Borrowing has become fashionable in Nigeria for states to test their viability by going to the credit market to borrow money, even for consumption purposes or just to satisfy kleptocratic urge. The Federal Government serves as the route and the surety for such loans. As of September 30, 2012, the nation’s external debt stood at $6.2bn and the government is proposing a total of $9.3bn external loan between now and 2014 to develop infrastructure. The way the Federal Government is pursuing requests and approval of loans from the National Assembly seem to indicate that the country is broke. But recent statistics from government sources do not support such a situation.”
The above is the opening paragraph of my article in The PUNCH in December 2012. We are obsessed with debts, even when the economy is in a good shape and we can finance our expenditures. A major candidate for debt is infrastructure and upon all the debts we have incurred on infrastructure, there is no measurable improvement in any – electricity, roads, airports, etc. In an interview in the Nigerian Tribune of November 7, 2016, the Director General of the Debt Management Office, Abraham Nwankwo, confirmed that since we exited the London and Paris Club debt in 2005-2006, Nigeria has always been borrowing from all sources, domestic and foreign. The more money we earn and borrow, the deeper the level of poverty in the land. That is the concern of the public to the current request for a jumbo loan.
The Millennium Development Goals was introduced in 2000 to be implemented across the developing countries till 2015 and with the hope that that poverty would have reduced by the end period. The World Development indicator of 2015 shows that the number of people living in absolute poverty or on less than $1.90 per day worldwide reduced from 37.1 per cent in 1990 to 12.73 per cent in 2012. For Africa, where Nigeria represents more than half of the population, there was a slight cut from 56.75 per cent in 1990 to 42.65 per cent in 2012. For Nigeria alone, the National Bureau of Statistics figures for those living in absolute poverty rose from 54.7 per cent in 2004 to 60.9 per cent or almost 100 million people in 2010. That was despite huge revenues from oil and borrowing from international markets but before Boko Haram insurgence and massive fall in oil revenue since 2014. The percentage has since increased!
The need for borrowing is more apparent in a recession when an economy needs a boost but the thieves in government also use recession to steal blind. Thus, borrowing now, though ideal somewhat, there is the need for stock taking. The article by Sonala Olumhense in the Sunday PUNCH of October 30, 2016 is entitled, “Mixed metaphors: Lest we forget”. The title may not attract those who are interested in Nigeria’s indebtedness but I got attracted because I like reading him. The article sends a message on re-evaluation of our present composition of debts and the proposed one on the table if we are not going to run into incurring double debt for one item. The projects proposed for financing in the current loan request also existed in those projects in the President Goodluck Jonathan’s debt proposals which might have been financed. Call it debt padding.
When Nigeria borrowed $1 for road project in 1977, it was regarded as Jumbo loan but what do we call $30 billion loan? The concern about the current proposed loan is not just whether it is too much, though it is, or whether it will not yield any benefit like the ones before it but that the country has no National Plan where the debt fits in terms of projects financing and the share between internal and external resources. Such amount cannot be for three year spending on budget implementation. Whatever we are spending such huge money upon must have desired long term quality. We got loans before for roads reconstruction, for airports’ redesign and for power installations, among others. The quality of the roads being constructed these days is very poor. Each time I drive on the old Western Region roads, I wonder whether those who constructed and those who monitored the projects were angels from heaven. The Murtala Muhammed Airport, the major entry point into Nigeria, is an eyesore as the microphones have not been working for some time and announcements have to be made through “shouting officials”, the lobby and channels are not well-lit, the conveyor belts in the arrival have been down while the passenger hangers are oven. Landing at the airport from abroad where things work would tell you that you are getting into a troubled land. The more money we borrow for electricity, the more darkness we “enjoy”.
I have heard that the country has a Plan worked out by the National Planning office. I have heard of a Medium Term Expenditure Framework derived from a long-term Plan. The latter has been described by the National Assembly as empty. It has to be because a National Plan must, from conception to implementation, be open and involve all strata of the society. The country needs a National Plan that will span the next 25 years from which the MTEF will derive its strength. That Plan needs not be started anew but a review of the Vision 20:2020 with inputs from the government, the private sector and the civil society and with final stamp of the National Assembly. The country cannot continue to be run on an ad hoc basis as this gives room to trial and error.
The $30bn loan is more than the total loans for the previous 10 years. It connotes that the country is not expected to earn money from oil and non-oil sources in the next five years; that we are not recovering both local and foreign money from those who have stolen the country blind and that we are not expecting foreign investments and grants from any source in the next few years. It assumes that Nigeria is a country in isolation and needs to spend (or steal big) to integrate into the rest of the world! These are not the case. We are still selling oil and gas; revenues from non-oil sources are reportedly increasing; looters are bailing themselves out with millions of naira with promises to add more, and foreign direct and portfolio investors are still interested in the largest economy in Africa with the largest population or a great market. This country can and do generate lot of funds.
In spite of the fact that we now have a President that is honest and fighting corruption with doggedness, the situation has not changed, the thieves are in and outside his government. Corruption is still going on, even on the roads by the police with the Inspector-General and his officers looking the other way. It may not be surprising that some people wish that the President’s four years end tomorrow or that he kicks the bucket so that they can be saved the agony of being exposed or the benefit of recovering their seized property and loot. Unfortunately, while the “rich” are few and can hold meetings, the poor are so many and divided, weather-beaten and diverse that they cannot do the same. Anyone thinking of revolution against the injustice in the land must be in delusion. Nigerians are not cut out for that. It is what Fela called “suffering and smiling”.
Let me conclude with the last paragraph of my 2012 article referenced above which I found to remain germane for today:
“There is hardly a day without the news of fraud in one government agency or another but hardly also do you find anybody found guilty and jailed. There has been more noise about increase in power output or repair of major highways in the country than actions. The present political circumstance or environment does not augur well for borrowing for development. The level of corruption is alarming and the fear of the loans disappearing into private pockets is real. Can the National Assembly save the future generations of agony of paying debts for which they derived no benefits?”
Tella is a Professor of Economics, Olabisi Onabanjo University, Ago Iwoye, Ogun State,
satellang@ooufms.com
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