President Muhammadu Buhari’s request for re-consideration and approval of a 2016-2018 External Borrowing Plan to enable him secure additional $30 billion loan to finance an estimated 39 infrastructure projects across the country has sparked concern about Nigeria’s rising debt profile.
Buhari’s borrowing request shut down by the eighth National Assembly was conveyed in separate letters to President of Senate Ahmad Lawan and Speaker of the House of Representatives and read at plenary yesterday.
The president’s letter titled: “Request for the National Assembly to re-consider and approve the Federal Government’s 2016 and 2018 External Borrowing Plan” read in part: “Pursuant to section 21 and Section 27 of the Debt Management Office Establishment Act “I hereby request for resolution of the Senate to approve the Federal Government’s 2016 and 2018 external borrowing plan as well as relevant projects under this plan… “The outstanding projects in the plan that were not approved by the legislature are nevertheless critical to the delivery of government policies and programmes relating to power, mining, roads agriculture, health, water and educational sectors.”
But Nigerians have raised concerns that the fresh external loan would further escalate the country’s loan stock. Some experts who spoke to Daily Sun, yesterday, urged the lawmakers to throw out request if they truly have the interest of Nigerians at heart.
According to them, approving the humongous loan was the quickest way to kill the country as there were no satisfactory repayment strategies on ground. They argued that for a country already boxed into a debt trap with over $82 billion debit, taking additional $30 billion credit was tantamount to committing suicide.
Lead Director, Centre for Social Justice, Mr Eze Onyekpere, said for President Buhari to have made a request for $30 billion loan means he did not have the grasp of what simple governance entails. “What does he need the money to do? This is a disaster. What manner of president is this? After introducing the Finance Bill to tax Nigerians more to raise more revenue now, he wants to borrow additional $30 billion. For what? If this is approved, Nigeria is gone to the dogs. $30 billion on top of the existing $82 billion we owe? When will we pay back? How do we pay back? He wants to pile up loans for generations to pay”, he said.
In his submission, Odilim Enwegbara, Developmental Economist, described the loan request as the height of insensitivity and crass demonstration of cluelessness. “Let him (Buhari) show us the debt sustainability plan. What infrastructure is $30 billion going to be used for? How do we pay back? If he says he wants to build infrastructure, the bulk of it is domiciled in the states. “Let the states come in here and arrange a PPP to address the infrastructure gaps we have. The Federal Government can’t continue borrowing money, and saying it’s addressing infrastructure, when what we are actually doing is borrowing money to enrich a lot of people close to government or in government. “You can’t continue to accumulate debts we can’t pay. Government should allow restructuring so that regions can build their own infrastructure,” Enwegbara posited.
The Nigeria Employers’ Consultative Association (NECA) expressed its fears at the nation’s mounting debt burden with Buhari’s request for fresh US$30 billion loan.
Director-General of NECA, Mr. Timothy Olawale, said: “Figures released by the DMO earlier in the year showed that the Federal Government’s domestic debt profile rose to N15.814 trillion in September, 2018 from N15.629 trillion in June, 2018 (1.19 % increase). This figure becomes more worrisome when we look at the total public debt stock, comprising external and domestic debt of the FGN, the 36 states and the FCT hitting the US$73.208billion (N22.38 trillion) recorded in June, 2018. This bourgeoning debt profile calls for concern as our appetite for debt skyrockets. “This trend, which is very disturbing, could have a negative effect on the developmental capacity of Nigeria despite government’s financial managers’ argument that the rate of increase is within a manageable limit. While the effect of the increasing debt may not be immediate in totality, it could be catastrophic in the long term with a chunk of revenue consumed by debt servicing to the detriment of infrastructural development. This, sadly, is the current reality as a chunk of the 2020 budget would be used for debt servicing rather than developmental projects. This trend is not sustainable and could harm the nation on the long term. We are only appealing that the government should not make it difficult for the incoming generation to survive,” he said. He reasoned that Nigeria should be cautious of getting herself entangled in loans that she would not be able to repay like Kenya, Zimbabwe and others where China has started taking over their national Assets.
Also reacting the nation’s Organised Labour warned that Nigeria’s penchant for foreign loans may draw the country back economically. President of the Academic Staff Union of Universities (ASUU), Biodun Ogunyemi, said the administration preponderance for debt was taking the country’s fortune back to pre-Obasanjo’s administration.
But Chief Executive Officer, Financial Derivatives Limited, Mr. Bismark Rewane, said there was nothing wrong with borrowing as long as it was tied to projects that will impact the people. The economist said if the projects were the ones that could be identified and will not lead to wastage, then the president was on the right course.
Rewane dispelled the believe that borrowing was bad, saying what they are used for should be the questions Nigerians should be asking and not faulting borrowings in itself. “External borrowing is an integral part of financing plan for the current budget. What is important is to ensure that the subsequent spending is strictly infrastructure-focused. Borrowing should also be on concessionary terms to mitigate the burden of debt service,” he argued.
On September 29, 2019, the Dr Bukola Saraki-led shredded Buhari’s letter requesting a $30 billion loan to build new roads, investing in outdated power grids, boosting agriculture and other non-oil industries, and reducing the economy’s dependence on dwindling crude revenues. The Senators threw out the plan, without even dignifying it with a debate. The loans, which cover a period of three years, included the sale of Eurobonds worth $4.5 billion and planned budget support of $3.5 billion.