FG’s Reckless Debt Servicing Obligations

Ring true BY Yemi Adebowale

Email: yemi.adebowale@thisdaylive.com

Last year, the federal government spent 76 per cent of its revenue on debt servicing. This may jump to 92 per cent this year as predicted by the International Monetary Fund (IMF). Nigeria’s debt-servicing obligation in relation to its revenue is far above World Bank’s suggested 22.5 per cent for low-income countries like Nigeria. The Buhari government has evidently been binge-borrowing. Last year, it took $6.18 billion external loan to finance the N5.6 trillion deficit in budget 2021.

Already, there is a provision for N6.258 trillion borrowing in the 2022 budget. When Nigeria’s public debt portfolio was N32.92 trillion in December, 2020, federal government’s share was N26.91 trillion, leaving just a balance of N6.01 trillion to sub-national governments – mainly, the 36 state governments and the Federal Capital Territory. The implication of this is that 83.78 per cent of the nation’s debt stock, as at December, 2020, belongs to the federal government, with the sub-national governments accounting for 16.22 per cent.
This ugly trend has since continued. Nigeria’s total external debt which stood at N12.706 trillion as at December 31, 2020, rose to N13.711 trillion by June 30, 2021. Of the N13.711 trillion external debt, the FG alone accounts for N11.828 trillion while the states and the FCT make up the balance of N1.883 trillion.

As more debts mature for payments, the pressure on FG’s revenue rises. Now that this government has decided to retain fuel subsidy with a larger cost that wasn’t captured in budget 2022, that would mean more borrowing with stretched fiscal deficit. It means the FG has to take more loans and print money to fund personnel cost, pensions and capital expenditure. Printed money is also part of any government’s debt component. The manner the Central Bank of Nigeria has been printing money in the last six years and giving it to the federal government is dizzying. It has risen intensely from N2.2 trillion printed in 2016, to an estimated N10 trillion at the end of 2020.

What the Buhari government has been doing in almost seven years, with its inept economists, is reckless borrowing, and has evidently borrowed beyond its repayment convenience. This is why the government is in a mess with debt servicing. Sometime last year, it admitted this much, saying it spent N1.8 trillion on debt servicing from its N1.84 trillion revenues in the first five months of 2021 – January to May. This puts the federal government’s debt-servicing-to-revenue ratio, a key measure of debt sustainability, at 97.8 per cent for this reviewed period. Is this not scandalous?

No wonder the IMF said few days back that Nigeria’s debt sustainability is at risk, with a great deal of unease in the long-term, while reiterating the need for the Nigerian government to implement timely fiscal reforms. IMF’s Mission Chief for Nigeria, Ms. Jesmin Rahman, noted during a briefing on Nigeria’s 2021 Article IV Consultation Staff Report that the increase in Nigeria’s public debt had grown rapidly in 10 years and was approaching a time when the country would spend all its income on servicing debts.

Rahman added: “There are a couple of other points that we should remember…Nigeria’s debt carrying capacity is very low. For us, revenue levels are low compared to a typical emerging market country that spends less than 10 per cent of revenues on interest payments.”
Even Buhari’s Economic Adviser, Dr. Doyin Salami, agrees that the borrowings of this government is not sustainable. Salami, in a presentation on “The State of the Economy,” last year, pointed out that the federal government’s expenditure had been on the increase, and at a faster pace than its revenue. He added that public debt had continued to expand on the back of growing fiscal deficit. His alarm came months before that of the IMF.

Experts expect the federal government to offset the negative consequences associated with its rising debt profile by cutting unnecessary expenditure from its budget. But this government will not listen. I don’t know of any sane society where government takes loans for things like railway and airports. Investments in areas like these should be private-sector-driven. Government’s role should be to create an enabling environment for the private sector to go in. Rational governments work to free resources for health, education and other welfare sectors. But in Nigeria, we are busy diverting our limited resources and loans to areas better handled by the private sector.
Some of the projects the Buhari government is spending foreign loans on include several railway projects, one of them going 40 kilometres into Niger Republic; ICT Infrastructure Backbone Project; Airport Terminal Expansion Project (Abuja, Kano, Lagos and Port Harcourt); Zungeru Hydroelectric Power Project; 40 Parboiled Rice Processing Plants; Mambilla Power project; NTA’s modernisation project and the rest.

Last Monday, The Debt Management Office (DMO) was defending FG’s binge borrowing, saying the IMF report did not acknowledge the improvements in infrastructure, “which have been achieved through borrowing, as well as, the strong measures by the government to grow revenues.” How can the DMO be talking about positive measures to grow revenue when Ministries, Departments and Agencies of the federal government still steal trillions of Naira yearly? These agencies can safely fund federal budgets if they meticulously remit this money. The massive corruption, mismanagement and ineptitude in virtually all federal revenue-generating agencies remain unabated under the Buhari government. The likes of Customs, NPA, NNPC, NIMASA, and the Nigeria Upstream Regulatory Commission (NUPRC) are feeding fat on this country.

