Debt crisis and management in developing countries: the Nigerian experience
This paper traced the historical evolution, composition and magnitude of developing countries’ debt profile and the instruments adopted for its management with emphasis on Nigerian experience. It discovered that most developing countries resort to loan acquisition with the aim of fostering economic development but end up been worse-off as a result of the adverse effects of systemic corruption which consequently leads to wider technological and socio-economic gap as well as asymmetric relationship between the creditor and debtor nations. The paper analysed the arguments ‘for’ and ‘against’ the justification for external borrowing with its corresponding effect on the country’s investment. It analysed the politics behind the debt cancellation between President Obasanjo’s administration and the Paris Club; and the re-emergence of another debt burden under President Jonathan’s administration facilitated by the same Finance Minister. It discovered that Nigeria’s external debt keeps increasing in fold in comparison to the internal debt and projected that the country’s debt profile will rise to US$25,206.86billion by 2015 from the current US$9,021.53billion as a result of the astronomical growth in the borrowing trend of the federal, states and local governments. The paper argued that obtaining loan is not really the problem but its embezzlement and misappropriation in the Nigerian context is of greater concern. It recommended that Nigeria should adopt “growth oriented strategies” to strengthen the economic conditions of the country which will allow for reduction of the real debt burden to a sustainable level. This should be premised on transparent government with uncompromised political will on the part of the decision-makers.
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