“Our political leaders have suddenly developed not just a taste for, but a voracious appetite for debt. As usual, most of such debts that are procured are hardly thought through. Predictably, ability to repay such debts is lacking”
-Former President Olusegun Obasanjo speaking at the ‘Why I am Alive’ campaign in December 2019.
One recurring ugly decimal of Nigeria’s inexcusable economic paradox of the people’s pitiable poverty amidst abundant God-endowed resources is the ever-increasing debt profile, at both the state and federal levels. It is sad to note that it has been so over the decades, spanning different administrations, with variant political colorations.
More worrisome is that there is inadequate empirical value on the ground, that is in terms of infrastructural development, appreciable human development index and economic production to show for the humungous sums of money so borrowed, year after year. It would seem that our political leaders have refused to adhere to the biblical admonition that: “The rich rule over the poor, and the borrower is slave to the lender”, according to Proverbs 22:7.
Recall that yours truly has over the years raised the alarm in published articles on the critical issue, as a concerned citizen. These include the ones titled: “Nigeria’s debilitating debt profile” (January 2013); “Who will pay these huge debts?” (July 2017); “Nigeria’s dehumanising debt profile” (July 2019) and “Nigeria’s free fall into China’s debt trap” (July 2020) published in different newspapers and magazines. Painfully, things have not changed for the better ever since.
For instance, as of July 8, 2021, the media was awash with the following headlines: “Fresh loan request pushes Nigeria’s public debt to over N35.5 trillion”; “Buhari gets Senate’s approval for N2.3tn foreign loan request”; “FG to fund N5.62tn deficit in 2022 budget with loans”; “Nigeria on debt precipice, spent N1.8tn on debt servicing between January and May 2021”; “Government records debt service to revenue ratio of 98%”!
You should be similarly worried about these scary economic indices, shouldn’t you? Yes, you should. The reason is simple: one does not want Nigeria, our dear country, to go the way of some other African countries that are currently enmeshed in the debt marsh to China. For instance, as of 2020, African countries with the largest Chinese debts include Angola ($25 billion), Ethiopia ($13.5 billion), Zambia ($7.4 billion), the Republic of Congo ($7.3 billion) and Sudan ($6.4 billion).
The warning given here is that our current political leaders should prevent Nigeria from being taken over by the overtly ambitious China because all Chinese loans are tied to infrastructural developments. In fact, some of the African debtor nations have had to forfeit some to China. For instance, $7.4 billion of Zambia’s total $8.7 billion foreign debt is owed to China. It was reported in late 2018 that China was primed to take over the state electricity company, ZESCO, as a form of debt repayment since the country had defaulted!
Also, Kenya may soon lose its largest and most lucrative port, Port of Mombasa to its creditor (China) after it defaulted in the repayment. This could force Kenya to relinquish control of the port to China.
This unfortunate economic situation throws up some salient questions, all begging for answers. Have we, as a country, not been making money from crude oil sales, multiple company taxes including VAT, inflow from the ports and that from the Customs charges and duties?
Back in June 2017, Prof. Pat Utomi and Mr. Bismarck Rewane, both seasoned economists, asked questions about the increasing debt burden at both the state and federal levels. As of March that year, the nation’s total debt had risen by N7.1tn to a mind-boggling N19.16 tn.
While as of June 30, 2015, the country’s total debt was N12.12tn by September 2018, the debt stood at N22.43tn. That means that within the first three and a half years of the current regime, the debt rose by N10.31tn which is 85.06 %. The external debt component of both the federal and state governments including the FCT increased by 109.21%, according to the Debt Management Office. Are you not worried?
Fast forward to 2019. President of the African Development Bank, Dr. Akinwunmi Adesina, raised similar concerns to those of Utomi and Rewane. According to him, Nigeria was as of that year using 50 per cent of its revenue to service its debts, compared to the average of 17 per cent for other African countries! This is unsustainable.
Furthermore, going by the frightening figures made public by the DMO, the total debt stock stood at some humongous amount of N24.047 trillion as of March 31, 2019. Reports have it that N560 billion out of this was borrowed in only three months!
In fact, on May 21, 2020, an online platform, ‘Nairametrics’, warned about Nigeria falling into China’s debt trap. According to the Director of Centre for Infrastructure Policy Regulation and Advancement, Dr. Bongo Adi, Nigeria lacks accountability, transparency, and responsibility to refund its loans. He is of the Lagos Business School and surely knows his onions.
We surely do not need rocket science to understand that Nigeria’s economic growth is undermined by the huge debt stock as well as other obvious factors like sheer profligacy in running government apparatus. With decrepit infrastructure and some 23 out of 36 states at a point unable to pay 100% salaries to deserving workers, there is crass corruption in high places.
This is exacerbated by the huge pay package of political office holders, with those of our lawmakers ranking amongst the highest in the world, even as Nigeria remains the poverty capital of the world. All these have no doubt led to an unprecedented unemployment level and an upsurge in the wave of crime.
The way forward is for government to cut its economic coat according to available resources. It should allow for a holistic economic restructuring so that the states can control their resources and pay an agreed percentage of income as tax to the centre.
We have to become more creative now so that the commercial banks can start lending to the real sector to boost manufacturing. Government should ban sundry consumables including textile materials and electronic equipment that are being imported daily at astonishing rates and giving smugglers a field day.
Once again, one’s current concern, however, is who will pay these huge debts? Will the burden being left by the feckless, reckless and frivolous political class not be too weighty for the lean shoulders of our jobless children? Those in government should heed the words of caution by Chief Obasanjo so that generations yet unborn will not be turned to slaves and beggars in their own country by the creditor nations.A word should be enough for the wise.
– Punch