Maybe, the International Monetary Fund can help us fast-track the identification and repatriation of our stolen funds hidden overseas. Since the credit power has moved from Wall Street banks to now Chinese government-controlled banks, the power to dictate that was earlier fully controlled by the IMF, acting on behalf of western lenders’ interests, but now in Chinese hands.
This truth is being reinforced by the emergence of the China-led Asian Infrastructure Investment Bank, which is currently having over 57 members including South Africa as the only African member.
Since this is where the future of infrastructure financing lies, it is highly advisable that the President Muhammadu Buhari administration begins to give Nigeria’s membership of the AIIB the serious consideration it needs.
Without expecting the IMF loans, the Fund’s assessments of Nigeria will only remain mostly neutral while its advice to our government will never be mandatory.
Countries like China where most of the borrowings by the Nigerian government will take place already have their own independent assessment tools as well as lending conditions quite different from the IMF’s.
China, for example, is almost always interested in–and insistent on–loans having projects attached to them, projects that are wholly or a major portion executed by Chinese firms.
With our debt-to-GDP ratio at about 12 per cent, against our peers’ more than 60 per cent, we are so creditworthy that we can comfortably borrow as high as $270bn during the next four years without being debt trapped so long as, going forward, all our debts are for project-driven, particularly infrastructure-based loans that by reducing our current infrastructure deficit, reduce the present high cost of doing business and high interest rate causing high arbitrage.
Regarding the IMF’s promised technical support, I strongly believe that Nigeria has all the technical expertise in the country to address all our current economic challenges, including the ongoing efforts to block leakages in revenue and wastages in expenditure.
Because modernising tax policies to increase its coverage in ways that increases this year’s tax-to-budget ratio, I think, since it isn’t a rocket science, we can have no need for foreign hands, especially the IMF, which has never run any economy, let alone ones like ours.
That explains why I strongly believe that we do not have the kind of luxury of time to begin this kind of having to wait for readymade solutions that even if had worked elsewhere, may not necessarily work for us given our economic and cultural differences. Of course, these so-called western technocrats should be the least to have an understanding of our complex economic realities.
Homegrown solutions, as far as I’m concerned, are always better because not only do they enjoy a lot of wider national input, they also enjoy wider acceptance and are easily and better implemented by learning from field mistakes which help constant fine-tuning.
President Buhari made us proud not only by the way he received the IMF boss, Christine Lagarde, but also for making it clear to her that should we need the Fund’s help in dealing with our macroeconomic challenges, definitely we would be the ones contacting them. But that as it stands, we have what it takes to address our present problems.
Where I think Madam Lagarde’s advice was misleading is her insistence that Nigeria should not borrow again. I was instead expecting her to insist on government justifying borrowing by borrowing purely for investment rather than for consumption driven by big government which was rampantly the case during the Jonathan administration when Nigeria was running year-in-year-out fiscal austerity while maintaining bloated recurrent spending.
Therefore, I was expecting Ms Lagarde to be applauding the Buhari administration for its bold efforts to drastically increase investment in capital projects which he couldn’t do without having to borrow. Even though a lawyer and not an economist, her experience as someone who as a former French minister finance would have guided her advice in a way to agree that there’s no other way Nigeria should expect to solve huge infrastructure deficit head-on than to engage in massive borrowing, especially at a time when its main source of revenue, oil, is witnessing unprecedented plunge.
Or isn’t it hypocritical of her to be advising us not to borrow given our debt-to-GDP ratio which at about 12 per cent is by far the lowest among our peers? Or, why are the rich nations also the most indebted nations in the world? In other words, how many times has she advised against Japan’s debt-to-GDP ratio which currently stands at 224 per cent; Italy’s at 128.50 per cent; the US’ at 107 per cent; her France’s at 95 per cent; the United Kingdom’s at 89.80 per cent? What about Nigeria’s peer countries like South Africa with debt-to-GDP at about 44 per cent; India’s 66.10 per cent; Brazil’s 60.8 per cent; Kenya’s 50 per cent; Ghana’s 67.50 per cent, and so it goes?
Is the IMF boss fair to Nigeria that with its over $350bn infrastructure deficit, it is okay for us to remain in a league of nations with some of lowest debt-to-GDP ratios like Algeria’s eight per cent; Kuwait’s seven per cent; Afghanistan’s 6.6 per cent; Libya’s 6.10 per cent; Saudi Arabia’s 1.60 per cent among others?
Notwithstanding Lagarde’s hypocrisy on debt, I liked how she carried herself and particularly her expression of immense trust in the Buhari administration and by making it clear that Nigeria did not need any money from the Fund given the ongoing restructuring and reengineering of its economy taking place right now.
PUNCH
END
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