The President, Major General Muhammadu Buhari (retd) administration will go down in history as the most active Nigerian government in the debt market. The Minister of Finance, Budget and Planning, Zainab Ahmed, seems to have a way of convincing creditors to part with their funds and the National Assembly to approve every loan request or even the governor of the Central Bank of Nigeria to part with almost N23tn Ways and Means to fund consumption in the economy. Borrowing has become opium and the country is hooked on it.
By the time the administration exits on May 29, 2023 we will be able to know the actual internal and external debts. For now, reports indicate that with the approval of N22.7tn extra-budgetary spending by the legislature two weeks ago, the in-coming government will be inheriting a public debt of about N70tn! Presently, Nigerians are convinced that debt servicing is one of the major factors that have arrested Nigeria’s growth and development. Nigeria and the loan market should definitely miss our woman of substance in the credit market.
Just one week after I was jubilating that the Federal Government has finally “launched” the long-term National Development Plan tagged, “Agenda 2050,’’ I have longed for since the time of former President, Goodluck Jonathan, the news of return to the credit market was confirmed and it dampened my spirit. A poor developing country like Nigeria, desirous of growing out of poverty and debt traps must possess a defined growth-path policy document that will guide its footsteps toward socio-economic prosperity. Such a document is a comprehensive national development plan showing short-, medium- and long-term growth and development objectives, strategies and destinations by sectors and the macroeconomy.
The United Nations’ Millennium and Sustainable Development Goals are successive global development initiatives and the Agenda 2063 by the African Union for Africa’s continental development plan are expected to serve as guidepost for African countries in their quest for long-term development. What is important is not that the documents were prepared but the processes of preparation and adoption as plans at the global and continental levels. It is commendable that Agenda 2050 is finally prepared, the process of adoption as a book of national aspiration has yet to be completed. Even if we assume and it works out that the All Progressives Congress becomes the ‘drug’ that will cure our socio-economic malaise for the next 30 years, a document to guide our economic path for those years needs to be discussed at many levels for adjustments, correctness and authorisation.
So, like a budget, the President should present the agenda to the legislature, but more than a budget, there should be discussion on it by the organised private sector, labour unions, academia, non-governmental organisations et cetera for a guided period. The reports from such discussions are harvested for part of the debates at the legislature before final authorisation is given. The document then becomes the national guidepost for national development, irrespective of the political party that is in government. The plan would be regarded by all political parties as our collective aspiration rather than the document of the APC. Albeit, as we move along the path to 2050, there would be modifications and adjustments, just as any ruling political party at any point in time will follow the growth trajectory, with its political ideology and modus operandi. Let us now return to the matter at hand, the loan issue.
The issue of $800m loan from the World Bank was first mentioned when the outgoing government (we need to let them know they are going!) informed Nigerians that it would need to provide palliatives for the vulnerable citizens when the subsidy on petroleum is removed in June 2023. As discussion was going on and towards the objection of both the removal of subsidy and the loans, the government announced that it has handed off the subsidy removal and issues relating to it would be decided by the incoming government. Fortunately, the President-elect has not informed the nation that the subsidy will remain or be removed.
It is therefore illogical for the outgoing government to insist on obtaining the loans or even signing the loan agreement for an uncertain action or activity. The action that requires the loan has been dropped. So, the loan should also be dropped. Or, is the loan originally a parting gift robed in palliative garb? I do not think Nigeria can afford a parting gift of $800m for any government, particularly one that has destroyed its exchange rate, killed the spirit of hard work and output generation and reduced citizens’ wellbeing to ground zero.
Despite the fact that the outgoing government does not know how to work hard, generate output and income but specialises in borrowing, Nigeria made substantial income from oil and non-oil sources in the last eight years. International statistics show that Nigeria earned $206.06bn from petroleum exports between 2015 and 2019. In 2020, the oil and gas operation brought it $20.43bn which was lower than $34.22bn generated in 2019 due to COVID-19.
The 2022 earning from oil was N2tn or $45.6bn which was 46.41 per cent over 2021 when the amount was N14.41tn. Report by Nairametrics in April 2022 claimed that Nigeria earned an average of $39bn per annum from oil and gas under Buhari despite fall in oil output and increase in oil theft. There were reports of increases in the non-oil sector to the effect that it has been dominating the economic performance in terms of contributions to the Gross Domestic Product, not income though. The non-oil sector revenues include personal income tax; company tax; capital gain tax; withholding tax; custom and excise duties, value added tax and different forms of indirect taxes. In fact, the Federal Inland Revenue Service claimed to over perform in 2022.
One understands they have already launched a book on President Buhari’s achievements in the last eight years. The book has already concluded his activities without the loan. Unless there will be addendum to accommodate the loan as part of the achievements, it is better to skip the loan. When the Peoples Democratic Party lost the presidential election in 2014 and was sure it would leave office, the party members allegedly shared the country’s money among themselves, implying that the incoming government would have to generate its income. The country was virtually bankrupt with that action despite receiving over N90tn from oil alone in the Goodluck Jonathan era.
The APC took over and spent a large part of its first term crying about economic mismanagement. Now, APC is succeeding APC and it is behaving the same way the PDP behaved. That is, the incoming government will have to generate its own funds. Nigeria is a country where looters walk on the streets without an iota of sobriety but arrogance. The institutions to deal with such matters exist but are weak and the people themselves are weak or weakened by their own personal greed and hero worshipping.
The legislature cannot wash its hand clean of the economic mismanagement of this government because it has been approving all sorts of disapproved loans. At least members should do well for once, to say no to this request for approval of $800m. Actually, removal of subsidy means money spent on subsidy will be freed and it runs into trillions of naira. Why can’t that freed money be used for the palliative? What really is behind the borrowing? Given what is earned from oil sector annually, should the country be going for $800m consumption or palliative loan? It is because our economic managers are addicted to borrowing.
Banks as investors in financial assets, move around advertising and lobbying individuals, businesses and countries to take loans. As addicted borrower, they do not even need to lobby Nigeria because we are always in the financial market looking for loans. Someone needs to purge the country of this addiction. It is part of what is responsible for massive corruption in the management of the economy. Money earned from oil and non-oil sources will be stolen, sometimes without immediate detection, because the gap will be covered with borrowed funds. When eventually detected, the issue of plea-bargaining surfaces to close the case. That was why it took a long time to detect almost N109bn stolen by the erstwhile Accountant-General of the Federation, Ahmed Idris, whose case seems to have closed now after he reportedly returned $900,000.