Debt burden: NASS approved $49.852bn, €1.485bn for Buhari in two years

WITHIN a space of two years, the National Assembly, under the leadership of Ahmed Lawan and Femi Gbajabiamila, has approved a whopping $49.852 billion and €1.485 billion external loan for President Muhammadu Buhari, Sunday Tribune investigation has revealed.

A breakdown of the external loans requests to the House of Representatives shows they were approved between February 2020 and July 16, 2021. The timeline showed the dates of approval as: July 16, 2021, July 8, 2021, April 29, 2021, October 6, 2020 and February 6, 2020, in reverse order. The Senate, which also got similar loan requests, gave concurrence approval to the president’s requests.

The latest of the loans, $8.3billion and 490 million euros, requested under the 2018-2020 external borrowing (rolling) plan was approved last Friday, just in time before the lawmakers embarked on their annual recess. The latest approval was sequel to the consideration of the interim report presented to the House by the Ahmed Safana-led House Committee on Aids, Loans and Debt Management which recommended the approval of the loans.

According to the report, the loans will be sourced from the World Bank ($796,000,000); China EXIM Bank ($2,901,026,509); Industrial Commercial Bank of China ($2,484,555,304); African Development Bank ($104,200,000); Africa Growing together Fund ($20,000,000); European ECA/KFW/IPEX/AFC ($1,959,744,724); and International Fund for Agricultural Development ($60million). The second loan of €490 million has the French Development Agency, Agence Française de Développement (AFD) lending Nigeria €240,000,000 and the European Investment Bank €250million according to the report.

Buhari had, in May, 2021, asked the National Assembly to approve the loan. He had said the loan would enable projects listed under the 2018-2020 External Borrowing Plan to be financed. In the same vein, the House had on July, 8, approved Federal Government’s request $6.183 billion (N2.343 trillion) through the issuance of Eurobond in the international capital market in the 2021 Appropriation Act. The approval followed the consideration and adoption of clauses in the report of the Safana-led committee.

According to the report, which was approved by the House, the country’s actual foreign debt and domestic debts stand at N12.470 trillion and N20.637 trillion as of 31st March, this year. But the projected foreign and domestic debts are expected to hit N14.410 trillion and N24.679 trillion, totalling N39.088 trillion by 31st December 2021. The fund, which is to be borrowed from various sources, including the international capital market, multilateral and bilateral sources, is expected to part-finance the deficit authorised in the 2021 Appropriation Act.

The lawmakers have consequently directed the Minister of Finance, Budget and National Planning; Director-General of Debt Management Office (DMO) and governor of Central Bank of Nigeria (CBN) to submit to the National Assembly within 10 working days, a letter containing the US dollar amount so raised and received as a result of the above approval together with the applicable exchange rate. Similarly, the Lower Chamber, on Wednesday, April 29, 2021, approved President Buhari’s request to take $7.031 billion and 995 million Euros external loans.

A breakdown of the external loans approved showed that $5.513 billion is to finance Federal Government’s revised 2020 budget deficit; 995 million Euros to improve food security, while $1.5 billion was for state governments facing fiscal challenges arising from COVID-19 pandemic.

According to the report, the House, in June 2020, approved the request to obtain the $5.513 billion to finance the proposed revised 2020 budget deficit. “Due to the absence of adequate information on the second and third terms on the president’s request, the committee in agreement with the Minister of Finance, Budget and National Planning deferred consideration of the external borrowing request relating to funding of priority projects of the Federal Government to be captured in the budget estimates for 2021 and facilities to support the state governments to face the challenges of the COVID-19 pandemic,” said the report.

This was followed by the approval of $1.5 billion external borrowing to finance state governments facing fiscal challenges arising from the COVID-19 pandemic. A breakdown of the $1.5 billion showed that $750 million for State Fiscal Transparency Accountability and Sustainability Programme is to attract 2.45 per cent per annum (0.7 per cent service charge, 0.5 per cent commitment charge and 1.25 per cent interest rate) and five years moratorium and 25 years repayment period. The $750 million for COVID-19 Action Recovery and Economic Stimulus Programme to support state-level efforts to protect livelihoods, ensure food security and stimulate economic activity is to attract 0.75 per cent per annum and 0.25 per cent commitment charge and 1.25 per cent interest rate) with five years grace period and 25 years tenor.

