Written by Lucas Nwachukwu:
In the face of a novel virus threat and the concomitant socio-economic conundrum, President Muhammadu Buhari made fresh external loan request of $5.513 Billion. This request will see Nigeria’s total external debt leap higher.The culture of borrowing has become a serious cause for alarm, as it underscores an underlying socio-economic injustice being perpetrated against future generations of Nigerians who will be saddled with debt repayments, long after the current administration led by President Buhari is over.
The Federal Government has maintained that, given the debt-to-GDP ratio, Nigeria has not exceeded its borrowing threshold. It stands at 31.35% at the moment according to projections by Statista. However, an avalanche of humongous loans can culminate in a terrible debt disaster and become a huge burden to the nation, contrary to what the government wants Nigerians to believe. Also, has the government justified its past borrowing?Previous borrowings have had minimal impact, leaving the country with no improvement in health delivery, roads, education, security, power supply and provision of basic amenities.Given the cache of monies made available to the Nigerian government this year, it is sad that the government still insists on borrowing, instead of putting the available resources into proper use. It could be recalled that the Senate had earlier in the year, approved $22.79 Billion external loan request, which was also meant to finance the 2020 budget. Also, since the first recorded case of COVID-19 in February, the Federal Government has received a $3.4 Billion loan from IMF, and an approval for₦850 Billion loan from the Capital Market. The CBN has also earmarked ₦3.5 Trillion to support Small and Medium-Scale enterprises (SMEs), while corporate organisations and individuals of goodwill have donated over ₦43 Billion to the government as it tackles the coronavirus pandemic. The Federal Government in addition, received the sum of $311 Million of late Sani Abacha’s loot, as well as a donation of €50Million made to Nigeria by the European Union (EU). It suffices to state therefore, that no responsible leadership should still borrow in the light of all these donations and already secured loans, and against the backdrop of the ravaging poverty, insecurity, unemployment, bad state of facilities and amenities bedevilling the country.
A culture of borrowing, to support a comatose economy is unsustainable. The government therefore needs to focus on initiating ways through which revenues can be generated consistently, rather than taking more loans. There is need to look inward at this crucial time, utilize prudently the available fund from donations and recovered loot, cut off excessive government spending, cut down on unnecessary political appointees,reduce the emoluments of political office holders.All these can provide some fiscal buffer. But, cutting down on expenses alone, will not provide the consistent funding needed to cater to our gross infrastructural deficits. Nigeria needs to generate more revenue; and there is no time more expedient than now, with the unprecedented reduction in the price of crude oil which has been the country’s fiscal mainstay and remains a major revenue source.
It has also become a mantra on the lips of Nigerians that the economy be diversified. Nigeria has mineral resources that have been largely untapped owing to the government’s preoccupation with crude oil. The vastness of Nigeria’s minerals resources cannot be over-emphasised. The government must begin to aggressively explore the country’s natural mineral resources. Nigeria also has historical monuments that could be leveraged to develop the tourism sector of the country. Privatising non-performing organisations is also an option to boost revenue generation; as are Public-Private Partnerships that do not exploit the people via exorbitant toll gate charges or other billings. The government could also give tax waivers or contribute a resource such as land, to a promising commercial venture, in order to earn revenue and dividends through direct equity participation. The government must pay attention to the revitalisation of these afore-stated sectors of the economy which have been ridden with poor policy challenges, inadequate infrastructure, under-performance and stifled growth.
It is also incumbent on the leadership of the National Assembly steered by Senator Ahmed Lawan and Rt. Honourable Femi Gbajabiamila, to ensure rigorous examinations of these humongous loan requests and the terms and conditions applicable.It is their responsibility to subject these frequent loan requests to objective debates, study critically there payment conditions, and ask relevant questions about how every single kobo will be spent. If they fail in their legislative duties to check the executive arm of government, it will leave the country in the abyss, with no end in sight to the debt crisis. Nigeria’s over-dependence on loans has become extremely worrisome and must be regarded as an act of socio-economic injustice to future generations. Though we are confronted by a myriad of challenges as a nation, these challenges are surmountable, with deep, constructive and nationalistic thinking; not reckless borrowing.