Lagos, Nigeria — Former President Olusegun Obasanjo recently shared insights on his administration’s economic achievements during an interview with News Central, highlighting how he increased Nigeria’s foreign reserves from $3.7 billion to $45 billion during his eight-year tenure from 1999 to 2007.
Upon taking office, Obasanjo faced a daunting fiscal landscape, with Nigeria’s external debt reaching $36 billion and servicing costs consuming $3.7 billion annually. He emphasized that strategic advocacy for debt relief led to a significant reduction in this burden, lowering the debt to approximately $3.5 billion by the end of his presidency.
Obasanjo attributed the growth of foreign reserves to fiscal discipline and the establishment of the Excess Crude Account (ECA), which was designed to manage budget surpluses from oil sales. “By being conservative in our budgeting, we managed to save approximately $25 billion in the ECA,” he noted, bringing the total available funds to around $70 billion when combined with foreign reserves.
However, he lamented that these savings have since dwindled. “Seventeen years after my departure from office, Nigeria’s international debt has surpassed the levels seen in 1999,” Obasanjo stated, attributing this to poor fiscal management and a lack of accountability in leadership. He criticized ongoing corruption and the absence of consequences for economic mismanagement as contributing factors to the country’s current economic difficulties.
As of the second quarter of 2024, Nigeria’s debt has reached a historic high of N134.3 trillion, accompanied by rising debt servicing costs that have strained the nation’s financial reserves. The Central Bank of Nigeria (CBN) recently reported that the ECA now holds a mere $376,655, reflecting the urgent need for improved revenue management.
In response to these challenges, current CBN Governor Yemi Cardoso is focused on rebuilding the foreign reserve base, which has recently climbed to $39 billion, with a goal of reaching $40 billion by year-end. However, this recovery strategy has come at a cost, as it necessitated reduced interventions to stabilize the naira, which has depreciated sharply to N1,700 per dollar, marking it as one of the weakest currencies in Sub-Saharan Africa.
Obasanjo’s remarks serve as a poignant reminder of Nigeria’s economic trajectory and the imperative for effective governance to navigate the nation towards a more stable financial future.
