On Buhari’s plan to borrow $30bn

I had a debate with an ardent supporter of President Muhammadu Buhari who tried to defend every action and policy of his government, including the intention to borrow fresh loan of $29.96 billion.

But the Buharist later ran away when he realised that I am not naive, I am well- enlightened and had facts and figures on the subject matter. He left abruptly as I began to back my rejection of the needless loan with copious and concrete reasons. Yes, he loves the president so cannot withstand criticism of his government. I, therefore, deem it good to educate the public on the effect of such debts. I recently discussed on the same issue on radio.

First, it’s pertinent to know that there is no country in the world that does not collect loans. It’s common to borrow when the need arises. Advanced countries such as America, England, China, etc, are all debtors. But unlike Nigeria, they borrow to boost their economies. By so doing, they get much to save and service debts.

However, in his letter to the Senate on the fresh $29.96 billion external borrowing, President Buhari explained that the loan is needed to provide infrastructure. I will only support the idea if the money is to be invested in the economy so that servicing the debt will not engulf much of our revenues.

Recently, the African Development Bank revealed that up to 50 per cent of Nigeria’s revenue is being used in servicing debts, which is worrisome because this is a country that needs more revenues to fund projects.

According to the Debt Management Office, the country’s debt profile at present stands at $83 billion. This includes both internal and external debts. If the National Assembly approves Buhari’s new loan, it will rise to $113 billion. To add salt to injury, a British court had in recent time ordered Nigerian government to pay a fine of $9 billion to a private company for allegedly breaching contractual agreement in a gas deal equivalent to N3 trillion which also amounts to 20 per cent of our foreign reserve. This is indeed a great threat to Nigeria’s economy. 

In 2005, the Olusegun Obasanjo administration facilitated the cancellation of the ‘huge debt’ of $35 billion on the nation. The creditors relieved us of over $31 billion debt and we were left with just 3 and something billion dollars debt to repay at that time. Immediate past President Goodluck Jonathan also left behind just $10 billion external debt to Buhari, but within the last four years of the incumbent government, it rose to over $27 billion, an increase of about $17 billion without commensurate developments in the country. 

If $35 billion would be considered a huge debt for the country by Obasanjo, what if it grows to $113 billion? And if at the moment, servicing debts can consume half of our revenues, what will happen when the debts burden increases? Yes, like I said, even the developed countries borrow but it doesn’t have serious effect on their revenues. For instance, America spends only 12.5 per cent and England expends 7.5 per cent of their revenues in servicing debts. Their economies are strong that they do not only provide infrastructures for their citizens, but render charity services to underdeveloped nations through their NGOs.

Debt crisis is not good on the economy; some countries were thrown into debt crises by their leaders still find it difficult to revitalize their economies. Example, Greek government-debt crisis was the sovereign debt crisis faced by Greece in the aftermath of the financial crisis of 2007–2008. 

It was as a result of series of sudden reforms and austerity measures that led to impoverishment and loss of income and property, as well as a small-scale humanitarian crisis. The Greek economy suffered the longest recession of any advanced capitalist economy to date, overtaking the US Great Depression. As a result, the Greek political system has been upended, social exclusion increased, and hundreds of thousands of well-educated Greeks have left the country.

As at March 2019, the gross external debt of Greece stands at $394.3 billion. What I want to emphasise is that instead of resorting to borrowings, Nigeria should diversify its economy and reduce the cost of governance as a way of accumulating more funds. The money being allocated to government officials is too much and unjustifiable.

In the last budget, N1 billion was allocated to Buhari for foreign trips, N98 million for food, N49 billion overhead cost for the Villa and N2 billion as impress for the office of the president. On how to diversify the economy, the federal government should revamp the agricultural sector. It is sad that of the 82 million hectares of cultivable land in Nigeria only 41 per cent is being cultivated. Government should encourage farmers, provide them with farm implements, purchase their farm produces and establish industries that will refine and process them. By doing this, we can feed ourselves, export the products to other nations and boost our internally generated revenues.

Lastly, I advocate privatisation of moribund government companies and public enterprises which do not yield adequate profits to it, which the government spends more on their running and maintenance than what they generate back. The sale of NITEL by the Obasanjo administration yielded good results; better telecommunication services, provision of jobs to teeming jobless compatriots and generation of taxes to the government. Public enterprises such as NIPOST, Nigerian Railway Corporation, etc could be sold out to credible investors.

Having said that, I advise the federal government to jettison the plan to borrow the almost 30 billion dollars loan and if it insists on doing so, the national assembly should in the best interest of the nation reject it.

 Najib is a journalist, author and public affairs analyst