If there is anything that is currently agitating the minds of Nigerians across all divides, it is the recent revelation by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, that Nigeria’s debt profile would hit N38.68 trillion by December 2021.
Before her disclosure, Nigerians from all walks of life including politicians, captains of industries, academics, labour leaders, members of the civil society groups, and rights activists have all raised the red flag about the country’s rising debt profile, warning of an imminent danger if the trend was not arrested urgently.
Her disclosure also exacerbated the reactions that have been trailing President Muhammadu Buhari’s 2021 budget estimate of N13.08 trillion presented to the joint session of the National Assembly last month, where a whopping N3.14 trillion was earmarked for debt servicing alone.
Some Nigerians are crying blue murder and calling attention to a portion of the budget estimate, which placed the budget for capital expenditure just a little above that of debt servicing at N3.85trillion; a development they described as very dangerous and anti-people.
It is instructive to note that in October 2005, Nigeria and the Paris Club announced a final agreement for debt relief worth $18 billion and an overall reduction of Nigeria’s debt stock by $30 billion. The deal was completed on April 21, 2006, when Nigeria made its final payment and its books were cleared of any Paris Club debt.
Regrettably, Nigeria’s external debt which stood at $9.7 billion in 2015 has today risen to $27 billion. Analysts believe that most of the debts that shot the external debt from $9.7 billion to the current $27 billion were borrowed in the first four years of President Buhari’s administration through multilateral, bilateral, development, and commercial loans.
As if the figure was not bad enough, Nigerians were again taken aback by the Federal Government’s latest move to borrow $1.2 billion from Brazil. This has been generating ripples among Nigerians with some mockingly saying that having won gold medal among countries taking loans from China in addition to its N3.96 trillion indebtedness to the World Bank and $3.4 billion to the International Monetary Fund, the country has now beamed its borrowing searchlight on Brazil.
The situation has become so frightening that even the Kaduna State Governor, Mallam Nasir El-Rufai had to publicly declare that Nigeria had reached the limit of borrowing. In other words, the Kaduna governor was mildly suggesting that very soon, Nigeria would no longer be credit worthy in the comity of nations.
But the government is not giving in to citizens’ hue and cry as it has stoutly and consistently maintained that it had no choice, seeing its oil revenues fail to meet up with target and thus unable to fund Nigeria’s huge infrastructural deficit required to propel economic growth.
And that is where some Nigerians have issues with the government. To this category of Nigerians, borrowing is not a bad economic decision. What is bad is the government’s penchant to embark on ceaseless borrowing without anything to show for it. Today, Nigerians are not just angry and confused that the country’s debt profile has hit the roof top; they want the government to point to any infrastructure or legacy projects that have guzzled all the money so far borrowed in the last five years. They insist that most of the projects for which the loans were taken, according to the government, were initiated by the last administration of Goodluck Jonathan. The Buhari-led Federal Government, they argued, is only completing some of those projects; a fact that cannot support the quantum amount of money that has been borrowed by this administration.
The Peoples Democratic Party (PDP) in a statement by its Publicity Secretary, Kola Ologbondiyan said it was alarmed by the President’s move to borrow additional $1.2 billion loan from Brazil despite the public outcry against the accumulation of loans from China and other foreign countries, warning the government not to further weaken the nation by using “nebulous” agricultural programmes as justification for further accumulation of foreign loans.
The party warned that the loan request, if approved by the National Assembly, would exacerbate the nation’s debt burden, mortgage the agricultural sector, weaken the investment capacity and worsen the food security challenge.
Former Vice President Atiku Abubakar has equally joined other Nigerians to warn that the increasing debt profile would definitely drive the country to economic precipice.
He advised that the Federal Government should take immediate steps to reduce expenditure, especially those on frivolities such as the maintenance of the Presidential Air Fleet, unnecessary renovation of public buildings, maintenance of limousine fleet for top government officials, overseas medical trips and N4.6 billion presidential villa maintenance among others.
The former vice president had earlier in 2015 and 17 respectively warned against the dangers of continued borrowing. In 2017, he declared that Nigeria’s endless borrowing would lead to endless sorrowing, warning the government to desist from indiscriminate borrowing to avert the looming danger.
Former Chairman, Nigerian Economic Summit Group(NESG), Mazi Sam Ohuabunwa, believes that the country has borrowed up to a point where debt servicing might not even be assured.
