When I prepared to write on the danger inherent in Nigeria’s rising debt portfolio under an administration known for its challenges with economic management, I was going to rely mainly on The Point’s exclusive analysis of documents obtained from the Budget Office of the Federation.
The rate at which the President Muhammadu Buhari administration was accumulating debts from all corners, without confident explanations, was scary enough to call for a thesis on caution, especially at a time the world is preparing for a recession worse than the 2008 economic crisis.
As expected, a breakdown of the figures obtained threw up a need for every patriotic Nigerian to be genuinely concerned about the health of the nation today and in the future. But as clear as the indices were, those currently at the centre of policy decisions might have read political undertones to a candid fear. Luckily, Senate President Ahmad Lawan bailed me out.
Last Friday, Lawan unveiled the achievements of the 9th Assembly in the last one year. No one would have expected the distinguished senator to score the Upper Chamber low, even in the event of a face-covering outing. Nevertheless, the Senate President gave an unpremeditated slap to the President Muhammadu Buhari-led All Progressives Congress administration, when he happily listed an unreasonably huge external loan approval as a key accomplishment of the Senate under him.
Nigerians confirmed, straight from the APC Senate President, not from any opposition party, that the National Assembly approved a total of $28 billion foreign loans for the Buhari government in only one year! Did Nigeria go to war? The economic jargons associated with the request for approval might have prevented the respected Geography graduate and his colleagues from seeing beyond the superficial “national development” in a bid to answer this sarcastic question, at least in the context of Nigeria’s peculiar macroeconomic model.
Explaining this one-year feat with palpable pride, the Senate President said, “In order to support and enable the government to raise the necessary funds for national development, there were requests for approval to borrow, both from the domestic and local sources. We have approved foreign loans of about $28bn in the last one year.
“We had ensured proper scrutiny for the desired projects and programmes of the government, the conditions of the facilities before approving such borrowing requests. The task ahead of us is to ensure tracking, monitoring and supervision of how the loans are applied.”
In a ship that seems rudderless, this ‘proper scrutiny’ required for the disbursement and application of such humongous loans would, most likely, need more than the compromised binoculars of the Senate as currently constituted.
As for the planned task of “tracking, monitoring and supervision of how the loans are applied”, the Senate President, who has a doctorate degree in Remote Sensing, would definitely require his wealth of knowledge, in that line, to see beneath the deal papers. (Remote Sensing is the scanning of the earth by satellite or highflying aircraft in order to obtain information about it). The experience under the APC rule has been ‘the more you pry, the less you comprehend.’
Now, let’s leave Lawan’s $28billion approval figure aside. Our perusal of Budget Office documents revealed a fresh debt layout of N4.17 trillion this year, through local and international sources. A breakdown of this figure showed that N744.99bn would be sourced from domestic sources to fund the 2020 budget. About $2.36bn (N850bn), expected to be raised from external sources, is now being raised from the domestic capital market.
At the end of 2019, Nigeria’s total debt stock stood at about N27.7 trillion, made up of N18.38 trillion domestic debt and N9.02 trillion external debt obligations. Add this to N4.17 trillion, the country’s debt profile rises to N31.87 trillion, about $89 billion.
It is surprising how an administration that made so much noise about inheriting so much debt from “a corrupt” government is suddenly on the verge of clinching a gold medal in the same trade.
A few hours before the end of the former President Goodluck Jonathan administration, arrowheads of the then incoming APC administration made a monster of the debt stock and tied the figure, which had actually accumulated from independence till then, tightly around the necks of Jonathan and his finance minister, Ngozi Okonjo-Iweala.
Even when Okonjo-Iweala, who was also the Coordinating Minister for the Economy at the time, clarified issues and separated the $21 billion incurred throughout the Jonathan administration, from the nation’s $63.7 billion total debt stock since independence, the incoming APC government refused to sing a fresh song until Nigerians angrily called for another tune.
Perhaps if those who would become the frontline policy thinkers had known that their expertise in seeking external and other loans, in suspicious circumstances, could dwarf the combined skills of previous economic handlers, they would have hidden an apparent fear of non-performance behind a bigger finger.
Justifying $28 billion, in foreign loans alone, and in just 12 months, against the total $21 billion incurred under the previous administration, must be a herculean task for the best of APC’s spin doctors. But they have tried, even to the point of transforming the Minister of Works and Housing, Babatunde Fashola, into a Senior Advocate of Increasing Debts, with his recent one-sided position on government’s borrowing versus banks’ liquidity.
At the beginning of the year, the Chief Executive Officer of the DMO, Patience Oniha, also cautioned Nigerians against blaming the President alone for the increase in total debt, explaining that “total public debt comprises borrowings of the Federal Government, states and the Federal Capital Territory.”
Someone should, however, remind the former banker that she might need to have further explanations handy for undergraduate students of macroenonomics on the difference between the composition of public debt under previous administrations and its structure under the current one. If this justification works for Buhari, why was Jonathan crucified for far less?
Even the explanation of the Minister of Finance, Budget and National Planning, Zainab Ahmed, that the country is battling a revenue crisis and not a debt crisis, using the argument of a safe 1.52 per cent debt-to-Gross Domestic Product ratio, still does not allay fears of mismanagement and deceit, especially when experts know that external debt servicing and interest rate are inversely related to the growth of an economy. This is aside from the fact that the Nigerian economy is a very troubled one as it is.
But the debts have been incurred, and deal papers signed for pending ones, so there is really no point crying over spilled milk. We all just must shine our eyes, not minding legislators’ ostensibly weak spectacles, and ensure, at least, 50 per cent judicious use of borrowed funds. It’s a choice between seeing the glass as half empty or half full.
If we can’t help multi-billion dollar grants being muddled up under hazy project headlines, we must be able to avoid a double tragedy for this generation and future ones, in terms of a fruitless debt repayment burden. But those who have the ear of the President must tell him, without much grammar, that he urgently needs new economic managers!
For now, Nigerians may only need to tighten their belts in preparation for a very rough landing of the current APC ride.
