AT last, the presidency has made good its intention to represent the bill seeking the legislative approval for a borrowing plan involving $29.96 billion. The action is in tandem with a promise made by the presidency more than two years ago when the request met a brick-wall in the Senate.
Then, the presidency had declared that it would be re-present a detailed request to the Senate to borrow $29.96 billion to finance the 2016 budget since the upper chamber hinged its opposition to the request because inadequate information. “You notice that what the Senate said was that it needed more details about that bid for loan. It was not that it rejected it completely,” the presidential spokesman, Mr Femi Adesina, had said. “If on the basis of that you do not represent, it does not show you as a serious government in the first place. This is not a flippant government and before it asked for that kind of loan, it did its homework properly and if the senate says it needs more details that will be provided and represented,” he added.
It is presumptuous if the document represented by President Muhammadu Buhari fully captured the demands of the eight Senate in turning down the initial request made about two years ago. The extent the letter addressed the issue of the ‘detailed information’ that the Senate talked about for its action then remain to be seen. Suffice to say that in his letter dated November 26, 2019 on the matter, President Buhari stated that the eighth National Assembly approved only a part of the External Borrowing request forwarded to it in September 2016. The action of the then Senate under Dr Bukola Saraki, the president claimed, hindered the implementation of critical projects spanning across the mining, power, health, agricultural, water and educational sectors.
The letter read: “Pursuant to Section 21 and 27 of the Debt Management Office (Establishment) Act, I hereby request for Resolutions of the Senate to approve the Federal Government’s 2016 – 2018 External Borrowing plan, as well as relevant projects under this plan. “Specifically, the Senate is invited to note that: While I had transmitted the 2016-2018 External Borrowing Plan to the Eighth National Assembly in September, 2016, this plan was not approved in its entirety by the Legislature, only the Federal Government’s Emergency projects for the North East, (Four (4) States’ projects and one (1) China Exam Bank Assisted Railway Modernisation Projects for Lagos – Ibadan Segment) were approved, out of a total of thirty-nine projects.
On the ground the eighth Senate cited for turning a blind eye to the initial request two years ago, President Buhari said he had directed the Federal Ministry of Finance to be on standby for the ministry of finance “Accordingly, I have attached, for your kind consideration, relevant information from the Honourable Minister of Finance, Budget and National Planning the specific outstanding projects under the 2016 – 2018 External Borrowing plan for which legislative approval is currently sought. I have also directed the minister to make herself available to provide any additional information or clarification which you may require to facilitate prompt approval of the outstanding projects under this plan.”
The request is still eliciting divergent views across board, with most of the people interrogating the issue seriously concerned about the grave implications because of the rising debt profiles of the country. The International Monetary Fund (IMF) and other reputable financial institutions had lately cautioned Nigeria on the steady rise in its external debts which some experts claim stands at about N36.5 trillion. Nonetheless, the Federal Government has consistently said the nation’s debt portfolio does not pose any threat to the economy. In fact, a former minister in the last political dispensation strongly dismissed the pervasive fear over the mounting debt. “We don’t have a debt problem, we have a revenue problem,” Udoma Udo Udoma, who was the Minister of Budget and National Planning, had said.
However, the relevant statistics obtained from even Federal Government agencies sharply contradicted such official views and stance on the nation’s growing debts. The figures from those agencies like the National Bureau of Statistics (NBS) tend to corroborate the shades of opinions, anxiety and concern across the country. For instance, the Debt Management Office (DMO) put Nigeria’s debt portfolio at N9.61 trillion as at 2018. According to the DMO, Nigeria’s debt stood at N21.73tn as of December 31, 2017, while the figure as of June 30, 2015 was N12.12tn. The implication was that within 30 months, July 2015 to December 2017, Nigeria’s debt leaped by N9.61tn, that is, 79.25 per cent. According to the DMO statistics, the debt stock as of the end of 2017 showed that external debt was 26.64 per cent of the portfolio, up from 20.04 per cent in 2016; while the domestic debt was 73.36 per cent, down from 79.96 per cent in 2016.
It is recalled that the Olusegun Obasanjo presidency had succeeded in securing a debt forgiveness from the Paris Club, a cartel of European creditor-nations in 2005. But, to justify the loans it has borrowed so far, the present Federal Government said a lot of achievements had been recorded in critical sector of the national economy after injecting huge funds into roads, power, agriculture, and social investment schemes, among others.
“Over N300 billion investments in the rice value chain. Between 2016 and 2018, eight new rice mills have come on-stream; and Nigeria’s paddy production and productivity has doubled compared to 2014 levels. Nigeria’s milled rice production has increased from 2.5MT to about 4MT, and rice exports from Thailand to Nigeria dropped from 1.23 million MT in 2014 to 23,192 MT as of November 2017,” the presidency stated in its Economic Recovery and Growth Plan (ERGP) launched by President Buhari in 2017.
