Sustainability: Nigeria Must Avoid a Debt Crisis
It has become really alarming! Nigeria’s escalating debt crisis poses severe risks to its economic stability, governance, and societal well-being. With the country’s total debt projected to hit a staggering N136 trillion following the approval of President Tinubu’s latest borrowing plan, it is imperative for us at CSR Reporters to address this looming threat.
Beyond macroeconomic measures, Corporate Social Responsibility (CSR) and sustainability can provide innovative solutions to mitigate the impact of this crisis and chart a path toward fiscal responsibility and inclusive growth.
A second look at the Debt Crisis in Numbers shows that Nigeria’s debt has ballooned by N50 trillion in just 19 months, reflecting an increasing reliance on borrowing to finance government spending. From N87.3 trillion in May 2023 to N134 trillion by mid-2024, the rapid growth in public debt raises alarm. Debt servicing costs surged by nearly 69 percent to N6.04 trillion in the first half of 2024, further straining the country’s finances. With external debt at $42.9 billion and domestic debt at N71.2 trillion, the debt-to-GDP ratio reached 55 percent in June 2024.
This trajectory threatens long-term sustainability, with debt servicing projected to consume 32–33 percent of government expenditure over the next three years. Meanwhile, capital expenditures crucial for infrastructure development barely surpass these figures, leaving the country vulnerable to economic stagnation.
Maybe just maybe adopting a CSR-driven approach to our fiscal challenges may just be the Midas touch. Nigeria’s private sector can play a transformative role in alleviating the debt burden through robust CSR initiatives and sustainability-driven investments. Companies, particularly those in sectors such as oil and gas, telecommunications, and banking, can align their CSR strategies to address pressing national challenges. For example:
1. Infrastructure Development Partnerships
Instead of waiting for government-funded projects, private companies can step in to develop critical infrastructure under Public-Private Partnerships (PPPs). Such collaborations reduce government borrowing needs while ensuring efficient project execution. The Nigeria National Petroleum Company Limited (NNPC) can lead by example, inviting private investment to revamp its refineries rather than depending on futile repair expenditures.
2. Sustainable Revenue Generation
Diversifying revenue sources is vital. The private sector can invest in sectors like renewable energy, agribusiness, and mining, creating jobs and fostering economic resilience. These industries not only offer non-oil revenue streams but also align with global trends in sustainability and carbon reduction.
3. Education and Capacity Building
CSR programs targeting education and vocational training can prepare Nigeria’s youth for roles in emerging industries, fostering a more skilled workforce and reducing dependency on unsustainable economic activities. This also reduces government expenditure on unemployment and social welfare programs.
Also, adopting sustainable practices at both governmental and corporate levels can provide long-term solutions to Nigeria’s debt challenges. By integrating environmental, social, and governance (ESG) principles into its economic framework, Nigeria can achieve a balance between growth and fiscal discipline.
1. Asset Monetization for Green Growth
Nigeria’s unproductive assets, such as NNPC’s refineries, should be sold to finance sustainable development projects. For example, funds raised can be redirected to renewable energy initiatives, reducing the country’s energy dependence on fossil fuels and attracting climate-friendly investments.
2. Blue Economy Development
Investing in the sustainable exploitation of Nigeria’s vast water resources—through aquaculture, marine transport, and renewable ocean energy—can create new revenue streams. This approach addresses both economic diversification and environmental preservation, enhancing the country’s global standing in sustainability.
3. Debt-for-Nature Swaps
Nigeria can negotiate with international creditors to restructure debt in exchange for commitments to environmental conservation. For instance, debt-for-nature swaps could help preserve the country’s rainforests, protect biodiversity, and mitigate climate change impacts.
4. Carbon Credits and Green Bonds
The government should leverage the growing global carbon market by issuing green bonds and trading carbon credits. These instruments can finance sustainable projects while attracting socially responsible investors, reducing reliance on conventional loans.
For sure, addressing Nigeria’s debt crisis requires collaboration with the international community. Institutions like the World Bank and the International Monetary Fund must promote capacity-building programs for fiscal management while offering conditional financing linked to sustainable practices. Additionally, multinational corporations operating in Nigeria should adopt ethical practices and invest in community-driven development projects.
While the private sector and global stakeholders have roles to play, the Nigerian government must demonstrate fiscal responsibility. Transparency in borrowing, effective tax administration, and prudent expenditure are essential to regain public trust and attract investments. It is unacceptable for debt service costs to outpace capital expenditures when millions of Nigerians lack access to essential services like healthcare, education, and clean water.
The Tinubu administration must prioritize asset monetization over reckless borrowing. Selling unproductive state-owned enterprises, such as the four NNPC refineries that have failed to produce fuel despite over $20 billion in repairs, can provide the much-needed cash injection to fund critical projects. Such bold measures would signal Nigeria’s commitment to fiscal discipline and sustainable growth.
