Former NBA president Agbakoba laments Nigeria’s paradox: $1 trillion in revenue, $91.46 billion in debt

A worrying trend in Nigeria’s economic landscape has been revealed. Despite generating over $1 trillion in revenue from oil and gas over the past 40 years, the country is still burdened with a public debt of $91.46 billion (N121.67 trillion) as of March 31, 2024.

This paradox raises questions about the management of oil wealth and its impact on the country’s development.

Dr. Olisa Agbakoba, former president of the Nigerian Bar Association (NBA) blamed factors such as the exclusion of Nigerians from key sectors in the oil and gas industry.

Agbakoba in a report titled “Nigeria’s Oil and Gas Industry Paradox: A Policy Paper,” highlighted areas such as legal services, shipping, banking and engineering as potential culprits. He said the alleged exclusion diverted a large portion of oil revenues from the Nigerian economy.

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Agbakoba also highlighted the weak enforcement of local content laws, which are intended to encourage domestic participation in the oil and gas sector. In addition, the implementation of foreign agreements, tax avoidance strategies, and potential corruption were mentioned as possible causes of the debt dilemma.

$1 trillion in oil and gas revenues represent a huge potential. Ideally, these revenues should drive significant infrastructure development and economic diversification. However, the current debt situation shows a gap between resource wealth and utilization.

Agbakoba suggested a course correction through increased participation of Nigerians in the oil and gas value chain. He noted that this could involve stricter enforcement of local content laws and the development of domestic expertise in various industry sectors. These steps, he said, could help retain a larger share of oil revenues in Nigeria, potentially reducing reliance on loans and increasing investment in critical areas.

Agbakoba said: “Over the past 40 years, cumulative revenues from oil and gas have exceeded $1 trillion, an amount that should be enough to transform the country’s economy and infrastructure.

“However, Nigeria is consistently indebted, with total public debt standing at N121.67 trillion ($91.46 billion) as of March 31, 2024, according to the Debt Management Office, DMO.

“There are 36 value chains associated with crude oil exploration, with at least seven critical value chains largely without Nigerian participation: Legal, shipping, banking, insurance, drilling, oilfield services, engineering and construction.

“More than $1 billion of legal work is lost to foreign firms each year due to the perception of superior expertise and international experience.”

He added: “Oil rig companies have formed a cartel to evade taxes, and NIMASA confirmed that they are not collecting taxes from oil rigs. This is a huge loss of potential government revenue.

“Revenues from oil rigs are estimated at N3 trillion annually, about 15% of the national budget. The loss of this revenue has a significant impact on the government’s ability to fund development projects and public services. Tax avoidance practices by these companies create an imbalance in competition and discourage compliant companies.”

The way forward for Nigeria requires a multipronged approach. Addressing the issues raised by Dr. Agbakoba alongside exploring avenues for economic diversification are essential steps. Only through a combination of increased transparency, improved resource management, and fostering domestic participation can Nigeria turn its oil wealth into sustainable economic growth and development.

Former NBA president Agbakoba laments Nigeria paradox: $1 trillion in revenue, $91.46 billion in debt first appeared on Latest Nigeria News | Headlines from Ripples Nigeria.