But, the acting national chairman of the Social Democratic Party (SDP), Professor Tunde Adeniran, warned that the latest action of President Buhari to borrow $29 billion could further compound the economic woes. According to Adeniran, the move is capable of mortgaging the future of the country. He said the primary concern of the executive and the legislature should be a collaboration to salvage the economy towards bringing relief to the hapless citizens.
In a presidential democracy, the need to know cannot be compromised. It is the right of every citizen to know not only that the country wants to borrow but the details of why and for what. The general mood and expectations of Nigerians now are that there should be no borrowing but creative thinking to regulate the economy and solve the problems of hunger, insecurity and basic needs. With the necessary political will and socio-economic discipline, the Nigerian economy can be properly managed without pursuing the path of excessive borrowing. The executive and the legislature must not plunge Nigeria into an ocean of debt from which there would be no rescue,’ Professor Adeniran cautioned.
Similar view was expressed by Chief Ray Nnaji, a former national auditor of the Peoples Democratic Party (PDP). He said rather than giving a nod expressly to the presidential request, members of the National assembly should scrutinise painstakingly and act based on national interest and the merit or otherwise of the request so that the president does not further plunge the nation into economic mess.
The former Commissioner for Youths and Sports in Enugu State further said: “The current National Assembly members should find out why the eighth National Assembly rejected the loan request. As it is, the country is in a bad shape economically and they should not be pushed by anybody to aggravate the hopelessness in the country. Will the loan not going to cause more inflation? Many people are suffering and the country needs good economic policies that will reduce this hardship? The present National Assembly is perceived by many to be a rubber stamp to the president and they should try to be independent by looking at the loan request critically for the interest of the masses. This will change their image.”
Some experts drawn from the financial sector and Civil Society Organisations (CSOs) also warned members of the National Assembly against approving the $29.96 billion external borrowing proposed by the presidency without due diligence. They specifically expressed grave concerns over the failure of the successive administrations to justify the current country’s total debt stock worth over N25.7 trillion as at June 2019, according to the information reeled out by the Debt Management Office (DMO) during an investigative hearing held at the instance of the House Committee on Public Accounts. They noted that Nigeria had in October 2005 secured a final agreement with Paris Club for debt relief worth $18 billion and an overall reduction of Nigeria’s debt stock by $30 billion. Rather than dragging the country into another debt trap similar to the Paris Club, they urged the government to provide the enabling environment for organised private to provide required coastline for infrastructural development through a robust Public Private Partnership (PPP) arrangement.
Business Development Director Africa for Esilknet, Mr Tony Ejinkeonye, harped on the need to address critical challenges facing the country in relations to the endemic corruption and policy somersault before embarking on another borrowing. While expressing concern over the conditions attached to the borrowings, Ejinkeonye, observed that: “Debt and interest payments are about 35 percent of the disbursements in the 2019 budget. Taking another substantial loan would further increase the payments. “Our problem has always been the poor implementation of policies and we have a weak institutional structure that gives rise to non-implementation of crucial policies and corruption. Government needs as a matter of urgency plug the numerous leakages in the system before anything else. The Federal Inland Revenue Service (FIRS) and Customs Service, as reported, have collected higher revenues than ever before. Oil revenues, various inflows etc of government, where are they? My advice is that this is ill-timed and forebodes a mean future for all of us.”
Another expert, Mrs Vivian Bellonwu-Okafor, who is of the Social Action, frowned at the level of borrowing, accusing the government of failing to fulfill its cardinal part of pre-election promises to the nation. She claimed: “The request by the president to borrow over $29billion is not just appalling but deeply disturbing. This is because this was the same party that in campaigning to come to power took a bitter swipe at the ballooning debt profile of the country then which even at about N10 trillion, considered it unsustainable for the country and pledged, and if voted into power would not just commit itself to drastically reducing the volume but would also terminate unsustainable borrowings. Merely months down the line and indeed since coming into power, the country has shockingly witnessed not just a total renege on the promise to reduce its debt profile, but instead and upward swing into massive borrowings. The records are there: we have borrowed from China, from the World Bank, from the Islamic Bank, from Green Bond, from International Development Bank, in fact, practically from everywhere possible.”
Bellonwu-Okafor advanced further reasons she vehemently objected to the latest request by President Buhari. She cited the case of a security projected initiated by the last federal administration that was raised in the National Assembly by a minister. “Indeed, the country is yet to recover from the admission cum revelation made by no less a person than the Minister of Finance, Amina Zakari, before the Budget Defence Committee of the House of Representatives that the loan amounting to millions of dollars, borrowed from China for Abuja CCTV, cannot be accounted for. She openly admitted that the project was not done, while the country is compelled to repay the loan. And Nigeria has been doing so till date, it is just unfortunate. And while the admission by the minister shocked many, for us, we were not surprised.
