Nigeria owes the world a lot of money - nearly $13 billion in direct government and guaranteed debt (mostly to the international banks and to national export-guarantee agencies), plus probably another $5 billion of "suppliers credits," owned by various Nigerian importers to foreign companies, large and small, for an endless variety of capital and consumer goods purchased on open account, much of it before 1983 (cement and machine tools, rice and wheat, electronic gadgetry, insecticides and Rolex watches).
In 1983, the government, in order to shore up Nigeria's sagging credit rating, invited thousands of suppliers to submit claims for goods shipped and unpaid. This was an open invitation to a $10 billion paper blizzard, and the Nigerians, with professional help from an international banking agent, have been trying to sort it out ever since.
Many of the claims are valid, some are technically flawed, others are erroneously double-billed, and all too many are shamelessly over-billed and often patently fraudulent. But much progress has been made; about $2 billion has been converted to Nigerian guaranteed bonds, and most of the rest of the validated claims will probably be converted this year, including interest. In all, perhaps another $5 billion will thus have been added to Nigeria's official foreign debt, bringing the total to about $18 billion.
How much is $18 billion to Nigeria?
Nigeria's debt burden is clearly a heavy one at present, but relatively short-term in nature (three to five years) and probably quite manageable, with a little help from its friends.
Total Third World debt is approaching $1,000 billion and the top seven debtors, led by Mexico, owe 40 percent of that. Nigeria's per capita debt is about $150, while that of Mexico is over $1,000. Nigerian debt as a percentage of gross domestic product is about 15 percent, a figure that most Third World debtors envy.
Nigeria's immediate problem is that its otherwise manageable debt is "ballooning" during the next four years, 1986-1989, with an average debt service of $4.2 billion per year, before dropping sharply to $1.8 billion in 1990 and below $1 billion thereafter. Based on oil sales for the first quarter of 1986 ($2.27 billion) and a projected flat sales curve at the present 1.3 million barrels a day, and a $15-per-barrel price, Nigeria can expect total foreign exchange (FX) earnings of nearly $8 billion in 1986. With a little over half of the earnings going to debt service, the next four years could be difficult. Not impossible, but unnecessarily difficult. But with a comprehensive, intelligent debt rescheduling to get around the four-year crunch, Nigeria should be able to manage reasonably well.
Origins of the debt
At independence in 1960, Nigeria was a modestly prosperous agricultural nation, feeding itself and exporting enough palm oil, ground nuts, and cocoa to buy a fair share of the good life. Seven years later, as Nigeria lurched into a bloody and bitter three-year civil war, oil was discovered in the east.
The war ended in early 1970, and by the end of the year,
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