The DMO also talked about the improvements in Nigeria’s infrastructure with the reckless foreign loans secured by the FG. I can safely say that the so-called investments in infrastructure by the Buhari government in almost seven years have failed to significantly impact on the economy of this country. They have also failed to yield economic growth and jobs for our growing army of unemployed youths.
The projects funded with the foreign loans, spread across the six geo-political zones of the country, have not brought about poverty reduction, as well as protection of the most vulnerable and very poor segments of the Nigerian society, as claimed by the FG. We have to be honest with ourselves. Maybe few new jobs here and there; but if we are talking about creating huge number of jobs for our youths with these loans, there is nothing like this. The facts and figures are there.

Let’s even use government statistics to analyse the job crisis issue. The last time the National Bureau of Statistics (NBS), picked up courage to release figures on unemployment was Q4 of 2020 and it reported that Nigeria’s unemployment rate rose from 27.1 per cent in the second quarter of 2020 to 33.3 per cent in the fourth quarter of 2020, translating to 23.19 million unemployed people.
These NBS figures aside, in practical terms, let’s all look around us; in our homes and those of our neighbours. Of course, we will see an army of unemployed youths. Things have deteriorated in almost seven years of the Buhari government, the huge foreign loans notwithstanding.
Despite the huge loans amassed, this country’s economy is still in shreds and continues to suffer, with no hope in sight. The gloomy news is that under Buhari, and with all the foreign loans, Nigeria surpassed India as the country with the largest number of people living in life-threatening poverty in the world. This is an insignia of disgrace that should task Buhari. Regrettably, he is untroubled and still talking about “capturing” more foreign loans. This is absurd.

Masari’s Hypocrisy in Katsina Killings
Terrorists and Fulani militias have persisted in their nefarious activities against innocent people for too long in Katsina State. I sincerely hope Governor Aminu Masari is not giving tacit support to Fulani militias. His recent infamous decision banning the activities of Yan-Sakai volunteers in the state left me in shock. Masari accused the vigilante group of extra-judicial killings and directed the Nigeria Police Force and other security agencies to enforce the dismantling of the group.

The killings in the North-west are partly a result of the fighting between Fulani militias and Hausa farmers over land. The herders want unfettered access to farm lands. The Hausa farmers resist using their own militias called Yan-Sakai. Blood has been flowing on both sides in the last six years, in Katsina, Zamfara, Sokoto and Kebbi states.

Unfortunately, governors of the affected states have been taking sides, thus prolonging the conflict. This is what Masari just did by banning Yan-Sakai while Fulani militias are still roaming freely.

Chairman of the Coalition of Civil Society Organisations (CSOs) in Katsina State, AbdulRahman Abdullahi was apt when he said the banning of Yan-Sakai by Masari would aggravate killings and abductions of innocent citizens by terrorists in the state.
Abdullahi argues: “In the wake of the upsurge in insecurity in Katsina State, members of Yan-Sakai should be allowed to protect vulnerable communities. Government should devise means of integrating and coordinating their activities for effective and professional service delivery instead of dismantling it. Yan-Sakai has a vital role to play in enhancing the security of the state at this time of serious dearth of security personnel

“Why is the government going back and forth on security issues? Why is this coming from the same government that called on the public to defend themselves? Has the government got enough security personnel to man the state?”

The North-west Coordinator of the Coalition of Northern Groups (CNG), Jamilu Aliyu Charanchi, also described Masari’s decision as ill-timed and ridiculous: “For a government that advocates for its citizens to purchase arms and defend themselves, it would be ridiculous for the same government to ban an organised security outfit. It’s unfortunate that this is coming at a time when there is resurgence of violent attacks across many of our villages in the state, elimination of our people, destruction of their livelihood, raping and exploitation of our women and extorting our poverty-stricken villages became the order of the day.”

The only way forward in Katsina State is for governments at all levels to enforce the laws of our land. Those who kill must be apprehended and dealt with. Regrettably, this is not being done. Once justice is not served, then, the killings would continue. For me, Masari’s decision to ban Yan-Sakai shows partiality in the crisis in his state. His action will enhance the murderous activities of Fulani militias in Katsina State. This pronouncement must be reversed.

Sabon Birni under the Servitude of Terrorists
Sabon Birni Local Government Area of Sokoto State shares borders with two provinces in Niger Republic – Maradi and Tawa. This has been a curse on this local government as terrorists stroll in and out, killing and maiming. Sabon Birni is home to scores of terror groups under different leaders. The notorious Bello Turji resides here. Other terror leaders here are Nagona, Jambo Baki, Useini Dankwano and Dan Bakkolo. Our security agents know this. These terror groups are holding Sabon Birni LG by the jugular and collecting levies. So, the persistent stories out of the LG are about killings. Unfortunately, our governments obstinately fail the people.

Just last Sunday, the terrorists were all over Dantassako, Nasarawa, Gidan Idi, Adamawa and Rambadawa villages in Sabon Birni, killing and raping. They always get away with their crimes. The former Chairman of Sabon Birni LG Area, Idris Gobir swears the attackers are all Fulani militias. There has been no concrete response to this claim by security agents. Who will save the devastated residents of this local government? This is the big question begging for answer.