A recent comment by the presidential candidate of the All Progressive Party (APC), Bola Ahmed Tinubu, justifying the Federal Government’s penchant for borrowing to fund consumption and other non-productive ventures has sparked controversy across the country with many Nigerians expressing displeasure at the intentions behind his proposition.
Tinubu who made the comment in a Youtube vidio trending online, attempted comparing Nigeria’s borrowing with that of the United States of America which borrows to fund productive enterprise.
According to the APC presidential candidate, there is nothing wrong with a country borrowing to fund its government. In his words, “If borrowing is a crime, the entire America should be in jail.”
However, his comment has been met with backlash from Nigerians who have questioned the intentions for unbriddled borrowing by the Federal Government that has left the country with a debt profile of N42.84 trillion.
Chairman, SMEs Group of the Lagos Chamber of Commerce and Industry (LCCI), Daniel Dickson, countered the APC flagbearer’s comment pointing out that governments of other countries do not borrow to fund their recurrent expenditure like payment of salaries but rather to fund capital infrastructures that would contribute to the revenue generation.
He said, “ What year did America borrow to pay salaries and for consumption? Can Tinubu provide that information? To the best of my knowledge, in modern times, even smaller countries do not do that. As a country, you should borrow for capital projects that can generate money to repay the loan. You borrow to improve your capacity to generate money. Salaries do not improve capacity to generate money. If the government develops infrastructure, it will improve capacity to generate revenue.
Salary is a recurrent expenditure that should be provided for. The question is if you continue to borrow to consume and pay salaries, how long are you going to do that. That is very wrong. Dickson also commented on the non-functional state of factories in the country pointing out that the government should have been borrowing to reactivate these factories to be up and running. He said, “Factories are not working, and revenue is not improving. The major source of our revenue, which is oil, is going down. There is no verifiable evidence that America borrows for consumption and to pay salaries. May be America did that 20 or 30 years ago, but not recently.
In modern economics, no country does that. If they do that they won’t be developed as they are now. Every country runs away from borrowing money to deal with recurrent expenditure.
Also reacting to Tinubu’s proposition, a development expert, Nathan Oviri, faulted the idea of borrowing for consumption purposes. He said that borrowing without viable plans to transform it into generating revenue would have a huge negative impact on the economy. He advocated a reduction in cost of governance and improve utilisation of borrowed funds.
Nigerians Hit Tinubu Over Comments On Borrowing – Politics – Nigeria (nairaland.com)