By: Phrank Shaibu
The queerest, most illogical, most mind-numbing argument I have heard this year is the declaration by the National Chairman of the ruling All Progressives Congress (APC), Senator Abdullahi Adamu that the Muhammadu Buhari-led administration can borrow money from international creditors from now till eternity.
Speaking in an interview on Trust TV last Tuesday, Adamu said he had no issue with borrowing and that his position had been consistent on the subject. To justify his stance, he noted that other advanced nations borrow to develop their infrastructure.
According to him, “remember a programme we had here, I told you and I thought you believed me that I have no quarrel, issues with government borrowing. Government can borrow from here to eternity. The American government borrows, the Canadian government borrows, the United Kingdom borrows, France borrows money from the World Bank and such other institutions and Nigeria is no exception”.
“What I quarrel with,” Adamu said, “is if the money is not used for a purpose and the infrastructure we are developing across the country, is from this source.”
Adamu was correct when he argued that even advanced nations borrow to develop their infrastructure but he missed the point when he averred that the Nigerian government “can borrow from here to eternity.” The reason is simple: No nation borrows endlessly; ostensibly to forestall the far-reaching negative implications that excessive borrowing has on the economies of nations.
To be sure, the potential problems of indiscriminate government borrowing include; higher debt interest payments, heavy tax burden on citizens, crowding out of the private sector and – in most cases – inflationary pressures, all of which now stare Nigeria in the face!
This explains why most Nigerians do not see the rationale for the nation’s huge external and local debt portfolio, as the impact of the loans has not been felt in any impressionable way. For many experts, it is déjà vu all over again; a second debt trap being foisted on Nigerians by the APC administration.
But Nigerians are not alone in expressing such a legitimate fear. The International Monetary Fund (IMF) recently warned that Nigeria may spend nearly 100 per cent of its revenue on debt servicing by 2026. According to the Debt Management Office (DMO), as of March 2022, Nigeria’s total debt portfolio (FG, State and FCT) was N41.6 million.
The magnitude of the debt crisis was re-echoed in the recent alarm raised by the Centre for the Promotion of Private Enterprise. It warned that Nigeria’s national debt, including that of the Asset Management Corporation of Nigeria, and borrowings from the Central Bank of Nigeria, could hit the N50 trillion mark soon. This calls for serious concern. Already, the government is spending 90 per cent of its revenue servicing debts, an unsustainable quagmire.
Under the APC and Buhari, debt has been rising exponentially. The national public debt rose by 20.17 per cent year-on-year to N39.55 trillion in 2021 from N32.91 trillion the previous year, driven by increases in external debt as well as total domestic debt. The total external debt rose to $38.39 billion in 2021 from $33.34 billion in 2020; federal domestic debt rose to N19.24 trillion from N16.02 trillion in the same period.
The latest data on the fiscal activities of the Federal Government in 2022 confirmed that public debt may increase by N11.8trillion to bring the year-end figure to a little above N51 trillion. In 2021, the government exceeded the budget deficit by about 48 per cent to about N7.69 trillion, from N5.2 trillion in the approved budget for the year.
It is therefore frightening that under an administration that promised change, the debt-to-GDP ratio too has risen to 22.47 percent even as Buhari remains unconcerned about the short- and long-term impact of these unrestrained borrowings on the economy.
Nigeria’s story is tragic. It exited a crippling 30-year-old debt burden in 2005/06 via a landmark debt buy-back with the Paris Club and the London Club of international creditors. This ensued in $18 billion debt forgiveness after Nigeria paid $12.6 billion in tranches.
For emphasis, there is nothing wrong with borrowing. Borrowing had always served as a veritable financial platform for many countries of the world in running their economies, but judiciously utilising such loans for intended projects and servicing the debts appropriately have also been problems for developing countries, especially for Buhari’s Nigeria. Realities on the ground in the country in terms of required infrastructure and debt accumulations between 2015 and now appear disjointed.
The debt question in Nigeria has been a repeated issue that borders on the structure of the economy, the behaviour of the governing class and pervasive official corruption. But this makes little sense to the Ahmad Lawan-led rubber-stamp National Assembly, which has colluded with Buhari to plunge the country into another debt trap.
Public debt has expanded the most under Buhari when compared to previous administrations since 1999, with the foreign debt component growing over three times more than the combined figure recorded by the previous three administrations.
For instance, the Obasanjo/Atiku administration inherited a foreign debt profile of $35 billion in 1999 and arranged a buy-back deal that wiped $30 billion off the books.
The Umaru Yar’Adua government added $1.39 billion to the debt stock; the Goodluck Jonathan administration incurred additional debt, leaving the country’s total foreign debt at $10.31 billion when it exited power in mid-2015. On the domestic front, Buhari met N8.39 trillion, but by December 2020, it stood at N16.02 trillion and N19.24 trillion as recorded by the DMO.
This is why all men of goodwill must prevail on Buhari to apply the brakes. It is not rocket science to know that a country that does not produce anything tangible for the international market other than crude oil must be prudent. Spending 90 per cent of revenue on debt servicing is certainly not sustainable; it leaves next to nothing for capital projects other than paying workers’ salaries− this is O’ Level economics!
However, more disturbing is the fact that the worst is yet to come if Nigerians do not break away from their tormentors in the APC. If Nigerians think that their lot will improve under an APC government, then they are in for a shocker. It is apparent that All APC stalwarts, including the Chicago Bobo whose Lagos state owes $1.33 billion in foreign debt as of December 2021, think like the party’s National Chairman who believes that the way out of the nation’s economic woes is for the government to borrow its way through.
Nonetheless, this is Nigeria’s moment of truth – a moment to confront our demons and defeat them. The solutions to our problems are a no-brainer but it is clear that the APC lacks both the initiative and the will to solve them. Now, how do we proceed from here? The answer lies with the Nigerian people: the electorate should vote out the do-nothing APC government and replace it with one that has the competence to deliver the goods. Nigerians should elect a party that will explore other avenues of boosting revenue rather than resorting to endless borrowing.
Under an Atiku Presidency, the opaque nature of the crude oil business will be made transparent, every dollar realised from crude oil sales properly accounted for and fiscal leakages will be blocked.
Also, there will be no further delay in recovering the $62 billion oil revenue owed by major oil companies and sanctioned by the Supreme Court to be paid to the government since October 2018. If recovered, the amount will lift the nation’s economy.
Furthermore, gross indiscipline in the management of the country’s resources will be tackled. For instance, the Senate had established that many Federal Government Ministries, Departments, and Agencies did not remit over N3 trillion to the Consolidated Revenue Fund between 2014 and 2020, a figure that must have risen well above that by now. This is in addition to the failure of the MDAs to remit one per cent stamp duty revenue within the same period. Revenue generating agencies are statutorily expected to remit 80 per cent of whatever accrues to them as operational surplus into the coffers of the Federal Government. There is no doubt that Atiku will enforce these laws.
Again, under a People’s Democratic Party (PDP) led government, the massive theft of crude oil will be a thing of the past, the tax net will be widened, and most of the infrastructure that the APC government claims to have borrowed to put in place like the airport terminals, railways and seaports will be turned into active revenue generating points.
Ultimately, an Atiku Presidency will undertake reforms that will reduce governance costs, ease the financial burden and boost revenue generation.
SHAIBU, is Special Assistant to Atiku Abubakar on Public Communication.