The Minister of Finance, Budget and National Planning, Zainab Ahmed was at a World Bank meeting recently and she told journalists there that Nigeria is struggling to service debt and fund recurrent expenditure. She said this while trying to justify taking another trillion-naira loan that would take Nigeria’s debt, currently over ₦25 trillion, to something close to ₦27 trillion.
A brief look at our national debt history would show that when Nigeria first transitioned from military to civilian rule in 1979, General Olusegun Obasanjo left the country’s public foreign debt at $3.744 billion. By 1983, the Shagari administration had driven the debt to roughly $20 billion.
Obafemi Awolowo, a key opposition leader at the time, complained bitterly about this, and his exact words in response to the situation were, “We can all see at a glance, therefore, the depth to which Nigeria has sunk in the slough of foreign indebtedness as a result of the thoughtlessness of the Shagari and his team in their four years of office. His scramble for foreign loans from any source whatsoever and at any interest-rate up to Libor’s 20 percent per annum has no parallel anywhere except perhaps in a bankrupt country with a lazy and incompetent President like ours.”
These were Awolowo’s exact words on the ballooning debt profile of Nigeria in 1983 – thirty-six years ago.
Usually, countries keep track of their mistakes and try to avoid them. Nigeria however, appears to prefer to relive its worst mistakes and tragedies.
Obasanjo became president again in 1999 and worked out a partial write-off of Nigeria’s international debt to the tune of $19 billion, leaving Nigeria with a somewhat clean slate as at when he finished his leadership stint in 2007. We slowly grew this debt profile, and then 2015 happened. Buhari became President and Nigeria has borrowed more in the last three years than it did in the 30 years before his term and took debt levels from ₦12 trillion to ₦25 trillion without visible impact.
Let’s get one thing clear, debt in itself is not a bad thing. Debt is a neutral concept which can become a negative when done with the wrong thinking and spirit. A key factor in debt is the debtor having a proper sense of responsibility towards the lender, and the group that the loan is being taken on behalf of. This sense of responsibility requires the investment of the loaned sum in ventures that guarantee returns on the investment.
Nigeria, however, appears to be in a dangerous situation where its debt-accumulation is led by people who have no real sense of responsibility towards the lender and the country they represent.
These loans have not been used to improve infrastructure and education that would improve our capacity to earn and repay creditors. Instead, these loans have been largely wasted on unproductive recurrent expenditure while the government has stayed true to actions, inactions, policies and legislation that stifle regional growth and market improvements. The decision to completely shut the land borders of the country ostensibly to combat smuggling is just one example of the baffling policies of the government. While smuggling definitely occurs across every country’s land borders and even through seaports, to deprive the overwhelming majority of legitimate business owners of access to regional markets in order to fight a few smugglers is akin to chasing rats while your house burns down.
We are taking trillions of naira in loans but also spending trillions each year to subsidise both petrol and an unrealistic foreign exchange rate that distorts the economy. The economic policies of the government have also managed to create an environment in which local businesses struggle while simultaneously deterring foreign investment from entering the country. The consistent fall in FDI inflows combined with capital flight also leads to the government having to borrow more and more money to fund its expenditure.
Ironically, at the same time as the government voices concerns about the cost of governance, these costs are not being restrained in any way. Nigeria, despite being a country with rampant extreme poverty, somehow also runs one of the most expensive parliaments in the world. Recent moves by the National Assembly to acquire ₦50 billion in new vehicles have been met with outrage, especially considering the continued foot-dragging of the government over the implementation of the new national minimum wage.
Poverty and insecurity are spiking, partly because of government policies while the government itself is increasingly hostile and parasitic to the productive sectors of the country that it should support to get adequate economic growth and development. Infrastructure is in a dire state and several interstate highways are now either unmotorable or hopelessly compromised by kidnappers and other bandits. The Abuja-Kaduna expressway which has become a kidnappers’ haven despite the efforts of the police to secure this vital corridor, is a case in point.
That awful Nigerian tendency to re-enact its worst tragedies has resurfaced in the person of the Minister for Agriculture, Muhammad Nanono, who said that Nigerians were not hungry and can do away with bread and eat local foods as breakfast. Nanono’s statement is an almost word for word replay of President Shagari’s minister, Umaru Dikko, who said that Nigerians hadn’t started eating from dustbins so they were not really hungry.
The same mixture of callousness, arrogance and disastrous incompetence that set Nigeria on its way to becoming the byword for astounding mediocrity it currently is with us again. The choice is ours whether we accept that, or deal with it in such a way that it never raises its head again.
CHETA NWANZE
