GAVEL
Adedayo Akinwale writes that the National Assembly’s lack of capacity to check the excessive borrowing by the executive arm of government is fuelling its unbridled appetite for loans
Following the resumption of the National Assembly from its annual recess, the first request from President Muhammadu Buhari was a request for the legislative arm’s approval of a fresh N2.5 trillion loan despite the current debt overhang of N33 trillion.
The request seeks to consider and approve an external borrowing plan amounting to about N2.5 trillion to fund projects captured under the 2018-2021 borrowing projections.
This fresh loan request, if approved, will increase the country’s national debts to over N35 trillion.
Since 2015, Nigeria’s debt has also been increasing in double digits year-after-year, with the highest increase recorded between 2015 and 2016.
According to the Debt Management Office (DMO), public debt stock stood at N12,603 trillion in 2015, N17.360 trillion in 2016, and N21.725 trillion in 2017. In 2018, 2019 and 2020, public debt stood at N24.387 trillion, N27.401 trillion, and N32.915 trillion, respectively.
From the foregoing, the highest increase occurred between 2015 and 2016, while between 2015 and 2020, Nigeria’s public debt increased by 161 per cent, indicating a yearly average increase of 37.74 per cent.
Buhari, in a letter to the Senate President, Dr. Ahmad Lawan, dated August 24, 2021, which was read at the plenary last week explained that the projects listed in the 2018-2021 federal government Borrowing Plan were to be financed through sovereign loans from the World Bank, French Development Agency (AFD), Export-Import Bank of China, International Fund for Agricultural Development (IFAD), Credit Suisse Group and Standard Chartered/China Export and Credit (SINOSURE).
The president said the amount is in the sum of $4.05 billion, €710 million and a grant component of $125 million. He explained that the money would be used to fund federal and state government projects across key sectors such as infrastructure, health, agriculture and food security, energy, education and human capital development, as well as the COVID-19 response initiative.
Between 2015 and 2020, the federal government committed a total of N11.679 trillion into debt servicing, while N8.31 trillion was expended on capital/development expenditure
A breakdown of the amount showed that in 2015 and 2016, N953.620 billion and N1.475 trillion, respectively, were spent on debt service, while N1.841 trillion and N2.203 trillion went into the same line item in 2017 and 2018, respectively.
The analysis of the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper showed that the sums of N2.254 trillion and N2.951 trillion went into debt service in 2019 and 2020, respectively. The N11.679,845,205, 997 five-year debt service profile (2015-2020) also translated to a yearly average of N1.386 trillion.
Coming just three months after the Senate approved $8.3 billion and €490 million loans requested by the president, the alarming rate at which President Buhari continues to borrow money has led the country to sink deeper in overwhelming debt.
The staggering amount has also left many Nigerians worried, making them wondered if the lawmakers are properly monitoring or asking questions on how the loans are spent through oversight.
For instance, the President of the Senate, Lawan, had right from the beginning of the second term of this administration made it clear that anything Buhari desired must be approved because the president always meant well for Nigeria.
With the ‘rubber stamp’ nature of the present 9th National Assembly, the fresh loan request is as good as approved as no one expects the legislative arm to turn question the executive’s unbridled appetite for loans.
The only lone voice that spoke against the loan was former Senate Leader, Senator Ali Ndume who accused the Lawan-led Ninth Senate of denying the lawmakers of the opportunity of debating and deliberating on critical issues, stressing that this has already created a wrong perception of the Senate as a ‘rubber stamp’institution.
While acknowledging that he was not an expert in debt analysis, the senator representing Borno South lamented that the rate the country’s borrowing is increasing is worrisome.
Ndume stated: “It is not wrong, for example, to borrow money from the bank with some reasonable interest to buy a car, especially when you have a family – wife and children to take to school, and you plan to repay gradually with your salary. It is fine, because you cannot afford the money to buy the car on your own. Borrowing to you, becomes a necessity.
“But, when you borrow and you cannot buy fuel, then you keep borrowing to buy fuel, and you give the car as collateral to collect fuel… I don’t support that. It is not the borrowing. And this request for a loan that the president sent to the National Assembly is part of the approved external borrowing plan, but as I said. I am just being very careful”.
He advised his colleagues to take a critical look at the condition of the loan, its purpose, and if necessary look for an alternative or negotiate the terms, rather than hastily approving it just to remain in the good book of the president, even at the detriment of the country.
Ndume added: “Look at what the borrowing is for in the first place – is it necessary? Are the terms good? Borrowing is not a crime but when the rate of debt service increases and I understand it is getting to 80 to 90 per cent, you have to be cautious, you have to look at alternatives.
“There are certain borrowings that are just absolutely necessary, there are some that are not necessary. There are some that can be delayed, there are some that the terms can be negotiated or renegotiated. This is what we should analyse and see if it is necessary. Let us look at the implications and what the money is meant for.
“For example, we have an infrastructural deficit in this country and what we hear when people come to Abuja or when allocations are made, you can’t tell what is done with it”.
Ndume pointed out that he was not happy with the way the upper chamber under the leadership of Lawan was handling the external loan issue.
He said: “Another thing I am worried about is the way the Senate is handling it. The Senate, by definition, is the House of deliberation. When things like this (loan request) comes, you don’t just say, because you want to be good, you approve it. No. You are supposed to look at it critically. Cross the Ts, dot the Is, ask questions, carry the people you are representing along, ask if they agree. Not that we just sit down and just approve it.
“We thought it might be good but the way we do it makes the people we represent to look at us suspiciously. There are situations where the time is short and we need to act fast, then we will have to carry the people along. I feel pain when they say “you people again.”
“You call us rubber stamp and all that. But if there are certain things that can wait, we need to analyse and not rush. We rushed to approve certain borrowings. Up till now, we didn’t get the money. So why did we rush? These are the questions that come to my head most of the time.”
Despite Ndume’s warning, the Spokesperson of the House of Representatives, Hon. Benjamin Kalu told journalists last Thursday that while the House was worried about the debt burden of the country, it would approve the fresh loan request of the President provided the parliament is convinced about what the loan would be used for.
He said, “There is a projected new borrowing of N4.89 trillion. We are looking at approving it on the condition that there is the provision of the details of the borrowing plan and where it is going to because it was reflected in the MTEF.
“Now when you break down this proposed expenditure for 2022 which is at N13.89 trillion, you have a makeup of total recurrence, non-debt of N6.21 trillion, personnel cost by MDAs at N3.47 trillion, and capital expenditure exclusive of transfers of N3.26 trillion; special intervention recurrence amounting N350 billion and special intervention capital of 10 billion. We are thinking these should be approved but subject to debate by the House.”
Indeed, the lack of capacity of the National Assembly to question the Executive Arm’s obsession for loans has encouraged the present administration to engage in a borrowing spree that will plunge the country into serious economic crisis sooner or later.
