Reasons Why Nigeria Cannot Print Money To Pay Off Debt.
Money is an economic unit that function as a medium exchange for transactional purposes in an economy.
Money is as important as air and water to any economy, but as important as it is you need to be very careful how you manufacture it.
The naira was introduced on 1 January 1973, replacing the pound at a rate of 2 naira = 1 pound.
Naira notes and coins are printed by the Nigeria security and minting ( NSPM) plc. It is located in both Abuja and Lagos and is majority owned by the government of Nigeria.
So. Here in this article I will take you through what might have been running through your mind for a while now on why Nigeria cannot print money to settle her debt.
One of the reasons why Nigeria cannot print money to settle debt are highlighted below.
Cost of printing money.
The Central Bank of Nigeria spent acumultive sum of N231.2 billion to print bank notes in the last 6 years (2013-2018).
According to the C B N report. Between 2013 and 2018, the total cost incurred on printing bank notes increased by 105% specifically, the sum of N31.1 billion was spent in 2014 to print bank notes while it rose to N49.5 billion in 2018.
Now that you know how scandalously high it is for Nigeria to print her currency. There are even more reason there is, you just keep reading as I reveal them to you.
Nigeria’s debt has accumulated over the years due to various Loans that were granted to them. These Loans are mostly from China and World Bank.
Nigeria’s debt owed to China.
Nigeria owes China about $3.1 billion more than 10% of the $27.6 billion external debt stock. Already since 2002, Nigeria had borrowed $6.5 billion from China to fund various infrastructural projects.
Nigeria’s debt owed to World Bank
World Bank approved about $2.2 billion loans for Nigeria to uplift human capital and economic development in 2020.
The total debt owed to the World Bank Group by Nigeria rose by $1.3 billion in one year to $9.81 billion as of September 2019.
The total amount of loans approved by the World Bank for Nigeria had reached $24.68 billion according to the data obtained from multinational development bank.
So you can now imagine Nigeria printing all these huge figures, considering what it cost to print cash in naira. You can only imagine how much it will cost to print in commensuration to dollar. I think it will be too much for Nigeria to handle.
Printing money to pay off debt will make inflation worse. Nigeria cannot be rich by printing more money because there are no economic activities to match the amount of money to be printed.
The federal government of Nigeria also influences the supply of money in circulation to avoid high inflation growth.