Thursday, August 14, 2014

Nigeria’s rising debt profile and the culture of waste

On June 29, 2005, the Paris Club and Nigeria agreed on a US$18 billion debt relief package. As at December 31, 2004 Nigeria owed a total of US$35.994 billion. The deal with the Paris Club was celebrated by government and was counted as a major achievement of the Obasanjo administration. Unfortunately, Nigeria is back in the shackles of debt less than a decade after its glorious exit from debt burden. According to the latest release by Nigeria’s Debt Management Office (August 2014), Nigeria’s total debt stock recorded about 2.7 per cent increase to N10.43 trillion ($66.99 billion), against N10.16 trillion ($65.25 billion) at the end of the first quarter ended March 31, 2014. This is the result of continued debt deals by the Federal Government internally and externally.

Much as it is practically impossible to run a debt free government, the big questions are: What are the debts procured used for? Are the monies spent on consumption or production? Are they being used on capital projects for which they were sourced for ab initio? How come with all the domestic and external borrowings the state of infrastructure in the country is still parlous and deplorable? Is there a possibility that these borrowed funds are being misapplied and stolen? Why is government reluctant to use part of our external reserve to fund some of the projects for which money is being borrowed locally and in-country? Are there no alternatives to these ceaseless borrowings?

The rising debt profile in Nigeria is indeed a cause for concern. Much of the borrowed funds are diverted to fund unproductive ventures. Some State governments borrow to pay salaries and other recurrent overheads.  How productive are these? With a bloated bureaucracy that should actually be pruned. The luxurious lifestyles of our ruling elites that needs to be made austere. The white elephants that should never have been embarked on in the first place. All these are the bottomless pits that drain our meagre resources. These and the leakages in the system such as over-invoicing, kick-backs, and outright thievery have combined to rob us of effective debt management and value for money borrowed.

Most of the borrowed funds approved by the legislature for the executive are not monitored to ensure proper usage. In actual fact, it has been alleged that oversight function by lawmakers is largely an inducement seeking exercise. The civil society groups who could do a better job are  usually sidelined while only few of them even have the technical capacity to do a thorough monitoring of projects being funded through debts. In my own opinion, the argument that we are currently under-borrowing is balderdash. It is not mandatory that we must borrow. Instead, most of the things we borrow to fund could actually be funded by our national income. Just imagine what Nigeria will realise from stoppage of oil-theft, cutting down wastages in government such as the about a dozen presidential aircrafts and chains of bullet proof cars being yearly bought for the comfort of few of our ruling elite. Nigeria simply needs to re-order its priorities, plug all the leakages in the systems through which government fund is siphoned and ensure adequate oversight on the projects being implemented with the borrowed funds.