The Politics of Borrowing in Nigeria: Balancing Short-Term Gains and Long-Term Risks

• Post by: airjournals
• November 30, 2024
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Prof. Egiyi Modesta Amaka

Abstract

This study delves into the political drivers and implications of borrowing in Nigeria, emphasizing the balance between short-term gains and long-term risks. It explores the complexities of Nigeria’s borrowing history, current debt levels, and the implications of both domestic and external debt. Key political factors such as the electoral cycle, populist pressures, rent-seeking, corruption, and federalism play significant roles in shaping borrowing practices. The research highlights the challenges of responsible debt management, including the political unpopularity of austerity measures and the tension between short-term political incentives and long-term fiscal sustainability. The study also examines historical examples, such as France in the 18th century and developing countries in the late 20th century, to illustrate the consequences of excessive borrowing. To mitigate these risks, the study recommends strengthening fiscal management institutions, enhancing transparency and accountability, promoting public awareness, and diversifying the economy. By adopting these strategies, Nigeria can develop a more sustainable borrowing framework that supports economic development and ensures long-term fiscal stability. Ultimately, the study underscores the need for good governance and fiscal responsibility and calls for a national dialogue on sustainable borrowing to safeguard Nigeria’s economic future.

Keywords: Political Drivers of Borrowing; Fiscal Responsibility; Debt Management; Nigeria’s Economic Policy; Sustainable Borrowing Practices