He prayed that the situation does not degenerate to what the former President Olusegun Obasanjo met with the Paris Club. “We all know that if we have a shortfall in our individual budgets, what we will normally do first is to re-prioritize our expenditure; that is to cut down our needs to the money that we have. Now, if it becomes impossible to cut down, probably because it may involve the loss of lives or inability to feed or do basic things, then we can go and ask our creditors to give us things on credit. But not to be seen cutting down in our expenditure and just responding to the pressure to buy more to meet every expenditure is crazy. We have not seen any evidence of cut back in our cost or a re-prioritization of all the things that we need to do. So, I think that we seem to be following what I will like to call the least line of resistance, which is to borrow,” he said.
He argued that excessive borrowing is bad, especially when there is no guarantee for repayment. “Most people who borrow have to do cash flow analysis to show the kind of cash flow that will enable them to pay back. Where will Nigeria pay back from? Is it from the oil that is dwindling in the market; oil that is becoming useless? The world is moving towards green energy and checking for other ways to provide more environmentally friendly energy. So, fossil fuels are becoming discredited and disadvantaged. We were all here sometimes in April when in a single day, the oil price became negative. It was a big shock and I think it should have given us a lot of space for thought. If I was a policy maker, that would have been the last day of our dependence on oil. The next budget would have been done without oil,” he noted.
He advised the government to concentrate on the basic infrastructure like health and education and allow the private sector to drive other infrastructure development instead of continually borrowing to take on everything without any concrete repayment plan.
“Nigeria is building rail lines and Exim bank of China is contributing 70 percent while Nigeria is contributing 30 percent; we are building debt stock because I don’t know when we are going to pay. Why don’t we ask China to build the rail line, recover their money in the next 20 or 25 years and the rail line becomes a national asset. You can guarantee two things this way. First, you do not owe China; so it is not in your debt stock. Two, the cost of maintenance will be off you because China will bear the cost of maintaining the facility. So, I think that the government should cut back on its expenditure. We are like a farmer eating up his seed; and any farmer that does that will find it difficult replanting,” he stated.
He agreed with those who held that excessive borrowing would only make the borrower to be the lender’s servant. He said: “The implication is that we shall become servants of our creditors and in those days, a creditor can take your children. So, if we are borrowing ceaselessly as we are borrowing, we shall become the slaves of our creditors and they will determine the terms. They can decide to go into consortium like they did the last time. They can decide to block your trade, your sales, your property, your assets, your international transaction, your sovereign wealth and your reserve.”
He described the development as a big risk, saying, “We are mortgaging the future of our children because you cannot be borrowing with an uncertain future source of income. If we have diversified our income and we are sure of some income, we can borrow, especially if we are going to put the money on income generating infrastructure or in places like health and education. But if it is to pay salaries, run overhead and travels and all the inexcusable wastages you see in government, then it is a tragedy.”
A chieftain of the ruling All Progressives Congress (APC) and former Secretary General of Nigeria Union of Petroleum and Natural Gas Workers’ Union (NUPENG), Chief Frank Kokori, like some other Nigerians, held that every government borrows but insisted that Nigerians are worried because they don’t see what is being done with all the money. He lamented that rather than use the loans for the purpose they were meant for, they all end up with inflated and phantom contracts.
But rather than blame the government, the labour leader lambasted the National Assembly for failing to monitor the government on expenditure and spending spree. He stressed that every patriotic Nigerian should be concerned about the country’s rising debt profile even as he insisted that Nigerians should first of all direct their anger to the National Assembly members for failing to do their job.
“They will tell you that they are using the loans for the rail line and all that but the people who are supposed to monitor them and ensure that the purpose for such borrowing is fulfilled do not do anything and at the end of the day the money is gone without anything to show for it,” he added.
For the Spokesman of the Afenifere Renewal Group, Dr. Yinka Odumakin, there seems to be a deliberate plan to bankrupt the country. “The borrowing binge has become so embarrassing. What are they doing with the money? Where are the projects?” he queried.
He argued that it was time Nigerians made enquiries into what the government is doing with all the borrowed loans. “Because if you are borrowing that kind of money and we don’t see the projects, then it calls for serious concern. So, it is a worrisome development and it is either there is a hidden agenda for all the borrowing, which may not be for the national interest or there is a plan to bankrupt the country completely because the borrowing is not just ordinary,” he submitted.
National president of the Arewa Youths Consultative Forum, Yerima Shettima, feared that the consequences of the rising debt profile could be the enslavement of the Nigerian children of tomorrow.
He charged the government to be courageous enough to tell Nigerians what actually is happening. “The worst part of it all is that they keep collecting these loans, but people are not seeing the impact. I think the Federal Government should draw the attention of everybody who is involved to look at the issue critically because it is quite disturbing,” he said.
The moment of truth seems to be here with us as Nigerians want the government to come clean and tell them what has happened with all the loans so far taken.