From approving multibillion-naira contracts to signing deals, there are a series of last-minute economic decisions by Nigeria’s outgoing president, Muhammadu Buhari, that are expected to turn out to be a quagmire for his successor, Bola Tinubu.
The administration of Buhari, who will hand over on May 29, has taken several major decisions in recent weeks.
Among the decisions are the proposed 40 percent pay raise for civil servants, approval of ward of several contracts worth N327.34 billion, seeking approval for $800 million World Bank loan, and unresolved reforms add to the already challenges that await the President-elect, according to BusinessDay’s analysis and expert opinions.
“Governance demands continuity and global best practices emphasise that the business of government should hum along smoothly during transitions and even during emergencies; however, this series of last-minute decisions are an undesirable phenomenon for the new government,” a London-based investor told BusinessDay.
He added, “While the government is bound to approve and pre-agree policy, legal and financial engagements; however, entering into new non-essential or emergency procurement, or spending deals is unfair to the country and the incoming government.
“This is especially so when the treasury is empty, debts are at record levels, and almost all revenue is spent on servicing debts.”
The Buhari-led federal government has also deferred the planned petrol subsidy removal, postponed the national census and introduced a new tax regime that the new government will implement.
Seun Onigbinde, co-founder of BudgIT, raised red flags about some of the last-minute economic decisions of the outgoing government.
“To take an $800 million loan as consumption is illogical,” Onigbinde said. “Why is an outgoing government borrowing $800 million to provide palliatives when the government has already printed N23 trillion through the Central Bank of Nigeria over the last eight years?”
Ola Alokolaro, partner, energy and infrastructure at Advocaat Law Practice, said the outgoing president inherited an oversized, expensive bureaucracy. “He would have done Nigeria a great service by first drastically downsizing it and saving billions of naira before contemplating any pay rise.”
“The outgoing government failed to implement the pruning and cost-saving recommended by the Steve Oronsaye panel report. The N854.8 billion budgeted for gratuities and retirees’ benefits in 2023 will inevitably rise,” Alokolaro said.
Read also: Buhari leaves indelible mark on ailing power sector
A report by PwC also showed Nigeria’s 2023 budget is expected to produce Nigeria’s highest budget deficit of N10.78 trillion.
“The budget deficit exceeds the expected revenue of N9.73 trillion by about 11 percent; Nigeria needs to generate 111 percent of its current revenue to be able to meet its expenditure needs without borrowings,” PwC warned.
Alokolaro said the above development is a fiscal ambush for Tinubu.
Findings by BusinessDay showed the outgoing president is expected to pass on at least $785 million judgement debts to the next administration.
The judgement debts were listed as 18 promissory notes in a document titled ‘Schedule of Promissory Notes Issued by Category as of September 30, 2022′ by the Debt Management Office.
According to Investopedia.com, a promissory note is a debt instrument that contains a written promise by one party (the note’s issuer or maker) to pay another party (the note’s payee) a definite sum of money, either on-demand or at a specified future date.
Section 4 of the Government Promissory Notes Act states that government promissory notes are paid from the general revenue and assets of the federation.
It read in part, “The principal sums and interest represented or secured by any government promissory notes are hereby charged upon and shall be payable out of the general revenue and assets of the federation.”
Out of the 18 promissory notes to judgement creditors, one matured on August 11, 2022, while the second matured on October 15, 2022.
The remaining 16 promissory notes will mature at different times between October 15, 2023 and October 15, 2031.
In September, Abubakar Malami, attorney-general of the federation and minister of justice, disclosed that the federal government had agreed to pay a foreign investor $496 million to settle a long-standing $5.26 billion contractual dispute.
The government said the mediation proceedings were under the alternative dispute resolution framework of the International Chamber of Commerce led by Phillip Howell-Richardson.
“Most cases against the government are due to negligence and poor handling, leading to judgement against the government even where there could have been no judgement because it has been poorly defended. But unfortunately, the tragedy is that when you file a case against the government, they may not bother until you get a judgement,” Alokolaro said.
Other experts say the incoming government will contend with terrorism, banditry, kidnapping-for-ransom, killings and secessionist agitation, among others.
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