Killing Nigeria with Binge Borrowing


Ring True

BY Yemi Adebowale;; 07013940521 (text only)

The latest in the string of borrowing being celebrated by the Buhari administration is the $150 million loan approved by the World Bank for the country’s mining sector. The Minister of Solid Minerals, Kayode Fayemi announced it with fanfare about two weeks ago after a meeting with President Muhammadu Buhari. The government is also negotiating $1.25 billion in budget support from the World Bank. This is aside the $575 million already approved by the same bank for the rehabilitation of the North-east.

The list of foreign borrowing by the federal government is growing by the day. There is $1 billion African Development Bank loan. Of this amount, $600 million had been drawn. There is $1 billion Eurobond, with an additional $500 million expected from the Global Medium Term Note Programme. The China Exim bank is expected to provide $5.8 billion in the next few months, once all outstanding issues connected with securing the loan are addressed. It is on record that over 30% of the 2017 budget will be funded with foreign loans. With the way things are going, the federal government may end up with close to $10 billion foreign loans by the end of this year. Perhaps, this would have been higher if the National Assembly had not truncated plans to borrow another $30 billion.

The burden on our star-crossed generation and indeed future generation is weighty. Already, a huge part of the revenue that the federal government ought to be using for poverty alleviation and infrastructural development has been going into debt servicing, yet, we are sustaining the binge borrowing.
Just recently, the International Monetary Fund estimated that Nigeria spends 66 per cent of its tax revenues on servicing debts. The Emir of Kano, Muhammadu Sanusi II was right when he urged the federal government to slow down on its borrowing because it is spending such a huge part of its revenues to pay interests on debts. The Emir remarked: “The Federal Government of Nigeria is spending 66 per cent of its revenues on interests on debts, which means only 34 per cent of revenues is available for capital and recurrent expenditures. That model cannot work. If you look at the 2017 budget of the Federal Government, I sometimes wonder what Nigerian economists are doing? In the 2017 budget, the amount earmarked for debt servicing is in excess of the entire non-oil revenue of the Federal Government, but that is not the problem. The problem is that it is a budget that is even going for more debts.

“Borrowing has reached its limit and government should therefore look for ways to attract investments. Growth can only come from investments. It cannot come from consumption.  It cannot come from government balance sheet. It cannot come from borrowing because you cannot borrow unsustainably.”
The states are also into binge borrowing. Many of them have accumulated foreign and domestic loans far beyond their repayment capacities. This is why states like Osun, Kogi, Imo, Kwara, Oyo and Benue can no longer meet basic obligations to their citizens; civil servants inclusive. It is preposterous that Osun State is struggling with N147 billion domestic debts as at December last year. Juxtapose this with a well-managed state like Anambra with just N3.9 billion domestic debt during the same period under review. The poverty in Osun State is frightening despite taking so many loans. So, what did Aregbesola’s Osun State do with the massive N147 billion domestic loans? This is a story for another day. Back to the binge borrowing, Lagos State had a local debt stock of N311.7 billion as at December 31, 2016; Delta followed Lagos with N241.3 billion in local debts. Akwa Ibom came third with N155.4 billion; Rivers with N142.4 billion and Bayelsa with N140.1 billion. By the time the latest statistics of the foreign debts of these states are added and released, many will be stunned.

Statistics from the Debt Management Office show that the country’s total debt liability had risen to N16.29 trillion by June 30, 2016. As at June 2015, Nigeria’s total debt stood at N12.12 trillion. This means that within one year (July 2015 to June 2016), Nigeria’s total debt rose by N4.17 trillion, or 34.41 per cent. A breakdown shows that external debt by the federal and state governments stood at $11.26 billion or N3.19 trillion as at June 30, 2016. The domestic debt of the federal government alone stood at N10.61 trillion as at June 2016, up from N8.4 trillion in 2015. This indicates that within 12 months, federal government’s domestic debt profile rose by N2.21 trillion or 26.31 per cent. The domestic debt of the states stood at N2.5 trillion at the end of June 2016, whereas it was N1.69 trillion in July 2015. This shows that within a period of one year, the domestic debt of the states rose by N810 billion, an increase of 47.93 per cent.