Export-Import Bank of Brazil (BNDES) and Deutsche Bank of Germany are to provide 671 million Euros and 324 million for the Green Imperative to enhance mechanisation of agriculture and agro-processing in Nigeria at three years and two years grace period, 15 years and 7 years tenors as well as 2.935 per cent and 2.87 per cent interests rate per annum respectively. The lawmakers affirmed that the terms and conditions of the loans from each lender as contained in the loan agreements be forwarded to the National Assembly for proper documentation.

Also, on October 6, 2020, the House approved Buhari’s request to borrow $5.513 billion to finance the deficit in the 2020 budget. Breakdown of the loan indicated that FG intends to borrow $3.4 billion from the International Monetary Fund (IMF) for rapid financing instrument; $1.5 billion from the World Bank for development policy financing; $500 million from the African Development Bank for Covid-19 crises response budget support operation and $113 million from the Islamic Development Bank (ISDB) to part-finance the 2020 revised budget deficit.

Available reports also showed that the House had on Tuesday, February 6, 2020, approved Federal Government’s request to borrow $22.799 billion external loan and the revised Medium Term Expenditure Framework (MTEF) and Fiscal Policy Paper (FSP), as South-East lawmakers protested over exclusion of the zone from the areas to benefit from projects attached to the new borrowing plan.

The resolutions were passed after the consideration of the reports of the House Committee on Finance and Aids, Loans and Debt Management at the Committee of Supply, where the lawmakers adopted the recommendations to jack up the crude oil benchmark from $25 to $28 per barrel and retained 1.9 million crude oil production in the revised MTEF/FSP.

Out of the $22.799 billion loan, China Eximbank was to provide the larger chunk of the fund worth $17.066 billion at 20 years maturity, seven years moratorium, 0.5 per cent management fee, 2.75 per cent interest rate, 0.3 per cent commitment fee and 3-7 years duration.

The World Bank was to provide $2.854 billion at average repayment maturity of between 20-25 years, 1.25 per cent interest rate, 0.25 per cent commitment charge, 0.25 per cent front-end fee and five years duration. African Development Bank was to provide $1.889 billion at average repayment maturity of 20 years, 0.75 per cent service charge, 0.5 per cent commitment charge, five years grace period, 1.127 per cent interest rate and 5-8 years duration. AFD was to provide $480 million at 15-20 years maturity, 4-7 years grace period, 2.6 – 2.9 per cent rate in US dollar based on Libor floating market rates (1.3 per cent in Euros in Euribomarket rates) depending on loan maturity, 0.5 per cent commitment fee, 0.5 per cent appraisal fee and five years duration.

JICA was to provide $200 million at 30 years maturity, 10 years grace period and 1.4 per cent interest rate. German Development Bank was to provide $200 million at 15 years maturity, five years grace period, 3. 99 per cent interest rate, 0.25 per cent commitment fee of the undisturbed amount and 0.4 per cent management fee of the loan. Islamic Development Bank was to provide $110 million at average repayment maturity of between 25 years, Service Charge not exceeding 2 per cent, 2.5 per cent interest rate and four years duration.

A breakdown of the approved loans includes: $350 million World Bank Development Policy Operation loan for Kaduna and $110 million Islamic Development Bank Health Systems Projects Loan for Buhari’s state, Katsina. The committee, however, observed that out of the total borrowing of $22,898,446,773 as contained in the October 2019 reforwarded request of President Buhari, $17,065,496,773 is for funds proposed to be borrowed from China Exim- bank Bank.

In a swift reaction to the adopted report on the $22.799 billion external loan, the Deputy Minority Leader, Honourable Toby Okechukwu, argued that the “approval of the loan does not meet the expectations of our people. “First and foremost, there are certain strategic projects that ought to be there. First, the Western corridor rail line which goes from Lagos to Kano and the Eastern corridor rail line that goes from Port Harcourt through Enugu to Makurdi, Plateau down to Maiduguri.

“They were established the same day… commenced the same day; they were completed the same day they were operating. So, to take one in exclusion of the other is not appropriate.

“We looked at this as Nigerians and our expectation is that there should have been some more prudence to this effect. So we appreciate the proviso that there should be South-East in the next borrowing plan, but it’s a promissory note.

“So, our expectation is what we are borrowing is humongous. We are taking this N22 billion and we are going to take another N4.5 billion to fund the budget, the next season we are going to take another £4 billion for power. So, at which point are you going to accommodate the South-East? And that is why we said this is the proper time to do it.

“And it as simply because the Executive is not willing. They are not able to do that and at the parliamentary level we are expecting that at the appropriate level that should have been taken into consideration,” he said. 

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