Nigeria’s Terrifying Debt to Revenue Ratio

Nigeria’s Terrifying Debt to Revenue Ratio

Ring True

By Yemi Adebowale;; 07013940521 (text only)

The federal government currently spends 69 per cent of its revenue on servicing both local and international debts. This is a fact. I thought government officials would come out to dispute this figure when the former Vice-President (Africa) of the World Bank, Mrs Oby Ezekwesili unveiled it. It did not happen. It means that 69 per cent of the expected revenue in this year’s federal budget will go towards debt servicing. It is also pertinent to note that in the 2019 budget proposal still being worked, over N2.1 trillion has been set aside for debt servicing, yet, the government is not disturbed. The binge borrowing continues. This is why I found it shocking that the National Assembly approved FG’s request to raise $2.8 billion in Eurobond to fund the 2018 budget.

With Buhari government’s binge borrowing, in few years, Nigeria may be plunged into insolvency by the huge repayments commitments.

Ezekwesili, a former minister, was apt when she advised government to suspend the Eurobond plans because “it is not good for the health of the economy.”

The former minister added that borrowing more was not a sustainable step as the country was not generating much revenue to cater for its critical development needs.

She remarked: “The Federal Government is digging in instead of digging out. Already, the debt service to revenue is so high. Today it is 69 per cent. 69 per cent of revenue is used to service our debts.

“That is not a sustainable situation. I see the government quote all the time `Debt to GDP ratio’, but that is like a blunt instrument in an environment where your GDP is not reflective of your productivity.

“We measure your productivity by the revenue the GDP generates in the form of revenue of government that comes as a result of the GDP. Your debt to GDP is three per cent and you think that gives you the legroom to borrow and borrow. No, that is not your instrument. Your instrument is your debt service tool, which is the revenue.” 

Ezekwesili urged the government to explore innovative ways of increasing revenue and deploying its limited resources only in those areas with massive impact on development, instead of accumulating more debt.

Ezekwesili is an experienced economist. I sincerely hope that the baby economists around our President will learn and act on her incisive analysis, before binge borrowing cripples this country.

It is depressing to note that Nigeria’s debt has been on the rise in the last three years, amid so much poverty. This country has very little to show for this binge borrowing.

The federal government which accounts for over 90 per cent of Nigeria’s total debt profile has been very reckless. The Buhari administration is evidently looking good for the unenviable record of being the most notorious for binge borrowing in the 58 years’ history of this country. Within its first 29 months, it took foreign loans of almost $7 billion. There was a $150 million World Bank loan for our mining sector.

There was also a $1.25 billion in budget support from the World Bank. This is aside the $575 million approved by the same bank for the rehabilitation of the North-east. There was a $1 billion loan from the African Development Bank. There was a $1 billion Eurobond issued, with an additional $500 million from the Global Medium Term Note Programme. The China Exim bank is expected to provide $5.8 billion. There was $300 million raised through a Diaspora Bond issued in June 2017. Perhaps, the debt would have been higher if the Senate had not truncated plans to borrow another $30 billion. 

I can clearly remember the Chairman, Senate Committee on Debts, Shehu Sani, remarking that if Nigeria must borrow, it must borrow responsibly: “If we must bequeath to the future generation a pile of debt, it must be justified with commensurate infrastructural proof of the value of the debt. The payment plan of this debt will undoubtedly last the length of our lifetimes and possibly beyond. We must leave behind a legacy that will appease and answer the questions the next generation of Nigerians will ask.”

The burden of these loans on our star-crossed generation and indeed future generation is weighty. Many of the states have accumulated foreign and domestic loans far beyond their repayment abilities. This is one of the reasons many can no longer meet basic obligations to their citizens.

The way the federal government celebrate these loans often leaves me crestfallen. They create the impression that it would be a quick fix for all our problems. Unfortunately, it does not often turn out that way. What hapless Nigerians have been gaining from these massive borrowings are poverty, hunger, disease, malnutrition, unemployment and infrastructure decay.

Minimun Wage, Maximum Problem

Our sliding economy can’t cope with the persistent strike by organised labour over their demand for a new minimum wage. Last month, the nation’s economy suffered greatly during the warning strike that lasted four days. Labour is again threatening to embark on a fresh nationwide strike from November 6. I get confused whenever labour says that government is unwilling to implement a new minimum wage for workers. So, the federal government should arbitrarily decree a new minimum wage for all levels of government and the private sector? It is obvious that there was no agreement by the tripartite committee involved in the negotiation for the new wage. For example, the Nigeria Governors Forum had openly stated that many  states lack the capacity to pay the new wage proposed by labour.

I am not in support of the current miserable minimum wage. I am just opposed to persistent strike as the only option for eliciting positive response.  So, labour should intensify the negotiation instead of threatening the rest of the country with strike. The masses of our people suffer the most when it happens. This country does not deserve this kind of punishment at a critical period when our economy lays prostrate. Millions of Nigerians have lost their jobs, while industries are gasping for breath; yet, labour keeps talking about going on strike. Labour should also learn to sponsor/endorse candidates capable of improving the wellbeing of the working class.

On the flip side, I have never been a fan of the retention of minimum wage in the Exclusive list of our constitution. Our lawmakers should work towards moving it to the concurrent list or delete it from our constitution, else this crisis will persist. All levels of government and the private sector should be allowed to determine their minimum wage. It does not make sense for a state like Ekiti, to be compelled to pay the same minimum wage with a buoyant state like Lagos. It is just nonsense. This is one big issue our lawmakers must tackle during the next round of constitution amendment.

