The alarm bells are ringing across the Global South. Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has issued a stark warning: approximately half of all low-income countries are either already in, or rapidly approaching, a state of debt distress. This urgent declaration came during the recent Technical Group Meeting of the Group of 24 Nations (G-24) in Abuja, underscoring a mounting financial crisis that demands immediate attention.
Nigeria’s Own Debt Dilemma
While Nigeria is classified as a lower-middle-income country by the World Bank, it is by no means immune to these pressures. Our nation’s public debt has seen a relentless upward trajectory since 2023, hitting an estimated all-time high of $100 billion. Disturbingly, projections for 2025 indicate that the debt service to revenue ratio could reach a staggering 47%. This means nearly half of our national revenue could be swallowed by debt servicing, leaving precious little for crucial development projects.
A Burden on the Global South
Minister Edun highlighted that debt servicing has become a monumental burden for many developing nations. He pointed out that the total annual debt servicing payments from countries in the Global South now significantly outweigh both the inflow of Overseas Development Assistance (ODA) and Foreign Direct Investments (FDI) from the Global North. This imbalance cripples growth potential, forcing nations to allocate critical resources to debt rather than infrastructure, education, or healthcare. "The gathering," Edun stated, "was an opportunity to re-shape the development trajectory of the Global South at a time when global risks are converging faster than institutions can respond." He further revealed that a concerning 25% of Emerging and Developing Economies (EMDEs) have already lost access to international capital markets, making internally generated revenue more critical than ever before.
Modernizing Payments: A Key to Prosperity
Adding another crucial layer to the discussion, the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, zeroed in on the inefficiencies plaguing cross-border payments among G-24 members. "Today, cross border payments remain too slow, too costly, and too fragmented, especially for developing economies," Cardoso lamented. He cited alarming statistics: global remittance corridors costing over 6.0 percent, settlement lags stretching for several days, and compliance burdens that effectively exclude millions of Micro, Small, and Medium-sized Enterprises (MSMEs) from global opportunities.
Cardoso emphasized that his keynote on “Digital Cross-Border Payments, Global Finance, and Economic Transformation” was not merely a technical debate but a foundational development priority. He championed immediate action through modern digitalization to make these payments faster and cheaper. He praised Minister Edun for articulating the G-24’s vision, which aligns perfectly with central banks’ mandates: modernizing global finance, strengthening domestic capacities, and ensuring the digital transition fosters shared prosperity.
He further elaborated that for G-24 economies, these payment inefficiencies translate directly into higher remittance costs, expensive FX transactions, fragmented settlement processes, and barriers to MSME participation in global trade. "Improving cross border payments," Cardoso concluded, "is not simply a technical reform, it is a macroeconomic and development priority. The channels through which capital, remittances and trade flows move, now form a critical part of global financial stability architecture.”
A Moment of Uncertainty, A Call for Action
Dr. Iyabo Masha, Director and Head of the G-24 Secretariat, underscored the gravity of the discussions, noting that the meeting convened amidst "heightened uncertainty, policy fragmentation, and structural transformation." For many EMDEs, the challenge extends beyond mere recovery; it’s about restoring development trajectories, safeguarding macroeconomic stability, and financing transformation in an increasingly volatile world.
Conclusion
The G-24 meeting served as a crucial platform to address the intertwined challenges of escalating debt burdens and inefficient financial systems. As Minister Edun, Governor Cardoso, and Dr. Masha collectively highlighted, the path forward for the Global South hinges on innovative solutions – from robust debt management strategies to the transformative power of digital cross-border payments. The stakes are incredibly high, and the time for decisive action is now.
Source: Original Article
