Oil and Debt Management in Nigeria

Ako-Nai R I,Ayoola A O

doi:10.5539/jpl.v6n2p178

Abstract

Nigeria’s debt at independent was put at about N488.8 million which was mainly long-term development soft loans. The world economic recession and fall in price of oil in 1982 were identified as major factors that led many countries to debt crisis. Nigeria’s debt accumulated due to gross mismanagement of resources and loans contracted as well as failure of governments to keep-up with repayment schedules. This paper assesses the management of Nigeria’s debt. It examined the role of International Financial Institutions (IFIs) in discussing the politics of Nigeria’s debt management vis-à-vis motivational factor behind consideration for loans, disbursement and at what rate? The paper employed both primary and secondary sources of data. Primary data was sourced from Debt Management Office, National Bureau of Statistics, Central Bank of Nigeria and National Institute for Social and Economic Research while secondary data was sourced from journals, books, official government gazettes and internet. Data was analyzed using descriptive method. The result of the analyses revealed that 79% of the respondents agreed that Nigeria’s oil contributed to its huge debt accumulation and denied it debt cancellation. Also 65% believed that government has been prudent in managing the nation’s debt with every action taking in the interest of the people even when it failed to keep up with repayment schedules. The dependency theory formed the basis of discussion and analyses in this work. It concluded that, oil was a major factor behind the granting of loans to Nigeria as well as responsible for fiscal irresponsibility on part of the government which led to the failure of efficient management of such loans. This paper recommended that there should be prudent management of the economy while all forms of corruption must be eradicated to bring about real development.

Highlights

The struggle for political independence was majorly for economic liberation from the colonial masters whose only concern was to exploit and plunder the natural and material resources of the nation
The result of the analyses revealed that 79% of the respondents agreed that Nigeria’s oil contributed to its huge debt accumulation and denied it debt cancellation
This paper recommended that there should be prudent management of the economy while all forms of corruption must be eradicated to bring about real development

Summary

Introduction

The struggle for political independence was majorly for economic liberation from the colonial masters whose only concern was to exploit and plunder the natural and material resources of the nation. As a result of the above scenario, Nwoke (1990)posits that, it became largely impossible for the government to meet the yearnings and aspirations of the people since its earnings were not enough to feed not to talk of providing the basic necessities like education, good roads, potable water, electricity and so on He concludes that, the government had no choice like its counterpart in the African continent than to borrow money from the developed nations to carry out economic plans that would bring about positive change in the country. Writing on IFI’s involvement in Nigeria’s debt crisis, Olukoshi (1990) concedes that, the conditions attached to the loans are those that would tie the debtor nations to the creditors’ apron-strings and subject them to indirect control, making them perpetually dependent This, he claims dealt untold hardship on many of the African countries, as they found it difficult to meet up with the balance of payment. Instead of getting out of the debt wood, Africa states were going back to the International Financial Institutions for more loans with the intention to revamp their economy and embark on sustainable developmental projects

Statement of the Problem

Theoretical Framework and Literature Review

Nigeria’s Debt and the Oil Factor

Findings

Analysis and Discussion

Conclusion and Recommendations