How Nigeria’s Public Debt Reached $91.46bn Despite Generating $1trn in 40 Years — Agbakoba

Human rights activist and senior lawyer, Dr. Olisa Agbakoba, SAN, has highlighted the factors behind Nigeria’s rising public debt, which stands at $91.46 billion (N121.67 trillion) despite generating $1 trillion in 40 years.

Agbakoba identified key issues such as the exclusion of Nigerians from major value chains, weak enforcement of local content laws, incorporation of foreign agreements, tax avoidance, and corruption as major contributors to the growing debt.

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In his presentation titled “The Paradox of Nigeria’s Oil and Gas Industry: A Policy Paper,” Agbakoba called for increased Nigerian participation in sectors like legal services, shipping, banking, insurance, drilling, oil field services, and engineering within the oil and gas industry.

Key Points from Agbakoba’s Presentation:

1. Revenue Generation vs. Debt: Over the past 40 years, Nigeria has generated over $1 trillion from oil and gas, but the country’s public debt has reached N121.67 trillion ($91.46 billion) as of March 31, 2024.
2. Exclusion from Value Chains: Nigerians are largely excluded from crucial value chains in the oil industry, including legal, shipping, banking, insurance, drilling, oil field services, engineering, and construction.
3. Loss of Legal Work: Over $1 billion in legal work is lost to foreign firms annually due to perceptions of superior expertise and international experience.
4. Shipping and Banking: Nigerian shipping companies are not engaged in crude oil shipping due to the absence of a national fleet framework, and funds from crude oil production are often held in foreign banks before being remitted to the Central Bank of Nigeria.
5. Insurance and Drilling: The Nigerian insurance industry plays a minor role in the oil and gas sector, and major drilling contracts are typically awarded to foreign firms.
6. Engineering and Construction: Large-scale projects in the oil and gas sector are often awarded to foreign companies, limiting local capacity building and job creation.
7. Legal and Contractual Challenges: Foreign agreements often exclude Nigerian laws, and the complexity of contracts puts Nigerian entities at a disadvantage. This has led to unfavorable outcomes in international arbitrations and limits Nigerian participation.
8. IOC Dominance: International Oil Companies (IOCs) have more bargaining power, resulting in a significant portion of revenues leaving the country and limiting technology transfer and skill development among local companies.
9. Tax Avoidance: Oil rig companies avoid taxes, leading to a massive loss of potential government revenue. The revenue from oil rigs is estimated at N3 trillion yearly, approximately 15% of the national budget.

Agbakoba emphasized the need for substantial investments in preventive measures, increased local content participation, and the implementation of laws to ensure a fair and competitive environment. He highlighted the importance of addressing these challenges to reduce public debt and promote economic growth.