Nigeria: Debt financing.

Financing is critical for the survival of any entity even a government.

The Nigerian government has shown that its expenditure in the last few years is dependent on funding from taxes from individuals and businesses. Each sector of the economy is financed based on the budget approved by the executive arm of government.

The government is becoming involved in private-public partnerships with private organizations as a source of generation of revenue to sustain the sovereign state of Nigeria.

With the 774 local governments existing around the states of Nigeria, the flow of funding is still dependent on the federal government catering for states to the local government levels even though, each state generates its own revenue but each is still running on the dependence on the federal character.

The revenue generated from each state of Nigeria is more than enough to sustain its independent financing module as some groups are advocating for.

In recent times, the federal government of Nigeria passed into law a memorandum that borrowing of funds would be done from dormant accounts and shares deposit accounts of individuals and organizations of over 6 years without activity and this law has raised some form of suspicion from individuals, the political class, concerned foreign parties which think that Nigeria is a land with so many resources that could finance its operational affairs rather than inclining towards such debt financing model.

In earlier years, the Nigerian government moved to take funding from pension funds of pensioners and the current working class and also the sale of her federal properties like NITEL to meet up with her over-bloated budgeted expenses.

Diverse groups of people think that the Nigerian government isn’t sincere in its financial dealings which is alluded to the fact that revenue generated from her economic activities and remittances in the federal treasury is tangible enough to ensure the Nigerian state blossoms regardless of the shortfall in oil price and the Coronavirus pandemic.

How long would the Nigerian state be sustainable with its model of debt financing of her economy?