In 1978, due to strains on government finances and external reserves, the government resorted to international debt markets to finance itself. Between 1978 and 1982, a couple of “jumbo loans” were negotiated with international financiers. The logic seemed sound at the time. Establishment of a steel industry here. Industrial expansion there. And so on. In 1977, Nigeria’s external debt stood at around $684m. By 1983 it had risen to $23.4bn. Of course, we know how the story goes. The steel plant didn’t quite work out. The industrial plans even less so. Soon the government couldn’t even service the debt leading to accumulated arrears and then a full-blown debt crisis.
My piece in the guardian today. Read it here.