So, what has the masses of this country gained from this massive borrowing in terms of infrastructure and poverty alleviation? Honestly, I don’t think we have gained that much; not with the hunger, disease, poverty, unemployment and decay ravaging the country. Just look around you and you will see the level of decay in virtually all sectors of our economy – health, education, water, roads, power, security and the rest of them.
The way our governments at all levels celebrate these loans often leave me dejected. They create the impression that it would be a quick fix for all our problems. Unfortunately, it does not often turn out that way. Just imagine the completed $1 billion Eurobond sale being turned into an achievement. The oversubscription to the tune of $ 7.8 billion at an interest rate of 7.88% was celebrated as if we are getting free money. For those who don’t know, by the time this country exits this bond, we would have conservatively paid an additional $1 billion as interest. This bond was issued in dollars; therefore Nigeria must pay back in dollars. The interest could go higher as the Naira plummets. So, they have simply pushed Nigeria to continue wallowing in more debts.

Olisa Agbakoba’s Landmark Suit
Former president of the Nigerian Bar Association, Olisa Agbakoba has taken what I consider a landmark step towards addressing the neglect of the South-east. This week, he filed an application before a Federal High Court in Enugu, challenging what he called the total neglect of the South-east zone. He is also asking for N1 trillion as reparations to the states in the South-east. The fundamental rights class action before Justice A. R. Mohammed is on behalf of himself and the South-east on the grounds of discrimination, “pursuant to Section 42 of the 1999 Constitution (as amended)”. Agbakoba is asking for compensation on the grounds of total neglect of the geo-political zone by the federal government, in terms of infrastructure and general federal presence.

This former NBA president argues that the federal government has left the Niger Bridge to collapse and failed to build the 2nd Niger Bridge, making him feel isolated from other parts of the country and causing him apprehension about disaster on crossing the existing bridge. He is also seeking an order directing the federal government to forthwith, put all its machinery, including, but not limited to legal and political apparatus, in motion, with a view to urgently creating two additional states in the South-east geopolitical zone. This, according to the former NBA President, will bring to an end the discriminatory practices against the area, in terms of parliamentary representation, political and judicial appointments and federal allocation.
Some are cynical about Agbakoba’s case and the chances of getting result for the South-east in court. In fact, somebody told me last week that the Lagos lawyer was simply wasting his time in court on this. I don’t think so. I think all forces of good should stand by him and use the opportunity to draw greater global attention to the neglect of the South-east. The governors of the region must also rise up in support of this laudable project.

Still on Sambo Dasuki’s Illegal Detention
It was soothing seeing the former military governor of Kaduna State, Abubakar Umar, joining the voice clamouring for the release of the former National Security Adviser, NSA, Sambo Dasuki on bail as granted by the courts of our land. For this retired Colonel, the continued detention of the former NSA is beyond anti-graft war, stressing that Dasuki was only being punished because of his loyalty to Jonathan. “It is over one year since three law courts, including ECOWAS Court granted bail to Dasuki. The Federal Government has however refused to release him citing the untenable excuse of the grievous nature of his offence. Our extant constitution is quite clear on this issue.

“The federal government does not have the power to determine which offence is bailable or whether an accused person is deserving of bail. It should, therefore, obey courts’ decisions and release Dasuki without any further delay. His unlawful detention, campaign of calumny and pre-trial publicity make it impossible for him to receive a fair trial. The only explanation one can find for Dasuki’s lengthy detention without trial is that he belongs to the wrong camp. He also has the misfortune of having served as National Security Adviser to the much-vilified Nigerian president of Ijaw extraction.”
Umar’s intervention is a good one. I have written severally for an end to impunity in our dear nation. The federal government has been holding Dasuki illegally since November 2015 despite court rulings that granted him bail. This must not continue in an era of democracy. He must be allowed to enjoy his bail in conformity with the Rule of Law.

The Overzealous Security Man Called Bashir Abubakar
The fanatical Chief Security Officer (CSO) to President Buhari, Bashir Abubakar clearly needs special training on the principles of democracy, freedom and free press. A man who still thinks we are in a military era should not be seen working this close to a democratic President. I am still struggling with the fact that Abubakar ordered the expulsion of a Punch reporter from the Presidential Villa on Monday. It was reported that he had earlier summoned and grilled the reporter for about three hours and thereafter forced him to write a detailed statement of his knowledge about the content of the published stories before his accreditation tag was seized. Prior to the action on Monday, I learnt that this CSO had been constantly harassing State House Correspondents. Who the hell is Bashir Abubakar? He obviously went beyond his brief. I am glad the Presidency swiftly ordered the reversal of the expulsion and distanced itself from the action of this clown. His Principal has to go beyond reversing the expulsion. Abubakar has no business staying a day longer in Aso Rock. He should be substituted immediately. We must all rise up against this new anti-democracy force.