The-rising-debt-profile-of-nigeria-and-the-circle-of-more-borrowing-a-serious-cause-for-alarm
September 7, 2020 | News
THE RISING DEBT PROFILE OF NIGERIA AND THE CIRCLE OF MORE BORROWING – A SERIOUS CAUSE FOR ALARM.
With recent reports that the Nigerian Senate has finally approved President Muhammadu Buhari’s bid to borrow N850 Billion, and the Government also got the approval of another $3.4 Billion by the International Monetary Fund (IMF), it is without a doubt that Nigeria’s debt profile should be a serious cause for alarm for every Nigerian stakeholder and the common masses.
We keep hearing of Nigeria’s debt profile that is increasing every year, but we hardly hear of repayment of these loans, neither have we seen anything concrete these loans have been used for the benefit of the Nigerian citizenry. Former President Olusegun Obasanjo was able to initiate steps that led to the complete write off of Nigeria’s debt profile, which was one of his greatest achievements as a former Nigerian President. I was one of the agitators of the Nigerian huge debt cancellation back then, as I consistently wrote the IMF and World Bank to write off the Nigerian debts because none of the Government could adequately explain to Nigerians then, exactly what they used the borrowed monies for. My arguments then were that the western developed countries were encouraging the then Nigerian military rulers to loot our money and open foreign bank accounts in their bank vaults to keep these loots. While on the other hand they were still demanding the debts repayments, which we all know they collaborated with the then military leaders to loot, by giving them access to export the loots to their foreign banks.
This prompted Obasanjo, after being elected in 1999, to set up a Debt Management Office (DMO). I actually attended the international debt management conferences then with others like Mrs. Ngozi Okonjo-Iweala, Prof. Charles Soludo and the rest, including finance debt management experts, Representatives of IMF/World Bank, United Nations, Commonwealth, etc. And I was an active participant in the first Nigerian international conference for debt cancellation.
Today, all of that struggle have been rendered useless with more debts being accumulated by the Federal Government of Nigeria that came after the tenure of Obasanjo, who was able to have Nigerian foreign debts paid/written off.
It would be recalled also that some years back, Nigeria was compelled by pressure, from International creditors, particularly the London and Paris club, to ‘voluntarily’ part with almost $12.4bn allegedly owed, so that another $18bn debt could be written off, from the country’s total external debt of about $30bn. Notably, the debt write-off was, primarily, the product of pressure from civil society groups, such as the Jubilee Debt Campaign, Nigeria’s total domestic and foreign debt stocks as at June 30, 2017 stood at about $15.1 billion and N14.1 trillion respectively, the National Bureau of Statistics (NBS) noted in 2018. But what is more troubling is the fact that a review of the total foreign debt profile of the Federal Government and the 36 States Governments and the FCT, show a CONTINUOUS RISE SINCE The Coming Of The Present Administration, From $10.718 Billion in 2015, to $11.406 Billion in 2016 and $15.047 Billion in 2017. Nigeria’s total public debt as at September 30, 2019, according to the DMO, stands at about N26.2 trillion (or $85.4 Billion). But recent reports have noted that Nigeria’s Total debt profile is at N33 trillion. This is just as the Director General of the DMO, Mrs. Patience Oniha, expressed concern that economic effects of the Coronavirus pandemic may incapacitate the country from effectively servicing the debt.
With all of this, I am afraid, and even more troubled about the country’s future because as we speak, the Nigerian Government at all levels, have still not done anything on their part to address the increase debt profile of the country. rather, they have been making it worse. One would have expected that before now, the Nigerian Government at all levels would have drastically cut down on their recurrent and administrative expenditure, which are costing more damages on the Nigerian economy. Without a doubt, the Nigerian Government, both Federal and State; are killing the country with its excessive indulgence (binge) and unrestrained borrowing and we seriously fear what adverse impact this would have on future generations.
Agreed that other wealthy and developed countries also borrow. But the difference between them and Nigeria is that they have a well-structured and well-managed system to repay such loans and keep themselves bank-credit worthy. And most importantly, these developed countries are known to judiciously utilize whatever they borrow to improve the lives of its citizenry and also generate enough income via different channels. When one borrows more and above what one can pay at stipulated times, and the person cannot pay back, then it becomes a problem which ultimately leads to bankruptcy. That is where we fear Nigeria is heading to if care is not taken, especially in a situation where these borrowed monies are never accounted for by the Government at various levels.
The saddest part in all of this is the fact that despite these borrowing, the level of poverty, hardship, underdevelopment and backwardness in these thirty-six States and the Federal Capital Territory (FCT) are growing by the day. One then begins to wonder what these political leaders, particularly those at the Federal and State level, are doing with these borrowed funds? What has the masses of this country gained from these massive borrowing in terms of infrastructure and poverty alleviation? Honestly, we do not think we have gained anything; not with the hunger, disease, poverty, hardship, unemployment and decay ravaging the country. Just look around you and you will see the level of decay in virtually in all sectors of our economy – health, education, water, roads, power, security and the rest of them. What is even more appalling is the way our Governments at all levels celebrate these loans. It often leaves one dejected. They create the impression that it would be a quick fix for all our problems. Unfortunately, it does not often turn out that way.
If the borrowed funds are being used to judiciously improve the nation’s economy and Nigerians standard of living – with a good plan to service the debts without compromising anything, we would not be bothered that much. But in a situation where such unrestrained borrowings have not yielded much in improving the lives of the general masses, but only increasing the pockets of some few in political circles and wasted on servicing consumptions and not investment projects, then it is a serious cause for concern. This is something we all urgently need to pay more attention to, else, we will continue to ‘eat-away’ our today and future generations.
Zik Gbemre.
April 30, 2020.
