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It is no longer news that some of the first-term governors-elect will face many months of unpaid workers’ salaries and mounting pension liabilities, as well as agitation for the implementation of the nationally agreed minimum wage, rising inflation, escalating prices of goods and services, and dwindling purchasing power. These incoming governors, about seventeen of them, according to reports will have a difficult time boosting the economies of their individual states because they will take over at least N2.1 trillion in domestic debt and $1.9 billion in foreign debt from their predecessors.
It is equally a common knowledge that in January 2023, Patience Oniha, Director general, Debt Management Office (DMO), while fielding questions from journalists at the public presentation and breakdown of the highlights of the 2023 appropriation act in Abuja, noted that the incoming Federal Government would inherit about N77 trillion as debt by the time President Muhammadu Buhari’s tenure ends in May.
Aside from being an indication that Nigerians should expect tough time ahead or better still, may not anticipate a superlative performance from the incoming administrations as they will from inception be over burdened by debt, what is, however, ‘newsy’ is that each time the present Federal government went for these loans, Nigerians were usually told that the loan seeks to stimulate the national economy, making it more competitive by focusing on infrastructural development, delivery of inclusive growth and prioritizing the welfare of Nigerians to safeguard lives and property; equipping farmers with high tools, technology and techniques; empowering and enabling mines to operate in a safe and secured environment and training of our youths through revival of our vocational institutions to ensure they are competitive enough to seize the opportunities that will arise for this economic revival.”
From the above, it is evident that the nation did not arrive at its present state of indebtedness by accident but through a well programmed plan of actions and inactions that engineered national poverty and bred indebtedness. The state of affairs dates back to so many years in the life of the present Federal Government.
To explain; for years, we were as a nation warned with mountains of evidence that this was coming, it was also pointed out that under the present condition of indebtedness, it may be thought audacious to talk of creating a better society while the country battles with the problems of battered economy arising from indebtedness, yet, our leaders who are never ready to serve or save the citizens ignored the warnings describing it as a prank. Now we have learnt a very ‘’useful’’ lesson that we can no longer ignore.
In 2019, the rising debt profile of the country dominated discussion when the Senate opened debate on the general principles of the 2019 Appropriation Bill. Most of the contributors to the referenced debate asked the executive to exercise some level of caution on its borrowing plan in order not to return the country to a heavily indebted nation it exited in 2005 through Paris Club debt relief.
Senate Leader, Senator Ahmed Lawan, (as he then was) kicked off the debate when he read “A Bill for an Act to authorize the issue from the Consolidated Revenue Fund of the Federation the total sum of N8,826,636,578,915 only, of which N492,360,342,965 only, is for Statutory Transfers, N2,264,014,113,092 only, is for Debt Service, N4,038,557,664,767 only, is for Recurrent (Non Debt) Expenditure while the sum of N2,031,754,458,902 only is for contribution to the Development Fund for capital Expenditure for the year ending on 31st day of December, 2019.”
While noting that the budget deficit will be funded through borrowing, Lawan among other things stated; ‘’about 89% of the deficit (N1.65 trillion) will be financed through new borrowings while about N210 billion is expected from the proceeds of privatization of some public enterprises. Debt Service/Revenue Ratio which was high as 69% in 2017 has led to concerns being raised about the sustainability of the nation’s Debt.
Reacting to Lawan’s words, many Nigerians raised the alarm on the country’s rising debt profile. They noted that though the budget estimates should be given expeditious consideration and passage in view of the time already lost, the borrowing plan contained in the Bill should be properly scrutinized. They insisted that scrutinizing the borrowing plan became necessary to prevent the country from exceeding its borrowing limit when juxtaposed with the ratio of Gross Domestic Product (GDP).
Even some Senators in their submissions frowned at the nation’s increased borrowing proposals on our yearly budget which they described as becoming unbearable. “Yes, money must be sought for by any government to fund infrastructure but it must not be solely anchored on borrowing which in the long run, will take the country back to a problem it had earlier solved. “Besides, there are other creative ways of funding such highly needed infrastructure.”
Others at that time were particularly not happy that the debt profile of the country would soon rise to $60 billion from less than $20 billion it was before the present government came to power in 2015.
While they noted that the components of the $60 billion debt profile include $23 billion external debt and $20 billion local debts, these concerned Nigerians observed with dissatisfaction that another $12 billion was already being processed for presentation to the National Assembly to finance Port Harcourt to Maiduguri rail lines.
Still on the 2019 budget borrowing proposal, it noted that “Nigeria is gradually turning to a chartered borrowing nation under this government all in the name of funding infrastructure. “This must be stopped because the future of the country and in particular, lives of generations yet unborn are being put in danger.” Even with the high level of indebtedness of the country, “the government in power is planning to further devalue the Naira to about N500 to one US dollar.” They concluded.
Similarly in February 2022, Economic experts going by media reports urged the Federal Government to seek a debt moratorium and reduce the cost of governance to reduce funds expended on debt servicing, as it stands as the best available option.
This, according to them, will enable the government to suspend payment for now and re-strategize – particularly, the government cannot continue to service its rising debt profile at the expense of meeting the competing needs of the people, a similar expert warning was recently handed by Economic analysts that the Federal Government’s soaring borrowings could eventually suffocate the country if not mitigated.
In the first quarter of 2022 while speaking in Akure, Ondo State capital at the 32nd annual Seminar for Finance Correspondents and Business Editors themed: ‘Exchange Rate Management and Economic Diversification in Nigeria: The Pave Option’ the experts hinted that government’s plans, a fresh N6.3 trillion debt may be added to the current debt stock of N39.556 trillion ($95.779 billion as at December 31, 2021) to ultimately push the country’s total debt stock to N45.86 trillion by December 2022. Notwithstanding this unhealthy trend, they argued it was high time the country invested more in boosting local production and export oriented infrastructure before the huge debt burden sinks the country.
To be continued tomorrow
Utomi is the programme coordinator (Media and Public Policy), Social and Economic Justice Advocacy (SEJA). He could be reached via Jeromeutomi@yahoo.com/08032725374 .
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