Viable alternatives to Nigeria’s perpetual borrowings

 

When the National Assembly resumed from its two months’ annual vacation last Tuesday, September 14, 2021, the lawmakers were greeted with a request by the President, Major General Muhammadu Buhari (retd.), for approval of another external borrowing. According to a media report, President Buhari is said to be seeking the approval of the National Assembly to borrow fresh sums of $4,054,476,863 and €710 million in an addendum to the 2018 – 2020 borrowing plan. The President also asked the lawmakers to approve grant components of $125 million.

Recall that in July, the National Assembly approved $8.3 billion and €490 million loans contained in the initial 2018 – 2020 borrowing plan. But in the letter, Buhari explained that owing to “emerging needs”, he requires to raise more funds for some “critical projects”. He was quoted as saying that: “I write on the above subject and submit the attached addendum to the proposed 2018 – 2020 external rolling borrowing plan for the consideration and concurrent approval of the Senate for the same to become effective.”

“The Distinguished Senate President may recall that I submitted a request on (the) 2018 - 2020 borrowing plan for the approval of the Senate in May 2021. However, in view of other emerging needs and to ensure that all critical projects approved by FEC as of June 2021 are incorporated, I hereby forward an addendum to the proposed borrowing plan. The projects listed in the external borrowing plan are to be financed through sovereign loans from the World Bank, French Development Agency, EXIM Bank and IFAD in the total sum of $4,054,476,863 and €710 million and grant components of $125 million.” The President further said the loans, when obtained, will stimulate the economy and create jobs.

For sure, there is nothing wrong in borrowing. Individuals, corporate organisations and governments across the world do borrow. The United States of America has been several times cited as one of the greatest debtors in the world. However, the US is very credit worthy because of her economic fundamentals. She is an industrialised nation with high level of innovations which makes her one of the top 20 economies in the world.

On the flip side, Nigeria, though the acclaimed biggest economy in Africa, has very weak economic fundamentals. The country is neither an industrialised country nor high in innovation or technology. While our debt to Gross Domestic Product may be safe and tolerable, our revenue to GDP is nothing to write home about. We are a consumptive and not a productive economy. That’s what makes the difference between us and many of the top 20 economies. Is it not a national embarrassment that Nigeria with a population of a little over 200 million people is borrowing from China with over 1.3 billion population?

Other questions to ask with these perpetual loans put at an estimated N33 trillion are: What are the terms and conditions attached to them? Is there a moratorium? What is the interest rate? What do we lose if we fail to service or pay the debt? Are there equity, justice and fairness in the distribution of the projects that these loans will be used to fund? Are there ways we can reduce or considerably cut down this penchant for borrowing? I am of the considered view that we can actually do away with these debts if we are able to reduce the cost of governance, fight corruption and diversify the economy to make it more productive.

For instance, despite the dwindling revenue of up to 60 per cent of our national income, we have not deemed it fit to cut down considerably on our overheads or cost of governance. Our recurrent to capital ratio of our annual budget still stands at 70:30. That is, our recurrent expenditure gulps 70 per cent of our budget while only 30 per cent goes to capital. Meanwhile, about N3 trillion is spent on debt servicing! On several occasions on this platform and other media outlets, I had maintained that Nigeria can save a lot of funds if we reduce our Ministries, Departments and Agencies. This huge bureaucracy is antithetical to development. In the US, the total number of Secretaries, the equivalent of our ministers here, is just 15. The entire cabinet of President Joe Biden is less than 20 if you add the Vice President, Secretary of States, and Chief of Staff to the President. What do we have here, a cabinet of about 50 people made up of 43 ministers, Chief of Staff to the President, Secretary to the Government of the Federation, the Head of Service and Vice President.

Do we need 109 senators and 360 members of House of Representatives? Countries like Senegal, Mauritania and Italy have either scrapped their Senate or reduced their bicameral legislature by one-third as Italy did. I have previously canvassed in this column that while there may be merit in having a bi-cameral legislature at the centre, we do not need that huge number of representatives at both the federal and state assemblies. Each state can make do with two senators while the number of representatives from each state should not exceed five. It is incongruous to say that the number of state lawmakers should not be less than 24 and more than 40 as stated in Section 91 of the 1999 Constitution of the Federal Republic of Nigeria.

The number of airplanes in the presidential air fleet is too many. I think they are about six. A maximum of three would have been ideal. Even the number of vehicles in the presidential and state governors’ convoys is too many and not reflective of these austere times. Every year, the amount being voted for the State House and Presidency is too humongous and needs to be considerably trimmed down. I patiently wait for what this will be like in the 2022 national budget.

Monies voted for travels, entertainment, welfare, medical tourism by the MDAs at the federal, state and local government levels are outrageous and do not reflect the parlous state of our economy. Since April 2020, there has been a presidential directive for the implementation of the Steve Oronsaye committee report but nothing has happened thus far in this area. Borrowing to fix ailing refineries which had previously gulped $25 billion in turnaround maintenance without anything to show for it is very wasteful.

Many of the thousands of uncompleted federal and state projects across the country should be properly evaluated and those considered to be white elephants should be sold off to interested buyers. Proceeds from this sales should then be ploughed back to complete those that will add value to the economy. If the government doesn’t want to sell them off, it can approach the private sector to take them over, use their funds to complete the projects and allow the private investors to run the projects for some years in order to recoup their investments. This is what Build, Operate and Transfer popularly called BOT entails. There are other models of public-private-partnerships that government can adapt.

I am probably one of the few Nigerians calling for the removal of petroleum subsidy which has been enmeshed in a lot of fraud. The estimated N1 trillion being used to subsidise refined petroleum products can actually be used to bridge the country’s infrastructure gap. Some of our federal and state roads can actually be tolled in order to provide funds to maintain and service those roads.

The biggest challenge facing Nigeria today is not lack of funds or resources but misappropriation of the resources. Corruption is still plaguing the country while the country’s wastefulness is second to none. This regime has continued to blame previous administrations of borrowing to line their pockets. Just last Monday, September 20, 2021, Special Adviser to the President on Media and Publicity, Femi Adesina, said that the difference between the Buhari regime and others he accused of “borrowing to steal, to pocket and to waste” is that the current regime borrows for development. When a new government comes in in 2023, will it not accuse Buhari of also having borrowed to steal? This is why the National Assembly, Civil Society Organisations and the media need to do proper oversight on these borrowings which we know the federal lawmakers will approve despite concerns raised by the Nigerian public. Eternal vigilance, as the saying goes, is the price for liberty.