Explore Nigeria’s growing debt addiction and the World Bank’s role in perpetuating it. Learn why experts criticize the unsustainable borrowing practices of Nigerian leaders and their consequences.
Nigeria’s dependency on loans from the World Bank has been likened to addiction, with critics arguing that these loans serve the interests of the lender more than the Nigerian people. This sentiment was echoed by Professor Ode Ojowu, a former Chief Economic Adviser to President Obasanjo and member of President Buhari’s Economic Advisory Council. In a recent interview with Weekend Trust, Prof. Ojowu dissected Nigeria’s economic policies and shed light on the nation’s worsening debt crisis.
A Troubling Relationship with Borrowing
Prof. Ojowu revealed that the World Bank’s country directors often face career consequences if they fail to lend to nations like Nigeria. According to him:
“It is our responsibility to make sure that the lending is useful to us.”
Yet, these loans often lack thorough oversight and accountability, contributing to a debt spiral that benefits the World Bank while leaving Nigeria trapped.
Misguided Economic Decisions
One contentious issue raised by Prof. Ojowu was the reduction of Value Added Tax (VAT). He criticized the suggestion to lower VAT from 7.5% to 5%, arguing that such a move would drastically reduce government revenue and increase the nation’s dependency on borrowing.
Instead, he advocated for responsible fiscal policies that prioritize sustainable revenue generation over excessive borrowing.
“Debt is the opium of the governing classes,” Ojowu stated, highlighting the parallels between drug addiction and Nigeria’s reliance on loans.
The World Bank’s Role in Nigeria’s Economic Challenges
Unlike investment banks that scrutinize loan applications for viability, Prof. Ojowu likened the World Bank’s lending practices to those of drug dealers in his Lagos Island neighborhood. These loans are frequently given to governments with poor records of transparency and accountability, ensuring that a significant portion of the funds is mismanaged or embezzled.
This lack of scrutiny has entrenched Nigeria deeper into debt. Prof. Ojowu disclosed that World Bank country managers are incentivized to prioritize loan approvals over genuine economic advice, making them “economic salespeople” rather than impartial advisors.
The Consequences of Unchecked Borrowing
Nigeria’s current economic indicators paint a grim picture:
- Inflation surged to 34.8% by the end of 2024.
- Exchange rates skyrocketed to ₦1,600 per US dollar.
- Federal revenue projections fell drastically short of expectations.
Despite these alarming statistics, the Nigerian government continues to rely on loans to cover budget deficits. Prof. Ojowu emphasized that such borrowing benefits only the lenders while perpetuating the nation’s economic instability.
Breaking Free from Debt Addiction
To address the debt crisis, Prof. Ojowu called for a shift away from dependency on external loans. Instead, he urged Nigeria’s leaders to adopt policies that foster fiscal discipline, transparency, and long-term economic growth.
“It is not in our interest to be perpetually hooked,” he warned.
He also advocated for Nigerian citizens to demand accountability from their leaders and push for reforms that prioritize the nation’s welfare over short-term financial fixes.
Conclusion
Nigeria’s relationship with the World Bank is emblematic of a larger issue: a culture of unsustainable borrowing that mortgages the country’s future. Prof. Ojowu’s insights serve as a wake-up call for both leaders and citizens to address the root causes of this addiction and prioritize the nation’s long-term economic health over quick fixes.
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