We Mobilize Others to Fight for Individual Causes As If Those Were Our Causes
THE RISING DEBT PROFILE OF NIGERIA AND THE CIRCLE OF MORE BORROWING – A SERIOUS CAUSE FOR ALARM.
With recent reports that the Nigerian Senate has finally approved President Muhammadu Buhari’s bid to borrow N850 Billion, and the Government also got the approval of another $3.4 Billion by the International Monetary Fund (IMF), it is without a doubt that Nigeria’s debt profile should be a serious cause for alarm for every Nigerian stakeholder and the common masses.
We keep hearing of Nigeria’s debt profile that is increasing every year, but we hardly hear of repayment of these loans, neither have we seen anything concrete these loans have been used for the benefit of the Nigerian citizenry. Former President Olusegun Obasanjo was able to initiate steps that led to the complete write off of Nigeria’s debt profile, which was one of his greatest achievements as a former Nigerian President. I was one of the agitators of the Nigerian huge debt cancellation back then, as I consistently wrote the IMF and World Bank to write off the Nigerian debts because none of the Government could adequately explain to Nigerians then, exactly what they used the borrowed monies for. My arguments then were that the western developed countries were encouraging the then Nigerian military rulers to loot our money and open foreign bank accounts in their bank vaults to keep these loots. While on the other hand they were still demanding the debts repayments, which we all know they collaborated with the then military leaders to loot, by giving them access to export the loots to their foreign banks.
This prompted Obasanjo, after being elected in 1999, to set up a Debt Management Office (DMO). I actually attended the international debt management conferences then with others like Mrs. Ngozi Okonjo-Iweala, Prof. Charles Soludo and the rest, including finance debt management experts, Representatives of IMF/World Bank, United Nations, Commonwealth, etc. And I was an active participant in the first Nigerian international conference for debt cancellation.
Today, all of that struggle have been rendered useless with more debts being accumulated by the Federal Government of Nigeria that came after the tenure of Obasanjo, who was able to have Nigerian foreign debts paid/written off.
It would be recalled also that some years back, Nigeria was compelled by pressure, from International creditors, particularly the London and Paris club, to ‘voluntarily’ part with almost $12.4bn allegedly owed, so that another $18bn debt could be written off, from the country’s total external debt of about $30bn. Notably, the debt write-off was, primarily, the product of pressure from civil society groups, such as the Jubilee Debt Campaign, Nigeria’s total domestic and foreign debt stocks as at June 30, 2017 stood at about $15.1 billion and N14.1 trillion respectively, the National Bureau of Statistics (NBS) noted in 2018. But what is more troubling is the fact that a review of the total foreign debt profile of the Federal Government and the 36 States Governments and the FCT, show a CONTINUOUS RISE SINCE The Coming Of The Present Administration, From $10.718 Billion in 2015, to $11.406 Billion in 2016 and $15.047 Billion in 2017. Nigeria’s total public debt as at September 30, 2019, according to the DMO, stands at about N26.2 trillion (or $85.4 Billion). But recent reports have noted that Nigeria’s Total debt profile is at N33 trillion. This is just as the Director General of the DMO, Mrs. Patience Oniha, expressed concern that economic effects of the Coronavirus pandemic may incapacitate the country from effectively servicing the debt.
With all of this, I am afraid, and even more troubled about the country’s future because as we speak, the Nigerian Government at all levels, have still not done anything on their part to address the increase debt profile of the country. rather, they have been making it worse. One would have expected that before now, the Nigerian Government at all levels would have drastically cut down on their recurrent and administrative expenditure, which are costing more damages on the Nigerian economy. Without a doubt, the Nigerian Government, both Federal and State; are killing the country with its excessive indulgence (binge) and unrestrained borrowing and we seriously fear what adverse impact this would have on future generations.
Agreed that other wealthy and developed countries also borrow. But the difference between them and Nigeria is that they have a well-structured and well-managed system to repay such loans and keep themselves bank-credit worthy. And most importantly, these developed countries are known to judiciously utilize whatever they borrow to improve the lives of its citizenry and also generate enough income via different channels. When one borrows more and above what one can pay at stipulated times, and the person cannot pay back, then it becomes a problem which ultimately leads to bankruptcy. That is where we fear Nigeria is heading to if care is not taken, especially in a situation where these borrowed monies are never accounted for by the Government at various levels.
The saddest part in all of this is the fact that despite these borrowing, the level of poverty, hardship, underdevelopment and backwardness in these thirty-six States and the Federal Capital Territory (FCT) are growing by the day. One then begins to wonder what these political leaders, particularly those at the Federal and State level, are doing with these borrowed funds? What has the masses of this country gained from these massive borrowing in terms of infrastructure and poverty alleviation? Honestly, we do not think we have gained anything; not with the hunger, disease, poverty, hardship, unemployment and decay ravaging the country. Just look around you and you will see the level of decay in virtually in all sectors of our economy – health, education, water, roads, power, security and the rest of them. What is even more appalling is the way our Governments at all levels celebrate these loans. It often leaves one dejected. They create the impression that it would be a quick fix for all our problems. Unfortunately, it does not often turn out that way.
If the borrowed funds are being used to judiciously improve the nation’s economy and Nigerians standard of living – with a good plan to service the debts without compromising anything, we would not be bothered that much. But in a situation where such unrestrained borrowings have not yielded much in improving the lives of the general masses, but only increasing the pockets of some few in political circles and wasted on servicing consumptions and not investment projects, then it is a serious cause for concern. This is something we all urgently need to pay more attention to, else, we will continue to ‘eat-away’ our today and future generations.
Zik Gbemre.
April 30, 2020.
We Mobilize Others to Fight for Individual Causes As If Those Were Our Causes