The Debt Trap In Nigeria: Towards a Sustainable Debt Strategy (review)

The debt crisis has for decades remained a central theme in the discourse about the contradictions of Nigeria’s development. Despite her resource base, Nigeria has for years groaned under the weight of an excruciating debt burden, with heavy tolls on the country’s development. It was under this cloud that Nigeria emerged as a nascent democracy in 1999, leaving its leadership with deep concerns on how to start anew. As the outcome of an international conference on sustainable debt strategy for Nigeria held in Abuja in May 2001, this volume represents one of the official responses.

Aside from the panoramic introduction by its editors, the book has three main parts. The first, including contributions by Charles Soludo, Cyril Enweze, Callisto Medavo and Ibi Ajayi, deals with the question of debt, poverty and development in global, regional and national contexts. The second examines institutional and governance issues in debt management, with contributions from Graeme Wheeler, Okonjo-Iweala, and Mike Obadan. The third part, which features chapters by Jeffrey Sachs, Paul Collier, Matthew Martin and Ann Pettifor, engages the crucial issue of freeing Nigeria from the debt trap. The book seeks to fill a vacuum created by the dearth of literature on debt and development, focusing on specific national and regional contexts, with a view to promoting a convergence of views on the nature, severity and implications of the debt burden and debt accumulation. These are apart from sensitizing and building public–private consensus on the debt issue and crafting a strategy that would leave Nigeria less indebted and more prosperous in the medium and long terms (p. 2). For the first time since 1992, Nigeria’s official debt figures have been ascertained in a seemingly accurate form to be between $28–$32 billion (pp. 6, 7, 112, 171). Importantly, the book accounts for variations in government official figures and those of International Financial Institutions (IFIs) (pp. 7–8).

The contributors blame Nigeria’s debt crisis on both internal forces, such as corruption and poor management, and external factors – particularly the asymmetrical nature of the international system as well as the contradictions inherent in the conditionalities and roles of the IFIs. The result has been the worsening of poverty and inequality in Africa, capital flight and stunted growth, as graphically illustrated with convincing arguments and statistics by Ibi Ajayi (pp. 107–42). Wheeler and Okonjo-Iweala examine institutional and governance issues in debt management. For the former, good debt management would emphasize having clear debt-management objectives, a well-defined legal structure, and clarity in institutional roles, efficient organizational structure, quality assurance measures and risk management. The absence/weakness of these has been a major contributory factor to the debt crisis and its overhangs in Nigeria (pp. 168, 193). Other forces articulated by Okonjo-Iweala include the diffusion of responsibilities, in that many agencies are saddled with the same or similar tasks without effective coordination, leading to poor and variable debt data recording by the various agencies (p. 174).

The book offers several policy measures for a sustainable debt strategy. These include the need for comprehensive domestic economic reforms, pursuit of debt reduction and cancellation from the international community; sound macro-economic management, regular debt portfolio review and the institutionalization of sound governance and institutional practices in debt management. Jeffrey Sachs sounds most persuasive in this regard, arguing very forcefully for debt cancellation for Nigeria ‘now’. Situating Nigeria within a comparative framework with the HIPC, he argues that ‘all the broad philosophical discussion’ as to whether Nigeria merits debt cancellation or not, ‘amounts to just obfuscation of these very basic points’ (p. 220). He distils very convincingly what he calls ‘the mythology of a rich country somehow stealing its own resources’ (p. 220) peddled about Nigeria. Collier and Pettifor argue for...