There are big disturbing question over the economic future of Nigeria. In this analysis, EMMANUEL OBISUE examines the public concerns in the country over the growing debt profile which Nigeria has trapped itself once again after former President Olusegun Obasanjo administration freed the country.
At as December 2019, Nigeria’s external debt reached a 16 year high of $27billion, higher than the $20.8 billion recorded in 2005.
Later in December 2006, the figure lowered massively to $3.5 billion after the Olusegun Obasanjo administration paid off the Paris Club.
Over the years, needless and wasteful spending on recurrent expenditure, less spending on capital projects and looting of public money, has worsened Nigeria’s debt profile.
Also years of lower oil prices has adversely affected Nigeria’s ability to fund the development of its infrastructure, which is key in propelling economic growth.
It is worrisome that the cost of running the day to day activities of governance in Nigeria is largely funded by borrowed funds.
From the exotic official cars, to cut-throat salaries and allowances, to avoidable travels, the list of encumbrances that drains Nigeria’s wealth is unending.
Nigeria’s foreign debt has its origin from way back 1958, when a loan of $28 million was borrowed from the World Bank to construct a railway and some other developmental projects. Kudos to the Obasanjo-led administration, which intensely pursued debt revocation between 2003-2007.
Succeeding administrations, have however resumed borrowing and stockpiled the nation’s debt, comprising of loans, Euro Bond, Diaspora Bond, etc.
In recent times, China has become Nigeria’s major lender. As it stands, Nigeria is indebted to China, just as a woman is committed to the man who has paid her pride price.
Nigeria owes more money to China than any other country. According to statistics from Bloomberg, “Chinese credit accounts for 80 percent of all bilateral lending to Nigeria.
China provides loans to build railways, power plants and airport, helping to bridge infrastructure gap in Africa’s largest oil producer”.
Only last week, President Muhammadu Buhari wrote the National Assembly seeking for approval of a fresh $5.5 billion loan.
According to him, the loan is to finance critical projects and support some vulnerable states of the federation.
The four listed lenders were: The International Monetary Fund, IMF, World Bank, African Development Bank, ADB and the Islamic Development Bank.
The president’s request is cunningly coming just weeks after the National Assembly approved an N850 billion loan and another pending $22.79 billion loan for the federal government.
Painfully enough, the federal government must begin to understand that foreign debt accumulation is an economic burden that stalls economic growth instead of improving it as envisaged.
When these debts accumulate over time, the result is debt overhang.
The country in debt now becomes perpetually dependent on it’s forget lender and is in turn prone to exploitation.
The case will be similar to a grown adult exploiting the private parts if a younger inexperienced one at will.
This is the situation Nigeria has found itself in. It is leaving no stone unturned in servicing foreign debt so as to attract more debt.
The economic improvement claimed by the past and present administration was merely achieved by judiciously servicing debt and making Nigeria credit worthy, thus increasing levels of foreign borrowing which in turn enslaves the nation.
Going forward, experts have recommended that if government must borrow, it should be purposeful, especially with the intent to develop local economic capacity, most of which have remained untapped.
The government must also move away from the culture of borrowing to fund political ambitions. It is rather disheartening that most foreign debts incurred were more for political reasons than profitable ventures.
It is further advisable to have revenue generation and aggressive economic development as the focus in all foreign borrowings.
This can be achieved through adequate feasibility study to establish the profitability of capital investment and the likelihood of realizing the goal before foreign borrowing is undertaken by the government.
The current administration has done well in initiating processes for the revival of the Ajaokuta Steel Company.
It can also look at ways of exploring the Delta Steel Company, all these which have the capacity to generate sufficient revenue for the country and create employment.
A revival of the Nigerian textile industry which at maximum capacity, contributes up to 15 percent of the manufacturing earnings to the GDP and about 60 to 70 percent of the textile industry capacity in Nigeria and West Africa.
There is also a suspected, yet denied ploy to feast on the almost a billion dollars Abacha loot which has been coming in tranches since they were stolen in the 1990s.
As contained in an article published in Newsweek, a US based publication, Buhari through the Attorney-General of the Federation, Abubakar Malami, flattered that the money would be spent on upgrading infrastructure in the construction of the Lagos-Ibadan expressway, Abuja-Kano road, and the Second Niger Bridge.
“In Nigeria, a major global oil producer, we have finally established our first private oil refinery—which is also one of the largest in the world.
The Mambilla power plant, finally unlocked for completion after a successful decision by the International Court of Arbitration in Paris earlier this year removed impediments, will electrify the homes of some 10 million of our people.
“And we can now move forward with road, rail and power station construction—in part, under own resources—thanks to close to a billion dollars of funds stolen from the people of Nigeria under a previous, undemocratic junta in the 1990s that have now been returned to our country from the U.S., U.K. and Switzerland.
“That these friendly nations agreed to return these funds after so long is testament to the fact that, thanks to our governance reforms, Nigeria is rightly seen as an increasingly stable and beneficial place to transact and invest.
“In this new, post-coronavirus age, Nigeria—and Africa, more broadly—wish to benefit the world, not be a drag on its resources or seemingly forever in need of aid.
At last, after years of poor governance, we have the people, the purpose and the political will for this to change.
“What we need now is for the vision of others to match our own. For many lost decades, Africa’s manufacturing moment has been on the launch pad, but never leaving it.
“But this time, I am convinced, it can be different,” part of his article read.