The African Development Bank has warned against Nigeria’s rising debt service to revenue ratio, urging the country to decisively tackle its debt challenges.
The AfDB President, Dr. Akinwumi Adesina, gave the warning at a Mid-Term Ministerial Performance Review Retreat.
The two-day retreat commenced at the State House in Abuja on Monday.
Adesina, who revealed that the AfDB will invest $3 billion in support of local pharmaceutical industries in Africa, including Nigeria, said Nigeria’s debt service to revenue ratio was high at 73 per cent,
He said: Nigeria must decisively tackle its debt challenges.
“The issue is not about debt-to-GDP ratio, as Nigeria’s debt-to-GDP ratio at 35 per cent is still moderate.
“The big issue is how to service the debt and what that means for resources for domestic investments needed to spur faster economic growth.”
Adesina disclosed that Nigeria’s challenge is revenue concentration as the oil sector accounts for 75.4 per cent of export revenue and 50 per cent of all government revenue.
He stated that what was needed for sustained growth and economic resurgence was to remove the structural bottlenecks that limit the productivity and revenue earning potential of the huge non-oil sectors.
According to him, Nigeria should significantly boost productivity and revenues from its non-oil sector, with appropriate fiscal and macroeconomic policies, especially flexible exchange rates that will enhance international competitiveness.
