It is no news that Nigeria has been going through some financial challenges over the years. The COVID-19 and lockdown period last year also played a role in the financial crises we are facing today.
But is this a good thing for Nigerian citizens? Do we have hope of paying back the accumulated loans any time soon?
Photo of Obasanjo (Credit to Daily Post)
Recently, former President; Olusegun Obasanjo, spoke on the constant borrowing that the country has been doing for a long time now, saying that it will have a negative effect in time to come.
Just last week, the President wrote to the senate, to aspire authorization to borrow an estimate of $4 billion, and above €700 million, of which Buhari explained that the money will be used to settle urgent and pending projects in the country.
In reaction to this report, the former President spoke on Channels TV (according to Daily Trust), stating that accumulating debts for the future generation is a criminal act.
Photo of President Buhari (Credit to Vanguard)
"Borrowing to build a commercial house is reasonable, we can make money from it and pay back the debt in some year's time, but borrowing to feed yourself and your family is a careless and unreasonable thing to do".
"If you are collecting loans to accumulate debt for the next generation and administration, then it should be regarded as a criminal act".
Here are 2 things that may happen to the Nigerian economy soon, if the frequent borrowing doesn't stop.
Photo of Nigerian Currency (Credit to Google)
Naira May lose its Value Even More
The Nigerian currency has lost its value this period more than ever before. A lot of people are not aware of this, but constantly borrowing from abroad may also be responsible for this fall in the value of Naira.
When the country is spending a lot more than it's making, it will lead to inflation, which will result in a fall in the value of the currency in the country. That is what we are experiencing here in Nigeria.
If the borrowing continues, Nigeria's currency may lose value even more.
An Increase In Tax For Companies In The Country
This is another thing we must be aware of, if the Nigerian government continues borrowing money, it will get to a stage that the government may need to increase tax for companies and even citizens in the country, just to raise funds to pay back these numerous loans.
What is your take on this? Tell us in the comment section below.
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