Yes, the Federal Government should be allowed to borrow that money. This is not the same as the kind of debts we incurred in the past. The debts we incurred in the past were not tied to projects; they were loans borrowed at floating interest rates, which means we were not in control of the rates and it was a fraud committed by American and European banks. When they called it Paris Club loan, it was actually money lent to Nigeria and other developing countries by Wall Street banks and banks in the City of London with a goal to impoverish our economy.
You can’t compare those loans with this one; the reasons are obvious. The world has diversified to include countries like China and India so you have so many options. Unlike before when you were forced to borrow from only western debt markets, the present loans are needed if you look at our peer economies like South Africa.
South Africa has over $100bn foreign debts, so also Egypt. Egypt has almost $50bn if not more than that. Nigeria needs to borrow more externally. This time around, we are borrowing to improve critical infrastructure that will improve the economy and our competitiveness. We should also put in place a repayment plan. What we are borrowing for is capable of repaying the debt. We need to work out how and when to repay and we should ask ourselves; are these projects spread nationwide?
You cannot just borrow to finance only projects based in the north; it must be widespread. We must also consider the interest rates and the moratorium on payment before allowing the government to borrow the $5.5bn.
Prof. Suleiman Abubakar (A former Nigerian Minister of National Planning)
I am totally against the Federal Government being allowed to borrow the additional $5.5bn, but the most pathetic situation is that the Nigerians we are fighting for do not know what has befallen them. That money should not be borrowed.
The international community or creditors should ignore the request; they should not honour it in the interest of this country.
The country is in serious crises because we are taking credit and mortgaging Nigeria’s future by proxy. What obtains today is governance by proxy where some sets of characters within and outside government are mortgaging the future of Nigeria’s younger ones without the President knowing what they are doing. It is a tragic situation that calls for serious reflection and serious concern from all stakeholders in this country.
If you are taking such loan, you should know what you are doing.
President (Muhammadu) Buhari lacks knowledge of the economy. He does not know anything about the economy. A lot of things that are being approved or being sent by some people in the Presidency is not known to him. The man is not in charge. He does not know what is happening; this is the tragedy of the situation. You could see his signature on certain things, if you know how the Villa works. When you have a President that does not have the knowledge of what he is doing; and coupled with his health condition, you feel sorry for this country.
Yes, a country could take credit, but you have to know why you are taking it and what the credit is going into.
Kenneth Onyesom (Benin-based financial analyst)
I don’t subscribe to President (Muhammadu) Buhari going ahead with the loan request and I will not be happy to see the National Assembly approving it. We have been borrowing; what have we been doing with the money borrowed for projects? I believe that if we are able to make do with what we have, we can manage the country.
It is not by borrowing but by what we do with what we have. The government says it is fighting corruption; how sincere is it? We have a lot of debts to pay, yet we still want to borrow more. Would we be able to come out of the debts? The government should use the money recovered from alleged treasury looters to fund capital projects.
If the money was ever recovered as the government claimed, then let it use the money. After that, we will know where we are. The loan will further increase the financial burden of this country.
Mr. Akin Adebisi (A chartered economist/business analyst)
Nigeria, as the Africa’s largest economy, entered its first recession after 25 years.
Recently, Nigeria marginally came out of the recession with just 0.5 per cent. In June and after much delay, Nigeria signed off its N7.44tn ($24.39bn) for 2017. It had a deficit budget of N2.21tn translated to about last 2.18 per cent of Nigeria Gross Domestic Product.
A few weeks ago, the President sent a letter to the Senate seeking approval to borrow $5.5bn.This has generated a lot of discussions considering the success recorded from the mop-up exercise in the ongoing recovery of funds from looters.
To me and from a professional perspective, Nigeria’s external debt rose to $13.8bn in the first quarter of 2017 from $11.4bn in the 4th quarter of 2016, while actual debt service payment in the first quarter was $128m. Borrowing should not be seen as a curse or bad move. It all depends on the usage and how it would benefit the entire populace.
The implication of borrowing will follow with a key fiscal reform like a flexible foreign exchange rate. The borrowing from domestic capital market might probably not pose a serious challenge provided the control mechanism of the monetary policy of the Central Bank of Nigeria creates market stability and bond yield that are favourable to domestic investors. Continuous borrowing may not attract foreign investors because they may first of all demand further devaluation of Nigeria’s currency before putting their money into the economy.
For this borrowing to be meaningful, there is the need for effective fiscal control to block leakages in revenues. This should go beyond blocking of revenue to expenditure control but also the cost of governance like personnel, overheads, pension and other expenses must be checked. Our capital expenditure should focus on real sector growth. It should be the one that refrain from frivolous activities but can create local jobs and drive local production that can serve export in returns of foreign exchange. The debt financing strategies should also aim at infrastructural development and growth. The government also needs to diversify the revenue base and profile so that we don’t always rely on loan to fund our budget spending over a long term. The government should also increase tax collection revenue and contribution.
Finally, borrowing should be tailored towards increase in economic activities that drives growth and development.
Iyeli Iyeli, (Associate Professor, Department of Economics, University of Calabar)
The Federal Government should be allowed to borrow only if the money they will borrow will be used to finance capital projects in the country. If they can push the money into energy, it will be good. Energy is a critical sector for economic development in any country. The epileptic energy supply in Nigeria has grounded a lot of businesses in the country. Investors do not want to come and it is affecting our economy. If they will borrow to fix electricity, fine. Look at our railway projects, the project of a national carrier and others. If they will invest the money in these areas, there will be nothing wrong in the borrowing because it will promote trade and employment. Life will become meaningful for Nigerians.
But if they borrow for agricultural sector to buy fertilizers and to give loans to farmers, it is rubbish. If they also borrow to invest in the service sector, it is also not good. If they actually want to borrow for the capital sector, it will be good because it is critical to the development of the nation.
The question I want to ask is what happened to the loot that they recovered? Why can’t they use it to finance capital projects rather than borrowing? Although, it may increase our foreign debt, the advantages of borrowing for capital investment will outweigh the disadvantages. If actually they will turn the money into capital projects, they should be allowed to do so.