Professor Samuel Odewumi, the Acting Vice-Chancellor of the University of Uyo, has cautioned that Nigeria's mounting debt is not inherently detrimental, but its potential to damage the national economy escalates if borrowed funds are mishandled or diverted from their intended development objectives.
During an interview with ARISE NEWS on Friday, Odewumi characterized borrowing as a "double-edged sword," emphasizing that its actual impact is contingent upon the efficacy with which the funds are utilized.
"The crux of the matter isn't whether one borrows or not; it's about the application of those funds. Prudent and purposeful deployment can spur development. Conversely, mismanagement can inflict significant damage upon the economy," he remarked.
His remarks come at a time when there is considerable public apprehension regarding Nigeria's intention to secure additional external loans, including a reported $5 billion from First Abu Dhabi Bank and $1 billion from UK Export Finance, earmarked for debt servicing and infrastructure enhancement.
Odewumi underscored that no nation possesses sufficient domestic resources to finance all its developmental aspirations, thereby rendering borrowing a necessary economic mechanism when implemented effectively.
"Loans, when managed by skilled professionals, are powerful instruments for combating underdevelopment. A nation rarely accumulates enough internal capital to fund all its development projects concurrently," he elaborated.
He highlighted the critical role of infrastructure, particularly in transport and logistics, stating: "Transportation and logistics serve as the vital conduits for socio-economic activities. Their deficiency inevitably leads to economic stagnation."
Odewumi contended that targeted investments in infrastructure can stimulate economic expansion, provided that corruption in procurement and project execution is eradicated.
Addressing the specific topic of a $1 billion loan intended for port modernization, Odewumi supported the initiative, pointing to the dilapidated condition of existing port facilities, especially in Lagos.
"The ports have endured a piecemeal development approach, with problems being addressed sporadically. This loan aims to effect a comprehensive restoration, including quay walls, jetties, access routes, and evacuation systems," he explained.
He noted that approximately 90 percent of Nigeria's maritime trade currently passes through the ports in Lagos, underscoring the urgency of their rehabilitation.
"The current facilities serving the nation are in a state of disrepair. We must rectify what is functional while simultaneously developing new infrastructure. Effective diversification is unattainable if the core systems are faltering," he added.
While acknowledging calls to expand port infrastructure beyond Lagos, including projects such as the Ibom Deep Sea Port, Odewumi advocated for a gradual and strategic approach to diversification.
"Diversification is crucial, but Lagos will undoubtedly remain a central hub for an extended period. The objective should be complementarity, not rivalry. New ports are emerging, but they require substantial time to mature," he explained.
He drew an analogy between the development timelines of ports and "gestation periods," emphasizing that new infrastructure projects take considerable time before becoming fully operational.
Odewumi cautioned that infrastructure enhancements alone would not resolve the inefficiencies plaguing Nigerian ports without concurrently addressing systemic corruption and operational challenges.
"One can upgrade the physical infrastructure, but the human element – the 'software' – is paramount. Corruption operates like an uncontained force within the system. Some areas have effectively become lawless," he stated.
He emphasized the necessity of implementing institutional reforms alongside physical upgrades to ensure enduring positive outcomes.
Responding to concerns about why port-related loans are collateralized by Nigeria's sovereign treasury rather than the revenue generated by the ports themselves, Odewumi clarified that transport infrastructure typically yields indirect economic benefits.
"Transportation acts as an enabler. The return on investment is not directly generated by the port but by the broader economic activities it facilitates," he explained.
He further warned that imposing the entire repayment burden on port users could lead to increased tariffs and consequently higher prices for consumers.
"If the repayment obligation is fully transferred to port users, it will inevitably impact the cost of goods. Government intervention, potentially including subsidies, is therefore justifiable in such circumstances," he noted.
Odewumi concluded by cautioning that recurring, ad hoc interventions in port management have consistently failed to yield sustainable improvements.
"Securing loans for infrastructure development is only one facet of the solution. Unless we address systemic issues and the individuals managing them, we will continue to confront the same persistent challenges," he concluded.
By Boluwatife Enome
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