Govt borrowing should focus on infrastructure, improving Ease of Doing Business — ICAN
President, Chartered Institute of Accountants of Nigeria, ICAN, Chief Davidson Alaribe, has said that government borrowing should be focused on developing infrastructure and improving Ease of Doing Business.
He stated this at a panel session during the Vanguard Economic Discourse themed “Nigeria’s Economic Outlook 2025: Hardship and Pathways to Sustainable Recovery.”
Represented by Dr. Oluseyi Oladimeji Olanrewaju, Honorary Treasurer of ICAN, Alaribe said: “As we know, to fund a business, we say you do equity at the beginning, and when the business is growing and you want to expand, then you can look the way of debt.
”To borrow, you must be specific as to what you want to use the money for, and the return that you are getting from that expansion or from the project must be more than what you are paying as interest on the loan, that is talking as a businessman.
Usually we say don’t do long term if what you want to fund is working capital, because that is capital mismatch. Now, taking this to governments, I am hoping that one day we would have a surplus budget in this country, because from the point of view of the businessman, how would you want to budget and you are going to have a deficit, who does that? But that is what we have been seeing in Nigeria for some years.
They consciously will do a deficit project to give room to borrow to finance the deficit. While borrowing is understandable given limited resources, the core issue lies in what the borrowed funds are used for. Instead of funding infrastructure or developmental projects that support businesses and economic growth, much of the debt is channeled toward recurrent expenditures, which is financially unsustainable and ineffective.
Most business owners are the ones providing their infrastructure, where is this money going, including the debt the government is taking. They are using it on re-current expenditure, which is out of the way, it is a mismatch.
Going forward, we are not saying loan or taking debt is not good, but we are saying the purpose for the loan should be driven, should be focused through developing infrastructure, which will bring about ease of doing business, a very conducive environment for businesses to operate.
In the end government will generate more revenue in terms of taxes, if they provide conducive environment and make the environment very easy for people, and not making business owners to spend more on what the government should have done for them. So budget is good, but in Nigeria, we are not channeling the right way.
