The recent $30 billion loan request forwarded to the National Assembly by President Muhammadu Buhari for consideration and approval, has continued to raise dust, writes SANNI ONOGU
The Muhammadu Buhari administration may go down eventually as one with a very huge appetite for debts.
Lately, it forwarded to the federal legislature, request to borrow another $30 billion loan, and has been going round to convince Nigerians that, as usual, the loan was needed to provide critical national infrastructure.
But such arguments have refused to jell. Financial experts, labour unions, opposition political parties and international financial institutions like the International Monetary Fund (IMF) and the World Bank, have all described the growing debt as a death trap and queried the administration’s unquenchable thirst for more.
They alleged that a higher percentage of these loans in the last four years ended up in private pockets. They insisted that any loan that is not strictly for the provision of infrastructure is not needed.
Though details of the specific projects the loan is meant to finance are still sketchy, it is instructive that previous request, which was anchored on the 2016 – 2018 External Borrowing Plan of the Federal Government, was rejected by the Eighth National Assembly.
In an attached memo, President Buhari had lamented that though the request was not approved in its entirety by the legislature, “the outstanding projects in the plan that were not approved by the legislature are critical to the delivery of the government’s programmes relating to power, mining, roads, agriculture, health, water and educational sectors.”
The Debt Management Office (DMO) put Nigeria’s debt stock at $81.27 billion as at end of March 2019. The DMO’s website shows that as at the end of March 2015, two months before Buhari took over, on 29 May, the country owed a total of N12 trillion. At the end of June 2015, barely a month in power, the debt rose marginally by N12.1 trillion, which, is equivalent of $63.8 billion, at the old official exchange rate, of N196.95. The report added that by the end of June 2018, total public debt had almost doubled to N22.4 trillion. The increase, according to the DMO, comprised a $2.5 billion Eurobond issued by the Government in February 2018. This took Nigeria’s total debt to $73.2 billion, using the 2018 official exchange rate of N305 to the dollar. The nation’s total debt stock as at the end of March 2019, according to the DMO, stood at $81.27billion, in view of additional loans secured by the government.
While experts have pointed out the unsustainable trajectory of the debt, the DMO, which coordinates the management of the nation’s debt stock, however, justified the borrowings in its 2017 report. “While Nigeria’s total public debt stock is relatively low vis-à-vis the country’s GDP, the increased funding requirements needed to sustain the economic recovery, address the huge infrastructural gaps, as well as meet budget financing requirements, would entail enormous funding resources, including borrowing,” the agency had stated.
However, a chieftain of the All Progressives Congress (APC), Daniel Bwala, threw his weight behind the Federal Government’s move for more loans. Bwala, a lawyer, who spoke as a guest on Sunday Politics on Channel’s Television, said telling a government not to borrow was easier said than done. “Intriguing enough, any government that comes to power; before coming to power, they will kick against borrowing. But when they come to power and they are faced with reality, they will have to face the issue. I am in support of borrowing because if you have infrastructure deficit; if you have the problem of managing between that revenue ratio and the borrowing, then you have a problem”, Bwala said. He further insisted that no economist would argue the fact that a country needs to borrow if it must tackle the problem of infrastructure.
He nevertheless opined that the government needed to set up a task force, as a department in the Economic and Financial Crimes Commission (EFCC) to monitor projects which the borrowed money was meant to execute.
The Buhari Media Organisation (BMO) had also defended the President’s decision to represent the $30billion request to the National Assembly. The body averred that the request was in the interest of the country.
The Chairman of the BMO, Niyi Akinsiju, in a statement in Abuja, said the funds were necessary in order for the country to bridge the nation’s infrastructure gaps. Akinsiju argued that if the request had been fully granted in 2016, Nigerians would have seen more projects at various stages of completion across the country.
While acknowledging that government officials have over the years misappropriated both internal and external loans, the BMO chief said; “We make bold to say this President is different…just in case many are not aware, external borrowing is an integral part of the financial plan for the current budget. So as it stands, the country is committed to doing what is necessary to bridge the country’s infrastructural deficit.”
However, a former governorship candidate of the Action Democratic Party (ADP) in Lagos State, Mr Babatunde Gbadamosi, urged the Federal Government to save the nation from sinking. Gbadamosi, who spoke on national television on Sunday, described those managing the nation’s economy as ‘amateur.’
While reacting to the fresh request for the approval of the 2016-2018 External Borrowing Plan, he said: “Stop borrowing, open up the economy. Open the land borders, allow trade, remove forex restrictions; stop trying to micromanage the foreign exchange rates.”
