Bismarck Rewane, the Managing Director of Financial Derivatives Company Limited, has called for a more strategic approach to Nigeria’s borrowing, emphasizing the need for the government to ensure that such borrowings yield tangible benefits for the country’s citizens.
In an appearance on Channels Television’s Business Morning show on Thursday, Rewane stressed that it is crucial for the administration of President Bola Tinubu to borrow with clear, purposeful intent. He explained, “We need to be very intentional, very strategic, and focus on what we are borrowing for to generate revenue and to have an impact so that the people can begin to reap the dividends of reforms and democracy.”
As of December 31, 2024, Nigeria’s external debt stood at a significant $45 billion, according to the Debt Management Office. In just 16 months, the Tinubu administration borrowed $6.45 billion from the World Bank, as reported by official documents.
While acknowledging the necessity of borrowing to support the nation’s development, Rewane cautioned that the government must ensure efficiency in its financial management. “Nigeria needs some dollars, and those dollars are either going to come from investments that are coming in voluntarily or from borrowings that are done strategically,” he added.
Rewane also pointed to challenges in the current economic landscape, particularly in regard to interest rates. He noted that the expected drop in interest rates has been delayed, meaning Nigeria may need to borrow at higher rates than initially planned. “If that be the case, we have to be more efficient in the way we use our money,” Rewane advised. “What are we borrowing for? Are those budgets going to generate enough revenue to service those debts?”
As of now, the Nigerian government is navigating fiscal challenges in its second year under Tinubu’s leadership, with approximately 740 days elapsed since the administration took office. Time, Rewane emphasized, is of the essence in ensuring that borrowing does not strain the country’s future.
In addition to borrowing strategies, Rewane suggested that the Central Bank of Nigeria (CBN) has a role to play in fostering economic growth. He advocated for a reduction in the current interest rate, which stands at 27.5%, to incentivize investment. Rewane further highlighted that while the CBN’s mandate is primarily focused on price stability, a reduced interest rate could also encourage economic activity. However, he also noted that fiscal authorities must address barriers to productivity to make the most of these efforts.
“The fiscal authority must do a lot of things about the bottlenecks of productivity,” Rewane concluded.