“This is something we had known before and had indeed raised several alarm concerning. We have repeatedly called on the National Assembly to place moratorium on any further approval of loans and indeed go a step further and institute probe into the retinue of loans acquired on the name of Nigeria. This is because, as we know it, and by unassailable facts available to us, the projects for these loans are largely not done while the monies are simply looted by the respective public officials and their cronies. It is very sad to note that even in the face of the confession of malfeasance and corruption in the CCTV loans by the Minister of Finance, no action whatsoever had been taken to bring the culprits to book. Instead, the president takes up another humongous borrowing request to the National Assembly. I beg to ask; how does one expect to be doing the same thing repeatedly and yet expect to get different result? Things simply can’t change this way and it is obvious that tantrums by leaders as working for Nigeria to change is simply platonic.”
A tax professional, Mr Wole Obayomi, is equally appalled by the request for a fresh loan by the government. Instead, he said the government should provide the enabling environment for the organised private sector to thrive in order to secure the required capital to finance infrastructure. He underscored the need for the present administration to showcase who it utilised the $4 billion Eurobonds raised at the International Capital market in order to gain public confidence.
Obayomi said: “Borrowing is generally not a bad thing in itself. Whether it makes sense or not will depend on why Government is borrowing and what it is borrowing for. If it is borrowing to develop infrastructure which will improve quality of life and spur further productivity that will generate the revenue to pay back the debt, then it makes sense. The trouble with us, however, is that this is not always the case. For instance, the government has raised probably $4 billion in Eurobonds in the last few years but, as far as I know, there is no capital project to show for it.
“And even to finance infrastructure, the government doesn’t always have to borrow if it can create the enabling environment to attract private capital to the country under public-private partnerships. What is more, if only the government can remove all the constraints hobbling the private sector and create a positive enabling environment that is capable of attracting investments from within and outside Nigeria, businesses will thrive, the economy will grow and government will be in a position to mobilise domestic resources, in the form of taxation to fund its budgets and depend less on loans. With external debt in the region of $26billion, another $29billion foreign debt is one too many, no matter over what period the loan will be spread. We can do without it if the government can focus on unleashing the power of private capital.
“After all, we were practically without foreign debt about 10 years ago when our $32 billion external debt inherited by the Obasanjo administration in 1999 was partly forgiven and partly paid. Our foreign exchange reserves and excess crude account then had balances in excess of $60 billion. Today our foreign exchange reserves is less than $40 billion and we have very little in our excess crude account. This is not good for our country and this is not a time to accumulate loans upon loans.”
Similarly, the executive director of the Civil Society Legislative Advocacy Centre (CISLAC), Mr Auwal Musa Rafsanjani claimed that administration incurred more than $85 billion as debt within four years.” Recall that in October 2005, after a rigorous campaign for debt pardon, Nigeria was relieved of external debt. Some of the creditors under the Paris Club wrote off $18 billion or 60 percent of the $30 billion Nigeria owed the cartel. This relief was granted under what Nigeria described as economic reform. The deal was concluded in April 2006, when Nigeria made its final payment and its books were cleared of any Paris Club debt. It is disturbing to see successive administration incurring more debt instead of sustaining the commitment to reform, as one of the pre-requisites for the debt relief by Paris Club.We are seriously worried by the intensity of debt incurred by the present administration without tangible impact on the critical sector of the economy. It will be recalled that in 2015, President Muhammadu Buhari had revealed that the administration inherited a debt of $7 billion; it is however, surprising to gather that the administration has incurred over 85 billion dollar as debt within four years.Given the Federal Government present debt service interest which stands at 58 per cent of $66 billion total debt, if the existing request to borrow additional $30 billion is approved by the National Assembly, debt service will gulp 80 per cent of the Federal Government’s revenue.”
According to the CISLAC director: “Recently, President Buhari, while presenting a spending plan of N10.3 trillion to the National Assembly for the 2020, he declared that Nigeria will use nearly a quarter (N2.5 trillion) of the budget to repay local and international debts. How can the Federal Government efficiently deliver on effecting positive changes in the nation’s critical sector with such projection? This calls for serious rethink and constructive questions on our debt profile and the utilisation of the debts so far. More importantly, in Africa, Nigeria remains the most indebted nation. With $66 billion in external debt, a total of 86.9 million Nigerians presently living in extreme poverty which represents nearly 50 per cent of its estimated 180 million population.
“Also, as Nigeria faces a major population boom—it will become the world’s third largest country by 2050—it’s a problem that will likely worsen. Instead of being a strong candidate for debt relief, the major part of our oil revenues slips through the cracks of debt service, annually. High cost of debt service constitutes a major impediment to adequate budgetary allocation to the critical sector of the economy.There is need for serious rethink over Nigeria’s mono-economic practice and innovative but holistic measures to enhance our revenue generation capacity to finance critical sector and prevent high debt service that backpedals the nation’s socio-economic prosperity.”
With diverse interest groups and politicians expressing concern about the likely negative implications of the loan because of the already heavy debt burden of the country, the focus is now on the National Assembly on how it treats the request. Already, some concerned citizens have expressed personal opinions on how the ninth National Assembly relates with the executive arm of government on issues especially that evoke strong public reservation.
and then