Nigeria owes $5bn external debt – Maku •Says no cause for alarm

“We currently owe five billion dollars as foreign debt,” the minister said,
while speaking with Nigerian journalists in London.


“If you compare that to our foreign reserves and our economic capacity, there
is no problem as far as the country’s external debt is concerned,” he added.

Maku, who noted that most developed and developing nations were not free from
debt, however, conceded that debts should not be allowed to overwhelm the
country’s capacity to pay back.

He stressed that in the last 13 years of Nigeria’s democracy, the country had
been able to exit the debt track.

Maku recalled that at a point in time, the country owed the Paris Club of
creditors about 35 billion US dollars, adding that the country was,
nonetheless, able to pay off a substantial part of its external debt.

“What led to the huge debt was that the money borrowed was used for things that
were not productive,” he said.

The minister stressed that the “new” debts owed by the government were used to
revamp the country’s infrastructure such as the railways and the power plants.

“These debts are private-sector loans, guaranteed by government, because the
loans were given out at lower interest rates,” he said.

Maku said that for instance, the Chinese Nexim Bank was currently negotiating a
loan to build modern rail tracks in Nigeria.

“They (Chinese) are already building one railway track between Kaduna and
Abuja. Work has also commenced on the railway line linking Lagos through Ibadan
to Ilorin and Minna, while linking up with the one from Abuja to Kano,” he
said.

“These are private sector projects that will develop the economy,” the Europe
correspondent of the News Agency of Nigeria (NAN) quoted Maku as saying.

The minister expressed optimism that the “private sector” debts would propel
the growth of the economy.

He attributed the deficit in the housing sector to disruptions in government
policies, adding that before the current democratic dispensation in the
country, there had been lack of continuity in government’s policies under
military rule.

“There is currently a systematic institution and there are policies which
emphasise private-sector driven mortgage institutions that will work with the
government in creating credit facilities to enable Nigerians to have long-term
housing loans from mortgage companies,” he said.

Maku, nonetheless, said there were currently no proper mortgage finance systems
in the country, adding that this was one of the major factors inhibiting the
growth of the housing sector.

He noted that the previous practice in which the government was building houses
for the people was counter-productive because of inadequate resources.

He, however, expressed optimism that with efficient mortgage companies,
contributions from banks and the National Pensions Fund, a stable financial
system for housing delivery could be put in place.

Maku said this would enable the people to obtain long-term housing loans with
low interests, adding that plans were also underway to build more houses across
the country, in partnership with private mortgage companies.