The 2023 presidential candidate of the Labour Party and a leader in the ADC-led coalition, Peter Obi, has warned that borrowing for consumption rather than production remains Nigeria’s greatest economic challenge.
In a press statement posted by Symfoni TV, he explained that while borrowing is not inherently wrong, the misuse of loans has trapped the country in debt without growth.
Obi noted that major economies across the world, including the United States, China, Japan, Singapore, and Norway, owe significant percentages of their GDP in debts. He emphasized that the difference between them and Nigeria is the purpose of their borrowing, which is directed at productive ventures that strengthen their economies.
He criticized Nigeria for borrowing to fund consumption rather than investments in agriculture, industry, and infrastructure. According to him, this mismanagement has left the country spending 90 percent of its revenue on debt servicing, instead of the globally acceptable benchmark of 25 percent.
Drawing an analogy, Obi explained that if an individual borrows from the bank to invest in farming or industry, repayment is possible because the funds generate returns. But if the same loan is used for burial, birthday parties, or ceremonies, repayment becomes impossible.
He likened Nigeria’s borrowing habit to spending borrowed funds on picnics and consumption, warning that such practices will continue to deepen the nation’s economic crisis.
In his words, “But Nigeria, because you borrow for consumption, it’s like a human being. If you go to a bank today and borrow money, in order to do a farm, do agriculture, do industry, do everything, you’ll be able to pay back.”
“But if you borrow it for burial, you will not pay back. You have a problem. If you borrow it for birthday party, you have a problem. If you borrow it for wine carrying, you have a problem.”
“So Nigeria borrowed for picnic, it’s for consumption. And that is why we’re having problems, serious problems, to the extent that we will not survive it. It is that bad. If you borrow it for production, it will be different.”
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