Do we need the loan? The National Assembly must be circumspect
In a rehashed letter recently read on the floor of the Senate, President Muhammadu Buhari sought approval for an external borrowing plan of $29.96 billion to execute key infrastructural projects under the “2016 – 2018 external borrowing plan”. In the letter, the president recalled that he was merely resubmitting a request sent to the 8th National Assembly that was rejected under the previous leadership. While there is ordinarily nothing wrong with the idea of borrowing, we believe the National Assembly should be circumspect in examining this request that has serious economic implications for the country.
Speaking at the International Monetary Fund (IMF) and the United Nations Working Together Conversation last year, UN deputy secretary-general, Ms Amina Mohammed described our national debt profile as worrying. “In my country, the level of debt is worrying, but it is happening all over Africa. If that is the way we want to go, we need to sit down and have a better conversation….” Ms. Mohammed said.
That conversation is yet to be held in Nigeria despite the huge burden of debts. For instance, while there may be compelling needs for some external borrowing, we believe it is first important to close all loopholes and drainpipes in the system; drastically restructure and rationalise government agencies, most of which have duplicated functions and reduce the huge overhead cost that consumes a large chunk of annual budgets. If we ignore all this and borrow, such funds would never be well utilised and properly channeled, while the nation would be saddled with huge debts to service. Therefore, we query the wisdom of borrowing 30 billion dollars, especially at this period.
Indeed, while meeting with the leadership of the senate when this idea was first mooted in 2016, the then Finance Minister, Mrs Kemi Adeosun painted a pathetic picture of our national economy. She said: “By the time we pay salaries, pay debt, nothing is left. So, for these next few years, I think we have to take a gamble as a nation. We must take a gamble that ‘look, if we fix our roads, fix our power, can we generate more than that additional cost?’ she asked. Thus, from the outset, the whole idea was a big gamble.
We cannot deny the need for the injection of funds to help reflate the economy, stimulate consumption and production, create jobs and engender economic growth. But we would like to see the fine details of these deals before our nation is committed financially. Some of the questions that remain unanswered are: Does the Buhari administration have on its side skilled officials that can negotiate the fine lines of the ‘conditionalities’ for such heavy loan? If we borrow such a jumbo sum under the current situation, what is the guarantee that the money will not go down the drain?
At best, such a loan deal may buy the nation two to three years of some feel-good situation but then, what follows will be the problem of paying back. This becomes even more challenging against the background that most of the projects listed for funding under the proposal are neither regenerative nor capable of bringing enough returns on investments. We urge the National Assembly to critically interrogate all the issues in the presidential proposal before taking a decision.