Umar Yakubu, executive director of the Centre for Fiscal Transparency and Integrity Watch, has linked some of Nigeria’s economic troubles to lack of due diligence.
Yakubu noted this while speaking on the country’s infrastructure deficit at the Media and Development conference organised by the Centre for Journalism, Innovation and Development (CJID) in Abuja Monday.
He noted that the infrastructure gap can be closed through investments, but the country has to first do better with borrowed funds.
“Our level of due diligence is very low. We sign contracts without properly understanding what we’re supposed to do. Even if we do understand them, we do not sometimes sign them for national interest and national security purposes. That is why you see that will fall into a lot of problems where the monies have been collected, and when it comes to paying you will not see the value for money,” he said.
“Secondly, we have to also strengthen our internal systems when you borrow money, you know that future generations are going to pay so you have to ensure that the money is properly utilised. Meanwhile, the lenders do not care if they have already borrowed the money or however you pay. Lastly, or most importantly, there needs to be more transparency.
“Like I said earlier Nigeria is indebted $250 billion. If you asked for the components of those loans, you’ll see how we borrow them. But were the citizens engaged, were the media invited, were people invited to see and probably scrutinise how we use the money we borrowed, you find out they were not there. So these are the three things.
“I think we just need to add due diligence, transparency and accountability to go with what is being borrowed for effectiveness.”
At the event, Lola Adekanye, African program director of the Centre for International Private Enterprise said that the Nigerian environment for investment is not attractive enough, adding that investors now worry about different kinds of risks.
“A combination of issues is affecting the nation’s ability to attract needed investment, but the primary one is the environment for investment and growth. You will always hear that investors like stability, there needs to be trust in the business sector and what that translates to is, if I put my money in any business, I want to be sure that my return on investment is guaranteed. I want to be sure I don’t want to put 20,000 Naira into a business and I’ll earn 15,000 Naira from it.
“So the environment for investment in Nigeria is not attractive enough. Because investors now worry about different kinds of risks and political risk is one.
“Like the investment in the Abuja Kaduna rail, and then there was the insecurity attack, I’m not sure what insurance we have to recover the loss that we experienced or still incurring from that rail project not working optimally right now.
“So investors, before they invest, look at the track record of other investments that have been in the country before and when they see that the return on investment is not as guaranteed, it’s reducing and there are too many unstable indicators. They are not attracted to invest. So basically, it’s still a very risky market.”
This is as total investment into the Nigerian economy declined by 33 per cent to $1. 03 billion in the second quarter of 2023, as against $1.535 billion recorded in Q2 2022.
Speaking further, Adekanye stressed the need for government to promote stability in the economy through effective fiscal policies, and boosting opportunities for private sector growth.
She also decried the misuse of borrowed funds, which are spent on recurrent expenditure rather than capital expenditure. Spending funds on capital expenditure according to her can be turned into economic value over time.
“Government is borrowing to service recurring expenditure, government is borrowing to give out palliatives that do not demonstrate enough trust that the return on investment will be guaranteed. And so these are things that the government has to work on,” she said.
For Akintunde Babatunde, director of programs at CJID, bilateral relationships with foreign countries have not yielded the expected investments in the country.
He noted that the Conference aimed to spotlight some of the issues impeding development in the country, while also providing solutions to address them.
“At CJID, we have over the years invested in helping to build the capacity of journalists in health, health reporting, climate change reporting, conflicts reporting, anti-corruption and every other sector.
“In situations where bilateral relationships, agreements with other countries, and investors do not translate to what they should, then there is a problem. The moment when the media doesn’t know details about what contract the government is getting into, how much loan are we getting, if you know, the terms of the loan, then we have to be conscious.
“So the media should be at the heart of understanding what argument is my government going into? What are the terms who are the beneficiaries and how do we spot red flags?