• Monday, April 22, 2024
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Fighting the enemy through loans

Nigeria’s economic landscape is witnessing a worrisome trend, marked by a consistent surge in debt servicing over recent fiscal years, indicative of a notable shift in the nation’s financial priorities.

Earlier this month, President Muhammadu Buhari said his administration spent over $1 billion on equipment needed to recover territories in the North-East taken by Boko Haram.

“When I assumed power in 2015, Boko Haram held about two-thirds of Borno State, half of Yobe State, and a couple of Local Government Areas in Adamawa State, all in the North-East of Nigeria,” Buhari told delegates at the African Conference for Peace 2023 in Mauritania.

“We have been able to retrieve these swathes of territories by investing over $1 billion to acquire hard and software weaponry from the US and other friendly countries to carry out sustained operations against insurgency since 2015.”

An early 2015 offensive by Nigeria’s military led by the then General Officer Commanding 7 Division, now retired Lt-General Lamidi Adeosun, along with South African mercenary firm, STTEP International, and neighbours Chad, Cameroon and Niger helped regain all lost territories. Elections were held in all the local governments in Borno and Yobe states in March 2015, states Buhari won with a landslide.

John Campbell, a former US Ambassador to Nigeria, observed on March 24, 2015 that “since postponing the national elections from February 14 to March 28, the Abuja government has apparently recovered most of the territory in northeast Nigeria that had been lost to Boko Haram. Of the major towns once captured, only Gwoza appears to remain under Boko Haram’s control”.

With a huge appetite for loans, since coming to power in May 2015, Buhari has borrowed billions of dollars to fight the Boko Haram war.

In November 2014, Buhari, who was a presidential aspirant under the All Progressives Congress (APC), faulted President Goodluck Jonathan’s moves to borrow money to fight the insurgency in the North-East. He had said in Kano that besides corruption and mismanagement of public funds, Nigeria had no cogent reason to borrow money to fight insurgency.

He said Nigeria could generate enough funds to purchase necessary military equipment, adding that the real challenges militating against successfully fighting the insurgency were the lack of political will and diversion of the national treasury.

Read also: Nigeria’s debt pile takes toll on fragile earnings

In December 2017, Buhari ordered the withdrawal of $1 billion from the Excess Crude Account to enable the military and security services to fight the Boko Haram insurgency in the North-East. At the request of the Nigerian leader, the World Bank agreed in August 2015 to extend a $2.1 billion low-interest loan to the country, for the specific purpose of rebuilding the areas in the North-East that have been worst affected by Boko Haram.

“The World Bank will spend the $2.1 billion through its IDA (International Development Agency), which gives low-interest rate loans to the government. The first 10 years will be interest-free, while an additional 30 years will be lower than the capital market rate. The World Bank is eager to move in quickly, give out the loans, and give succour to the people of North-East, long at the mercy of an insurgency that has claimed over 20,000 souls,” Buhari said in a statement.

In February 2018, he asked the National Assembly to approve a $1 billion loan to fight Boko Haram.

In 2021, the House of Representatives approved external borrowings totalling $5.803 billion and a total grant of $10 million for the Federal Government as part of the proposed 2018–2020

External Borrowing (Rolling) Plan No.3 requested by the President. He had made the request for the facilities in an addendum to the 2018-2020 borrowing plan in September of that year.

Buhari had explained that owing to “emerging needs”, there was a need to raise more funds for some “critical projects.” He said the loans, when obtained, would stimulate the economy and create jobs. Part of the loans was to be dedicated to defence and security projects.

The government has also spent part of the N23.7 trillion in ways and means advances secured from the Central Bank of Nigeria on the military.