In the face of the fast increasing dent, analysis have advised that harnessing diaspora dollars could save the country from falling into glaringdebt trap.
Bismarck Rewane, Chief Executive Officer of Financial Derivatives Company (FDC) Limited said, as it were, there is urgent need for the government to diversify government revenue base, and one way of doing that is to tap into the diaspora dollars.
“Although lower borrowing costs could free up cash to provide critical infrastructure, it remains insufficient to alleviate Nigeria’s revenue woes substantially.
“This indicates the need to diversify the government’s revenue base. One such option is harnessing and improving diaspora remittances, which have grown 27 per cent in the last two years and contributed to dollar revenues. In 2022, Nigeria accounted for 38 per cent ($20.1 billion) of the total remittance inflows to sub-Saharan Africa ($53 billion). Personal remittances into Nigeria are projected to reach $26 billion by 2025.
He however said, challenges such as high transfer costs hinder Nigeria’s ability to tap into the benefits of buoyant remittance inflows. In this light, Nigeria can learn from Senegal and Ethiopia, which leverage remittances for infrastructure, education, healthcare, and entrepreneurship. The lessons learnt will be foundational to effectively mobilizing the upcoming Diaspora bond issuance.
The total public debt in the first quarter of 2024 increased by 30.4 per cent to N121.67 trillion from N97.34 trillion in the second quarter of 2023. However, in dollar terms, the total debt burden fell 15.5 per cent to $91.46 billion due to the naira’s sharp depreciation of 38 per cent to N1,339.19/$ in the first quarter of 2024. The apparent relief in dollar terms belies the stark reality of Nigeria’s economic challenges. There are mounting concerns about the country’s ability to manage and service its rapidly growing debt.
