Debt management and economic growth in Nigeria:performance,challenges and responsibilities

There is no one entity solely responsible for the debt crisis Nigeria found itself in by the early 1980s: not the Nigerian government, the banks, not the creditor governments. The increase in the Nigeria debt crises has been caused by a lot of factors that have forced their way into the country’s administration over the years. The major cause of Nigeria’s debt crises is the change in the economic fortune in the oil sector.One major obstacle for Nigeria’s economic development over the last two decades has been its crippling debt overhang. In April 2006, Nigeria ordered a final debt repayment to rich lending nations, completing Africa’s biggest debt relief deal.How do we assess the debt crisis in which Nigeria found itself? What are the lessons to be learned? Certainly, these are some of the most important questions to be studied as the country embarks with a clean slate with private and bilateral lenders after the long sought-after debt restructuring deal that came in April 2006.This paper analyzes the lessons to be learned from Nigeria’s debt history, looking especially at the phenomenon of oil-led spending and borrowing that occurred during 1986-2006. Its objective is to determine whether Nigeria received a higher credit-rating than its domestic and macroeconomic fundamentals would have otherwise justified due to its oil revenues, and whether the debt-repayment crisis arose because oil windfalls from the early 1980s were not used to retire its debt.