Besides being the main policy-making organ of the United Nations, the UN General Assembly(UNGA) is a gathering of the globalist elite. When leaders of nations come there, they come with a strong, convincing message that concerns their countries and citizens. They also come with style. Because the world is watching when UNGA is in session, and because it provides a unique forum for multilateral discussion of the full spectrum of international issues covered by the charter of the organization, it’s a perfect platform for a leader to market himself, showcase his capacity. Good leaders don’t miss this chance.
Recently, President Muhammadu Buhari spoke at the 76th session of UNGA in USA. He came with several messages. Among them was debt relief for Nigeria and other developing countries, term limits for elected leaders. He also renewed his advocacy for equitable distribution of Covid-19 vaccines, and other issues. Perhaps his plea for debt relief resonated more than any other issue he talked about at the august assembly. It was not for nothing. Making such an appeal for debt relief, in an intense and emotional way as he did, was an interesting paradox of sort. It is also self-defeatist. The question is: how can a leader make such a plea amid unending borrowings by his administration?
Those who watched President Buhari speak, and deconstructed his debt relief plea, picked holes in his speech. They scoffed. This is the Buhari message: “Developing countries have been faced with unsustainable debt burdens even before the pandemic. [But] the Covid-19 pandemic has increased the risk of new wave of deepening debt, where vital public financial resources are allocated to external debt servicing and repayments at the expense of domestic health and financing for critical developmental needs”. Good message, but low in strategic thinking. That’s where the President lost his audience, and muddled up his message. In the first half of 2021 alone, Nigeria has spent N532.8billion on external debt servicing.
With Nigeria’s debt service-to-revenue ratio at 98 percent, his administration’s borrowing binge has become unsustainable. As former military Head of State Gen. Abdulsalami Abubakar told Saturday Sun in an interview , “the country’s debt burden is a great concern to everyone”. But not this administration. President Buhari has brushed aside overwhelming public opinion against more loans. Many have called for a moratorium on borrowing. Only recently, he made a fresh request to the National Assembly to consider and approve external loans estimated at N2.5trn. This consists of $4.05bn and €710 million. The request is contained in a letter he addressed to the leadership of the Senate and House of Representives. According to Buhari, the fresh loans would be used to fund projects captured under the 2018-2021 Borrowing Plan through Sovereign loans from the World Bank and other external financial institutions.
Where are the benefits of the loans already secured from external lenders? Have the loans being used for the projects they were meant for? Little seen, little felt by the citizens. Where is the N8.9trn that vice president Yemi Osinbajo claimed was spent on infrastructure in one year? Data from the Debt Management Office(DMO), confirmed that debts by federal, states and Federal Capital Territory(FCT), as of June this year, stood at N35.5trn. This comprised of N21trn domestic debt, and N14.5 trn external loans. Debt relief or forgiveness is not given when the borrower has been on a spending spree with little to show on how the facility has been utilized. Besides, the Government has finalised another N10trn overdraft with the Central Bank of Nigeria(CBN). About 85 percent of already matured loans are being rescheduled. All of this makes the nation’s borrowing unsustainable, and the economy on the brink of collapse. Yet, the end to federal government’s borrowing spree is not in sight. It will be recalled that on May 18, 2021, President Buhari had sought and got approval of the Senate, to borrow $6.18 bn foreign loan to finance this year’s N5.6trn budget deficit. Also, on July 8, this year, the Federal Executive Council(FEC), approved the 2022-2024 Medium Term Expenditure Framework and the Fiscal Strategy Paper, authorizing the funding of N5.6trn deficit envisaged in the 2022 budget through borrowings. In real terms, about 90 percent of total earnings of government, is spent on debt servicing.
It is disturbing that while President Buhari was pleading for debt relief at the UNGA, under his leadership, Nigeria’s public debt has ballooned from N18.89trn he inherited in 2015, to N33.11trn as of March, 2021. This represents about 296 percent rise in 6 years. Statistics show that Nigerians have grown poorer for the sixth straight year. Like a rubber stamp, Senate President, Ahmad Lawan said to the surprise of no one that the National Assembly would continue to approve foreign loan requests by the presidency despite the debt burden because, in his words, “the country has no option than to borrow for critical infrastructure”. A forward-looking legislature ought to evaluate the existing loans, how they have been applied, and the level of implementation of the projects for which the loans were granted in the first place. Unfortunately, not this present 9th NASS. Already, this administration has planned to spend a whopping N13.98trn in the implementation of 2022 budget. With only projected revenue of N8.76trn, it’s not hard to predict where Nigeria is heading- sinking deeper into debt hole.
It was for this reason that the World Bank recently warned that Nigeria faces imminent high-debt risk exposure due to failure to meet contractual debt obligations to creditors. It means that for every N1 earned, N0.98 is spent on debt servicing. This is the worst the country has faced since independence. Without shame, the government has scored itself above all previous administrations. The calculation by Experts have expressed fear that Nigeria’s total debt stock could hit N40trn by year end. Between January and May this year, government spent N1.8trn on debt service obligations. The figure represents 98 percent aggregate revenue within the period, which is 44.6 percent lower than the projected revenue of N3.32trn for the period. For now there is little silver lining in terms of broadening the revenue base without further hurting the cost of living of the people who are already at the receiving end of most government’s policies.
Figures from DMO show that Nigeria had taken loans worth $31.98 billion from the World Bank Group, International Monetary Fund (IMF), African Development Bank (AfDB) Group and other financial institutions. This is contained in the September 2020 debt stock. According to the report, Nigeria has an outstanding $11.6 billion loan to be paid to the International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD).
These are organisations under the World Bank Group. Also, the report shows that Nigeria owes the IMF $3.45bn and $2.24bn to an organisation known as “Africa Growing Together Fund and African Development Fund”. These are entities under the AfDB Group. This is in addition to unpaid debts to four international lenders : the Arab Bank for Economic Development in Africa (BADEA), Islamic Development Bank(IDB), International Fund for Agricultural Development (IFAD), and European Development Fund (EDF), all totaling $298.12bn. Nigeria owes China, France, India and Germany $4.0 billion. This accounts for 12.74 percent of the nation’s external debt which currently stands at $32.86bn. According to DMO, these include $3.26 bn to the Export Import (EXIM) Bank of China, Agence Francaise Development, ($502.38 million), Japan International Corporation Agency, $78.20 million, Exim Bank of India, ($37 million). With this quantum of debts, made worse by the Buhari administration, debt relief for Nigeria is farfetched.