Olusegun Obasanjo, former president, has reacted to the incessant borrowing by the President Muhammadu Buhari-led federal government.
Despite Nigeria’s rising debt profile, Buhari wrote to the senate last Thursday requesting approval to borrow $4 billion and €710 million external loans.
Obasanjo, while speaking with Channels Television in South Africa, said it is criminal to accumulate debt for the next generation to pay.
He said if the existing debt remains unserviced or unpaid by the current administration, it might become a huge problem for successive governments.
However, the ex-Nigerian leader noted that borrowing is not a problem if the borrowed funds are used for development and there is capacity to pay back.
“If you want to build a commercial house and you go and borrow money, and you have 50 per cent of your own money and you borrow 50 per cent and in five years, you pay the 50 per cent that you borrowed. That is a wise thing to do. But if you have to go and borrow money for you to be able to feed yourself and your family, that is a stupid thing to do,” he said.
“So, if we are borrowing for recurrent expenditure, it is the height of foolery. If we are borrowing for development that can pay itself, that is understandable; then how long will it pay itself? But we are borrowing and accumulating debt for the next generation and the next generation after them, it is criminal, to put it mildly. What are we borrowing for?
“When I came into government and was elected President, we were spending $3.5bn to service debt, and even with that, our quantum of debt was not going down.”