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The decision to
focus more attention on domestic sources to raise funds for its
services, rather than relying on external sources is responsible for
Nigeria’s burgeoning debt profile, the Debt Management Office said.

Abraham Nwankwo, the director general, said in Abuja on Tuesday, in an interview with journalists.

“A strategic
decision was taken in the course of debt management situation, it was
better to use the opportunity of borrowing domestically to develop the
domestic debt markets, not just for government, but for the economy in
the immediate to long term,” Mr. Nwankwo said.

“It was deliberate
for government to depend more on domestic sources, rather than
external, so that we develop this other aspects of our economy,
including the bond market, the habit of long time savings and
investment, as well as developing the skills by our local
entrepreneurs. Nigeria now has the capability to manage various bond
markets,” he stated.

He added that as a
developing country, Nigeria cannot depend solely on what it earns,
pointing out that for her to be able to stimulate growth and
development, she has to depend on some external borrowing that would be
tied to specific projects that would improve the quality of life of the
people.

“Borrowing in
itself is not a bad thing, but the important thing is for one to
develop the capacity to effectively manage what one has borrowed, such
that one would be able to service the debt and have surplus value in
the end,” he explained.

Legacy projects

He justified
government’s recent decision to raise a $500 million Eurobond issue,
arguing that some of the projects that government is borrowing to
execute are legacy projects that will last between 50 and 100 years and
will not generate direct immediate commercial returns. He said what
should bother Nigerians should be whether government will utilise the
resources effectively.

“Government wanted
to raise money to cut the existing deficit. Beyond that, government
wanted to use that opportunity in a structured manner to develop the
markets, which is one of the strengths of this economy, which every
investor is looking forward to. The bond market is not fully matured
yet, but it is rapidly developing, which is a plus for the country.

“Everything
government is doing is guided by the principle that the country must
not relapse into debt unsustainability by producing guideline for the
Federal Government as well as helping states develop the debt
management capacity by facilitating the establishment of debt
management offices in their domains,” Mr. Nwankwo further said.

He said the DMO is
democratising the knowledge of public debt management to enable as many
Nigerians as possible to be aware of the issues involved so that they
can ask the right questions, do independent analysis on why the
government needs to go into certain debts, and establish the values and
worth of such debts, in order to hold governments accountable.