Former President Olusegun Obasanjo has warned that the nation is on the verge of bankruptcy and that it would take a great economic reengineering to avert this.
He raised the alarm that with an external debt of $81.274 billion as curtains fall on 2019, the nation’s debt grew by as much as 700 per cent to N24.947 trillion ($81.274 billion), from $10.32 billion in just four years (2015).
Speaking against the massive borrowing that the nation has embarked upon in recent time, Obasanjo who spoke at an event, the ‘Why I am Alive Campaign’ organised by Pastor Itua Ighodalo, in Lagos said that the implication of piling debts is that the country would have to commit half of its foreign earnings to servicing it.
The former president painted a gloomy future for Nigeria should its leaders not take a fresh look at their steps concerning loans, even as he expressed pity on the future generations of the country who would take the brunt of paying for the debt.
According to him, “the issue of Nigeria rapidly sinking under the weight of debt; both foreign and domestic, should bother us all. Everyone knows that our governments are notoriously deficient in serious and adequate discipline and most often lack competence and consistency as well.”
He averred that “no entity can survive while devoting 50 per cent of its revenue to debt servicing.”
He explained that the current budget out of which Nigeria spends 25 per cent to service debt “is not the country’s total earning; a lot of it is also borrowing. Simply put, we are borrowing to service what we have borrowed and yet we are borrowing more.
“I do not need the brain of any genius to conclude that those who use statistics to dig us deeper into debt are our enemies: statistics can be used to serve any purpose, and that is why Winston Churchill talked of lies, damn lies and statistics, meaning statistics can be made master of lies.”
While calling for national dialogue or debate on Nigeria’s short, medium and long-term plans as a nation, Obasanjo said his biggest worry was that, with the scale of debts the country was walking into, “there are already fiscal challenges to meet(ing) our obligations.”
Obasanjo lamented that “Our political leaders have suddenly developed not just a taste for, but a voracious appetite for debt. As usual, most of such debts that are procured are hardly thought. Predictably, the ability to repay such debts is lacking.
“We can extrapolate from this to decide the future impact on our already compromised sovereign existence. Current prognosis suggests that things might get worse.”
Of particular concern to Obasanjo was what he described as government’s “notorious deficiency in ‘serious and adequate discipline’ as well as lack of competence and consistency.”
“We borrowed to build a light rail in Lagos, embarked on the project and a succeeding governor abandoned the project for his full term of four years at 65 per cent completion when he should have started paying down on the loan. This light rail is important for the whole of Nigeria not only with respect for man-hours of Gross Domestic Product (GDP) that would have continued to be saved but because such loans are federally guaranteed. At the same time, there are bus terminals that were presidentially declared open but not used. This type of situation was not in Lagos alone but variously in other states like Rivers and Cross River. And the problem is not limited to states.”
Obasanjo kicked against alleged plans to demolish the Murtala Muhammed International Airport and rebuild from the scratch. He noted that procuring debt required clarity of purpose which must be linked with the ability to repay principal and interest as and when due.
He noted creditor’s special delight in debtors’ inability to service debts as they seek to impose stipulated sanctions and later appear friendly by offering to restructure the loans.
“So, overnight, a debt of $1million will become $5 million in spite of the fact that over time you had repaid $1.2 million. I say this without fear of contradiction. I have borrowed from banks as a private sector operator and I have borrowed from multilateral institutions as a political leader. So, I believe, you would understand my fears and experience about jumbo loans and my agony in getting rid of our external debts and developing a sustainable approach to addressing our domestic debts.”
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