FG and its endless borrowings

WHILE attending the African Development Bank’s (AfDB) high level virtual conference last week, erstwhile Minister of Finance and current Director-General of the World Trade Organisation (WTO), Dr. Ngozi Okonjo-Iweala, and Mrs Zainab Ahmed, the current Minister of Finance, differed on the country’s debt-to-GDP ratio. While Mrs Zainab Ahmed said that the ratio was in the region of 29 per cent, Dr. Okonjo-Iweala said that it had gone up to 33 per cent. Of course, the general consensus on the country’s debt profile is that it is worrisome, especially against the backdrop of the very solid, potential sources of income that remain untapped and the huge loopholes in critical areas of government revenue. The government has not displayed the political will to even contemplate tapping into latent resources. It remains fixated on oil money and how to spend it even before it is earned.

Time and again, the Muhammadu Buhari government, aided by a relentlessly and boastfully pliant legislature, has adduced various excuses for its borrowing spree. It is always broke and does not think creatively about cutting governance costs and shoring up the revenue base. Everything is about the here and now: there is no thought for the future. The fiscal situation is dire and daunting, and it is time the Buhari government changed course. For every N100 generated by the government and made available for public expenditure, N87 goes into debt servicing, while the debt remains intact. In public finance, that is a dangerous position to be in, whether the loans being sought after are meant to put infrastructure in place or not. Aside from the fact that the so-called infrastructure is for the most part crude, its maintenance and repair have been coming at huge costs. This is, we dare say, beyond appalling.

In previous editorials, we warned that the debt overhang had become an albatross threatening to delay the progress of the country. And if debt servicing has become such a huge barrier to the progress of the country, why sink further into the mire of debts? But like the profligate  outfit that this regime represents, it remains haughty and indifferent to wise counsel. Time and again, local observers and global citizens, statistical organs and heads of international organisations have called for a halt to the Buhari government’s borrowing spree. They did so again at the conference held recently, but they may well have been addressing the wind, as the government stood its ground, steadily flushing the country down the financial drain.

There is no logical reason for obtaining loans that will further compromise the future of generations yet unborn. A beleaguered country challenged by heavy indebtedness cannot be a good inheritance for the next generation. In any case, there is nothing on the ground to justify the endless borrowing, not even the so-called railway infrastructure that Nigerians have to travel long distances from their residences to even access. Instead of taking endless loans, what the government ought to be doing is cutting the cost of governance, plugging revenue loopholes and saving, no matter how little, because droplets can become an ocean with time. Nigerians would recall that while objecting to the statement by the Nigeria Governors Forum (NGF) in May 2016 urging President Buhari to approve the sharing of $2.259bn in the Excess Crude Account (ECA) among the three tiers of government in order to improve the liquidity position of the states, we stated that saving for a rainy day is the product of a disciplined consciousness. We urged the National Assembly to enact a bill institutionalising compulsory savings as part of the national culture. Of course, it never did.

Yet, as we argued, it is a proven fact that successful nations do not joke with savings, and that they do not save because of a surfeit of funds or the absence of critical needs. Rather, they do so in full realisation of the indispensability of savings to wealth generation, national stability and national security. If anything, the current sorry state of infrastructure across the country in the face of the astounding debt profile of both the federal and state governments should call for a rethinking and redrawing of strategies. The Buhari regime continues to claim that it is in need of funds to prosecute core developmental programmmes, but the available infrastructure falls criminally short of the resources supposedly expended on them. Sadly, it is not just that it has refused to save; it has blatantly refused to stop borrowing. And rather tragically, it has an ally in the legislature. Senate President Ahmad Lawan has just told Nigerians that their country is poor, and that the only option is to borrow. Would Senator Lawan please name just one country that has ever borrowed its way into prosperity? Of course, he cannot, and that says a lot about the leadership misfortune that has befallen the country.

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