I love challenging our thinking and jarring my readers’ imaginations from time to time. Last week, I wrote about the high likelihood that our population – presently put at around 220 million – is over-bloated for political reasons. The reasons I adduced and the data I presented in triangulating what we have remains largely incontrovertible but I am still open to learning more.
Most readers who responded to the article agreed with me. Few disagreed and I was able to show where their errors may be. This week, I am looking at our economy and our debts specifically.
I think Nigeria has an opportunity, within the ambit of the architecture of the global economy presently, to raise as much as $300 billion in debt, by targeting 100% Debt-to-GDP ratio, if we have a firm strategy to use such money to boost our economy, such that we could triple or quadruple our economy within a decade.
The idea is that our Debt-to-GDP ratio (that famous, much-critiqued, global measurement), stands at around 35 per cent today in a world where 100 per cent Debt-to-GDP is just the beginning for most countries.
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Our GDP is around $450 – $500 billion. 35 per cent of that is around $160-$175 billion (all-in including our overshot ways and means at the Central Bank, and all states and federal debts). This means that we have a gap of over $300 billion between that and our current GDP levels which we could validly and legitimately raise in debts. I favour local debts, which we could use to reprime our economy and obtain multiplier effects and leverage.
A larger, more efficient economy is one where government revenue grows much faster than the debts, thus servicing the debts should not be an issue. What matters is whether we are thinking big, and whether our citizens home and abroad are ready for the sheer hard work required for such a thriving economy.
This opportunity remains with us, and a single administration does not have to max it out. I am however excited by this ‘discovery’. I will also advise that most of our debt-raising going forward be in local currency, and targeted to sectors with very high local content – as much as possible. This is an opportunity for all; local businesses, construction, infrastructure, indeed all the sectors and the economy at large.
The summary of this write-up is that countries have leveraged debts greatly to grow their economies and create wealth for all, and to define new trajectories for their economies and cause their people to achieve a whole lot more than they ever imagined.
Most of the top economies never repay back their debts anyway. They just grow their economies. Nigeria stands at a threshold for immense growth and prosperity for all, if we could implement clear, focused strategies, and we must be careful of bad advice by some of these guys that move around but whose goals are clearly to ensure we never really move ahead.
This strategy here proposed, will however require immense and focused amounts of hard work on the part of every Nigerian, home and abroad.
I used to be seriously worried about Nigeria’s debt levels. Now, I worry no more. What happened between then and now? I got more knowledge about how nations get into debt and what they do with those debts. I went back into history. And the more history I ploughed, the more the great opportunities ahead of Nigeria became clearer to me.
Nigeria is indeed a blessed country. We haven’t even started to explore most of our opportunities and debt is one area that needs to be exploited, believe it or not. However, it has to be deliberate, measured, targeted, and controlled.
I now know why history was bleached out of the study of economics by these neo-liberal guys. I am indeed irked at them. Economic history used to be a standard fare in many academic circles and universities. But I reckon that in order to seal their own advantage, those who control the field of economics at the very top – usually Western intellectuals – ensured that we got deflected into the adoption of mathematics rather than history (or indeed a combination of both). I
t is left, therefore, to the inquisitive, to refuse to be blindsided and side-swapped by the heavy weather of dy/dx differential equations, mathematical models, high-level econometrics that adopt laws from physics, to seek further and find the truth. Of late, it is recommended that serious researchers in economics look to behavioralism. And, of course, history. I recall the fiasco of 2008-2011, which culminated in a Global Economic Recession and Financial Crisis.
I had been a student of mathematical economics and had learnt of how pure scientists, engineers, and physicists made their way into the field of economics, resulting in the fusion of laws/formulas of diffusion of pollen in water, and whatnot, in modelling the behaviour of financial assets. Stripped totally from the analysis was any knowledge about how human beings think and what motivates us. Condemned totally was any attempt to exhume lessons from 1929, or the 1980s when markets crashed as a result of exuberance.
Alan Greenspan – then US Fed Chair – capitulated to the peddlers of market forces and agreed that the banks should regulate themselves. Gordon Brown, as the British Exchequer had boasted that they had conquered boom and bust. How so wrong they turned out.
Whereas many times, the past tells you nothing about new phenomenon that will occur in future, and indeed there are black swans (unenvisaged scenarios), that shock your system, still it is valuable to study history for clues and knowledge. This is what I did. How did it happen?
I was having a discussion about the debt with someone. It was about the Central Bank of Nigeria’s N24 trillion ways-and-means advance to the federal government. This sum had grown from just over N2 trillion in 2015 to N24 trillion in 2023! That was phenomenal, given that the figure should not have been more than say N500 billion, and should, by law, be rolled out yearly by the government.
The ways-and-means line is just the central bank playing its role as lender of last resort. So, the amount (N24 trillion) is alarming enough. But it must be said that we had no choice (especially during COVID-19) than to lean on the CBN when there was no other resort.
Every country did the same and even much more as we will see in this article. Also, a friend dropped this quote on my laps as I rounded up this article: “A government can live for a long time, even the German government or the Russian government, by printing paper money. That is to say, it can by this means secure the command over real resources, resources just as real as those obtained by taxation. The method is condemned, but its efficacy, up to a point, must be admitted…. (Maynard Keynes 1923)”