The Association of Senior Civil Servants of Nigeria (ASCSN) has also opposed the planned borrowing presently on the table of the National Assembly. ASCSN’s President Comrade Bobboi Kaigama described the request as “both unfortunate and worrisome.” The ASCSN boss warned that there is the need for the government to access well-structured public loans that “will only be for projects of utmost national importance and for which expected revenues accruable from such projects will be able to repay the loans without saddling coming generations with repayment burden.” Kaigama rued the difficulty in meeting up with debt servicing obligations.
The Lagos Chamber of Commerce and Industry (LCCI) has raised the red flag about Nigeria’s huge debt profile and its poor capacity to service the debts. The Director-General of LCCI, Mr Muda Yusuf is worried that whereas Nigeria’s capital budget in 2019 was N2.9trillion, its debt service provision was N2tn. “This implies that the debt service commitment is 70 per cent of the capital budget allocation,” Yusuf said.
Continuing, the LCCI chief said, “The growing national debt is a cause for concern as the debt profile grew from N12.6tn in 2015 to N25tn in 2019 second quarter, an increase of 104 per cent. There is also a bigger worry about the capacity to service the debt. In the 2020 budget, debt service commitment and recurrent spending are beginning to crowd out capital expenditure. This trajectory is inconsistent with the administration’s to build infrastructure and make the economy competitive. Debt service of N2.45tn is more than the capital budget of N2.14tn in the 2020 budget. That is 114 per cent of the capital budget.” For him, pitched against the backdrop of the growing unserviceable debts, the new request for $30bn is troubling.
Rising in opposition to further borrowing, the Director, African Centre for Peace and Development, Senator Shehu Sani, defended the decision of the Eighth National Assembly to reject Buhari’s $30billion loan request. Sani, who represented the Kaduna Central district in the last Senate, said the legislature did not want the country to sink into a trap of perpetual debt. Sani was then Chairman, Senate Committee on Local and Foreign Debts. He insisted that with the current upswing in borrowings, Nigerians will one day wake up to find that they are now tenants in their own houses.
“We turned down the Federal Government loan request for $30 billion to save Nigeria from sinking into the dark gully of a perpetual debt trap. We don’t want our country to be re-colonised by creditor banks. Our external debt in 2015 was $10.32billion and it escalated to $22.08 in the second quarter this year, which is 114 per cent. If we had approved that loan request, our external debt would have catapulted to over $52 billion and that is not sustainable. With the current escalation in borrowing, we will be walking into debt slavery and move from landlords to tenants in our country. They will always tell you that even America is borrowing and I don’t know how rational is it to keep on borrowing because another country is borrowing. If we keep listening to bankers and contractors, we will keep borrowing and burying ourselves and leave behind for our children a legacy of the debt burden. Loans are not charities. Most of those encouraging more borrowing are parasitic consultants, commission agents, rent-seeking fronts and contractors. We must be cautious”, Sani declared.
Former Vice-President, Atiku Abubakar, similarly lamented that the country under Buhari has obtained more loans in the last three years than it did in the 30-year period preceding 2016. Atiku said this position was revealed by a former Chief Executive Officer, Nigeria Economic Summit Group (NESG), Prof. Anya O. Anya. Atiku, who spoke while delivering a speech at the 14th Founders’ Day ceremony of the American University of Nigeria in Yola, the Adamawa State capital, said that it is troubling that the country recorded such a humongous increase in borrowings but with an unprecedented reduction in investments in education.
To the Chairman Senate Committee on National Planning and Economic Affairs, Senator Olubunmi Adetunmbi, it is quite possible that if the country’s revenue mobilisation architecture is sufficiently safeguarded against leakages, Nigeria may not need to borrow as much as it is borrowing. Adetunmbi, who was answering questions from Senate correspondents, said in the absence of necessary blockages, the country should either scale down on its aspirations in terms of what it wants to do or look for alternative means of sourcing funds.
He would rather want Nigerians to follow the money to make sure it is being judiciously utilised by the government rather seeking to know where the money is coming from. “That is the reality and there is no shying away from the fact. It is difficult to say that borrowing is not healthy for the economy because even in corporations, there is a difference between equity and loans. It is not everything you can do with your own resources and that is why lending institutions are there. I think Nigerians should begin to get more interested in following the money, rather than questioning where the money is coming from. I encourage Nigerians to follow the money, whether it is internally generated or borrowed. Let’s follow the money and make sure that it delivers value to the economy. I think that will be a useful way to spend our time whether borrowed money, personal money or national money. None of it deserves to be wasted. It is the duty of the media to ensure that they follow this money and ask questions appropriately,” Adetunmbi said.
Regrettably, most Nigerians believe the ninth Assembly under its present leadership should return the document to Buhari without its approval stamp, regardless of the dire implications for the future of the very people they represent. The mad rush for debts, low-interest rates and a long moratorium on repayment notwithstanding, they argued will leave Nigeria and its unborn generations a charred and miserable future. Nigerians look up to the National Assembly. Will it rise up in their defence?