Still on the Tyrannical Executive Order 6

The federal government has brazenly shown that it would tame opponents with the ludicrous Executive Order 6 which gives President Muhammadu Buhari the right to arbitrarily seize people’s assets. Buhari has gone further to impose restrictions on the movement of unnamed 50 high profile Nigerians and placed them on security watch list. Are we back to a military government? No section of our constitution gives the President such executive authority. This is an intrusion into the principles of separation of powers and must be opposed by all. The laws of this country did not authorise the Executive to restrict the movement of criminal suspects.

I was really impressed by the courage ofhuman rights activist and Lagos lawyer, Mr. Femi Falana, in opposing this illegality. He described the restrictions on the 50 Nigerians as repressive, adding, “the President’s Executive Order cannot restrict the movement of any Nigerian citizen.”

Falana declared: “The travel ban is a sad reminder of the reckless placement of political opponents on security watch list and seizure of their passports by the defunct military junta… the directive to place the 50 high profile suspected persons on watch list and restrict their movement is highly superfluous, completely unwarranted and totally uncalled for. In fact, it is an ingenious design to expose the Buhari administration to ridicule… For the umpteenth time, I am compelled to caution the Buhari administration to wage the war against the menace of corruption within the ambit of the rule of law.”

It is pertinent to note that the Supreme Court had in 1999 ruled that the right of citizens to freedom of movement guaranteed by Section 41 of the Constitution and Article 12 of the African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act could not be abridged or abrogated by the Executive outside the procedure permitted by law. 

Patriots must proceed to the appellate court and challenge the Federal High Court’s ruling upholding the validity of the controversial Executive Order 6. This judgement can’t stand in a higher court. 

Boko Haram’s Unending Pain

Kalle village located about 17 kilometres from Maiduguri is now a ghost community after Boko attacked it last Saturday, killing 12 farmers. Residents of three other communities – Dala-Malari, Fuguri and Femari –  in Jere Local Government Area have also been displaced after the terrorists attacked them. Three people were killed, with about1300 others displaced, when the insurgents sacked the villages in Jere LG.

Two weeks back, I woke on a Tuesday morning with my pillow soaked in tears; tears for another brutally killed victim of the coldblooded Boko Haram; tears for traumatised residents of Borno and Yobe states, who are persistently deceived by a government that claims to have decapitated the rampaging terrorists.

Hapless Hauwa Mohammed Liman, a Red Cross worker in the custody of Boko Haram, was murdered, despite numerous appeals for her freedom. This is indeed an act of despicable cruelty. Hauwa was the second Red Cross worker to be killed by the terrorists. Saifura Khorsa was the first to be slayed. They were abducted by Boko Haram from the IDP camp in  Rann on March 1.

Few months back, I dedicated my column to the abducted aid workers, urging the federal government to rescue them. These patriots defied all pressures to go and assist IDPs in Rann. According to the Red Cross, “Hauwa and Saifura’s deaths are not only a tragedy for their families, but to thousands of people in Rann and other conflict-affected areas of north-east Nigeria where accessing health care remains a challenge.

“How can it be that two female health care workers were killed back-to-back? Nothing can justify this. Hauwa, 24, was full of life, became a midwife at an early age and people who knew her described her as a sociable, dynamic and enthusiastic woman who was loved by family and friends. She was truly dedicated to her work helping vulnerable women in her family’s home area.”

It is disheartening that the federal government failed these patriots. The international community has to step in to save Alice Loksha, the last aid worker being held by Boko Haram. The federal government can no longer be trusted to do this. Of course, they must also not forget Leah Sharibu and the other Chibok girls still in captivity. The rest of the world must assist Nigeria to secure freedom for these hapless girls.

The murder of Saifura and Hauwa, and the persistent attacks across Borno State is a clear confirmation that the terrorists are alive, kicking and control territories in Nigeria.  The war against Boko Haram is evidently sagging while the Buhari administration continues with its sham story of success against the terrorists. “Degraded” Boko Haram fighters are the ones taking the fight to our soldiers.

Kaduna State Needs a Dispassionate Leader

Residents of Kasuwan Magani community in Kaduna State are still burying their loved ones. Scores of people were killed in this area about two weeks ago, following clashes between the natives and Hausa settlers. Many were also killed in various parts of Kaduna metropolis three days after the Kasuwan Magani massacre.

Tension has always been very high in this state. There is so much mistrust among the diverse people here. Unfortunately, Kaduna State lacks a dispassionate leader; one capable of uniting these assorted people. The truth is that Christians, natives and other minorities across the state have no speck of trust in Governor Nasir El-Rufai. I concur that this man clearly lacks the capacity to govern a multi-ethnic and multi-religion society like Kaduna State. El-Rufai openly and persistently displays his prejudices, particularly during attacks in Southern Kaduna. This is why this state is on fire again.

The last three years have been horrendous, with so many communities in Southern Kaduna torn into shreds by bandits and herders. The only way forward is for this state to have a dispassionate governor, who would treat all parts of the state and all faiths equally. They need a governor to unite them and draw strength from their diversity. I believe that the people of Kaduna State know what to do in 2019.

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