Loans, debt and accountability

Nigerians are boisterous by nature. They enjoy their various freedoms as enshrined in the country’s constitution, especially freedom of expression. They are also assertive when it comes to exercising those freedoms and rights. And there are always differences in perceptions, appreciation of the situation and justifications for taking one side or the other.

It is in the context of exercising those freedoms and rights that various issues of significant public interest are discussed. The issues include government’s domestic and foreign borrowing, and spending to pay for desirable national development.

A news item which gained media and public attention because of the timing of its  publication (in a period of national holiday mood when the media faced news scarcity),  was the conversation on loans, debts, and accountability.

The item runs thus; “Socio-Economic Rights and Accountability Project (SERAP) has asked the Federal High Court, Abuja, to order President Muhammadu Buhari to publish details of loans obtained by his government since May 29, 2015, including the interest rate as well as details of the projects on which the loans have been spent.”

The demands made by the foreign-funded NGO calls for accountability in public financial management. Accountability  is one of the elements of good governance, the observance of which enhanced the credibility of the Muhammadu Buhari-led Federal Government. This cannot be denied.

The news item attracted my curiosity and interest as a watcher of the Buhari presidency. So I found it worthwhile to get facts and figures from the relevant sources regarding Nigeria’s indebtedness and how or where the borrowed monies were applied.

That took me to the Debt Management Office (DMO) online to obtain the facts and figures. The DMO said that as at 30th June 2015, roughly a month after President Muhammadu Buhari was inaugurated for his first term in office, the foreign debt of Nigeria was US$10,316.82 billion. It was inherited. The inherited domestic debt on 30th June, 2015 was N8,396,591,566,000.00 or N8.39 trillion. The Buhari administration came into its first term with those debts in the books.

Probably that was the reason the outgoing administration was not forthcoming in preparing and delivering its handover notes to the incoming Muhammadu Buhari administration. That attitude generated controversy in the country. At the end of the controversy, the then new administration said it met an empty treasury and mountains of both foreign and domestic debts.

The financial crisis faced by the Buhari administration on assuming office included a very low oil price on the international crude market, pervasive unpaid workers salaries, a massive pension arrears, unpaid invoices from contractors and pressure from international lenders to service foreign debts. In short, everyone knew that the new administration was handed an economy in recession.

At the time no non-governmental organisation, foreign or locally-funded, including SERAP, raised its voice or challenged the previous administration to give details of how the debts inherited by the Buhari administration were accumulated or explain what the monies were used for.

His Excellency, the former vice-president, Atiku Abubakar, too did not ask any questions about the country’s indebtness or how the monies borrowed were applied from 1999 to May 2015. But as a politician with an eye for 2023, he can raise any issue even if deep in his mind, he knows that he was playing to the gallery for cheap popularity and difficult-to-achieve image rectification.

The DMO indicated that the country’s foreign debts, majority of which were disbursed partially and some dating back to 2005, stood at US$6,592,661,317.29 as at December 2019. Each loan is tied to a specific programme, including polio eradication. Nigeria was recently declared polio-free.

Every loan taken by the Muhammadu Buhari administration is tied to a project or programme as illustrated here. The proceed of the first loan obtained by the administration in December 2015 was used in floating the Development Bank of Nigeria (DBN). The bank is financing businesses to create jobs and boost our GDP.

The second loan in March 2016 was obtained from the Islamic Development Bank for Bilingual Education Project in Nigeria for some states. But it is reflected as a federal government loan. Another loan obtained in 2016 from the Arab Development Bank was spent on the construction and rehabilitation of very useful small earth dams. The project is ongoing.

In August 2017, the Buhari administration borrowed US$1,267,317,586.10 to finance Railway Modernization Project Phase II, the Lagos-Ibadan section. At more than 95 per cent completion at the time of this publication, it will probably be inaugurated while the SERAP case is still in court.

Out of the several loans obtained in 2017 by the Buhari administration is a US$460 million, which is currently being spent on the rehabilitation and upgrading (dualisation) of the Abuja-Keffi-Makurdi road. Any interested Nigerian can visit the site and monitor the progress of work there.

In 2018, the Federal Government accessed a Special Drawing Rights facility worth US$46.4 million to finance Livelihood Improvement Family Enterprises Project in the Niger Delta of Nigeria. The project is up and running, and can be monitored by anyone.

Nigeria obtained many domestic loans for Accelerating Nutrition Results, which is aimed at mitigating the impact of malnutrition in infants, pregnant women and nursing mothers. The project is part of the Sustainable Development Goals. It matters a lot for the targeted population.

From the foregoing, it can be seen that all the 35 loans obtained by the current administration are tied to specific ongoing projects. The proposed US$5 billion budget support borrowing for 2020 is equally tied to specific items. Some of the loans come in as procured equipment, not in cash. One other common feature is that each of the loans is concessionary, attracting low administration fees and payable over decades.

With President Muhammadu in charge, the loans obtained are not lootable because the money is always tied to specific, measurable, clearly defined projects. The donors know this. So, those ignorant of the facts should not mislead fellow citizens by spreading their ignorance in the name of exercising whatever freedom.

Dambatta wrote via [email protected]

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