In June 2005 we were so ecstatic
in celebrating the debt relief offered us, a relief of over $20billion dollars,
which was beyond the total revenue of Nigeria for one year.
So happy were we that President
Olusegun Obasanjo, GCFR, had to make a broadcast to the nation on June 30,
2005. He followed the broadcast by appearing before the joint sitting of the
National Assembly on July 26, 2005 to speak on the issue. In the broadcast, he
declared, “How did we work to get out of this debt quagmire?
We did it by resolving and
working hard to break with the past; by identifying new voices and new leaders;
and by rejecting business as usual and voting for new values of accountability,
transparency, fair competition, social justice, and the upliftment of the
living standards of Nigerians. We revamped our institutions and put in place an
economic agenda that reduced the role of the state in the economy while
strengthening the place and role private investors.
We mounted a vigorous global
campaign to make a good case for debt relief”. He commended the economic
management team and assured that Nigeria will never fall into such trap again.
“How about the future? We must
learn from the past. We must all show collective responsibility to prevent a
return to the past. We must all commit ourselves to protecting, rather than
squandering the future of our children. We must all agree not to remove the
solid blocks on which our nation stands by accumulating debts that we cannot
repay. May God never let us go through this painful path again”, he declared.
We were all so happy at that time. Several people commended the government for
the action including Cardinal Olubunmi Okogie and General Yakubu Gowon (rtd),
GCFR.
Others who commended the
government at that time were the Senate President, Senator Ken Nnamani, the
Speaker of the House of Representatives at that time, Alhaji Aminu Bello
Masari, the former Vice President, Dr, Alex Ekwueme. Others were Alhaji
Mohammed Danjuma Goje, Abdullahi Adamu, Otunba Gbenga Daniel, Prince Olagunsoye
Oyinlola, Alhaji Bukar Abba Ibrahim, Chief Ebere Udeagu, Mallam Nasir El-Rufai, Senator Udoma Udo
Udoma, Chief Sunday Fajimi, Engr. Hamman Tukur, ambassador Agboola Isaac
Aluko-Olokun, Honorables Farouk Lawan, John Agoda, Kayode Amusan, Kelechi
Nwagwu, Oba Rilwanu Akiolu, Oba Omo N’Oba Erediauwa, Reverend Dr. Wilson
Badejo, Mrs. Oluremi Oyo, Alhaji Mansur Ahmed, Alhaji Lateef Owoyemi, Mr.
Charles Ugwu, Dr. Sonnu Folorunso Kuku, Dr. Cecilia Ibru, Comrade Adams
Oshiomhole, Chief Frank Kokori, Mr. Harry Nwana, Dr. Elizabeth Solere, Brig.
Gen(rtd.) Mohammed Buba Marwa, Prince Chidi Chukwuani, Mr. Kenneth Orkuma
Hembe, Comrade Zik Gbemre, Mr. Cordel Okafor, Mr. Bisi Olawunmi, Dr. Uma
Eleeazu, Dr. Stanley Macebuh, Prof. Nimi Briggs, Mr. Chijama Ogbu, Mr. Joseph
Omowa, Mr. Adesoji Olugbenga, Mr. Moses Olurunwa, Dr. Boniface Chizea and
others.
Others outside Nigeria who
commended the central government at that time were the British Prime Minister,
Mr. Tony Blair, Hilary Benn, International Development Secretary UK, Mr,
Idrissa Thiam, Senior Resident Representative of IMF in Nigeria, Ms Romilly
Greenhill, Policy Officer, Action Aid and Mr. Marc Balston, Debt. Strategist
Deutsche Bank, London.
To me the comment of General
Yakubu Gowon (85),GCFR, was most meaningful. He was in power for nine
uninterrupted years and throughout his tenure, 1966 to 1975, Nigeria did not
borrow a kobo. He should be commended along with his Ministers of Finance who managed
Nigeria’s finance during the civil war, Chief Obafemi Awolowo (6 March 1909 – 9
May 1987), GCFR, Alhaji Usman Aliyu Shehu Shagari (February 25, 1925 – December
28, 2018), GCFR and the Permanent Secretary in the Ministry of Finance at that
time, Prince Abdul Aziz Attah (1920-1972), son of the late Attah of Igbirra in
Kogi state.
General Gowon said at that time
“Let’s hope that no government will ever again commit the future generation to
such a heavy burden of debt”.
Let me say a word about Prince Attah.
He was educated at Okene Elementary and Middle Schools between 1926 and 1935.
In 1936 he entered the Achimota College, Ghana, and studied there until 1944
when he went to Belliol College, Oxford, England, graduating in 1947 in
Politics, Philosophy and Economics. Returning to Nigeria the following year, he
entered the government service as Cadet Administrative Officer in the then
unified Nigeria Public Services.
He served in Calabar, Opobo,
Ikot-Ekpene and former Southern Cameroons, all then under the Eastern Region,
and after the division of the Public Service continued to serve in that Region;
he was District Officer in Umuahia before obtaining the important post of
Private Secretary to Dr. Nnamdi Azikiwe, Premier of the Eastern Region.
Then he was Secretary to the
Agent-General for the Region in Britain;Training Officer in the Regional
Ministry of Finance, Enugu; and Secretary for Annang Province. He moved to the
Federal Public Service as Administrative Officer. Class III, in 1958 and was
promoted Permanent Secretary in 1960, and headed in turn the ministries of
Defence, Communications, Industries and Finance.
He occupied the vital post of the
Permanent Secretary, Finance, from 1966 through the years of civil war with all
its effects on the country’s finances. In December 1970 he was appointed
Administrative Officer (Principal Grade), and became Secretary to the Federal
Military Government and Head of the Federal Civil Service. Alhaji Attah died on
June 12, 1972 at the Royal Free Hospital, London.
In July 2005, the Federal
Ministry of Information celebrated the debt relief by publishing a pamphlet
titled “BROKEN CHAINS”
Now sixteen years after, we are
back to square one. Sixteen years after we are back to the UNBROKEN CHAINS. I
do not know what will happen now, but certainly we have messed up. In terms of
the management of our economy, we have missed our way. We are back to recession
again. And in spite of the optimism being expressed by the Minister of Finance,
Zainab Shamsuna Ahmed, we do not know how to get out of the recession and when
we are going to get out of it. Between
2005 and now, we cannot point to anything substantive we have done with the
money we borrowed.
According to a report by Premium
Times, Nigeria’s total public debt stock increased by about N2.38 trillion, or
$6.593billion, as of June 30 last year. The Premium Times quoted the Debt
Management Office (DMO) that the country’s total debt portfolio grew from about
N28.628 trillion, or $79.303 billion, as of March 31 to over N31.009 trillion,
or $85.897 billion, in the period under review.
Details of the increment, the DMO
said, showed about $3.36 billion came from Budget Support Loan from the
International Monetary Fund (IMF), while the balance are new domestic
borrowings to finance the revised 2020 Appropriation Act. The new domestic
borrowings include a N162.557 billion Sukuk and promissory notes issued to
settle claims of exporters. The data showed the new debt figure comprised the
debt stock of the federal government, the 36 state governments and the Federal
Capital Territory.
The total external debt stands at
about N11.363 trillion, or $31.477 billion, about 35.65 per cent of the overall
outlay, against total domestic debt of about N19.945 trillion, or $54.419
billion, about 63.35 per cent of the total portfolio. Of the total external
debt stock, the federal government accounted for N9.824 trillion, or $27.214
billion (about 31.6 per cent) of external debts; and N15.456 trillion, or
$42.814 billion (about 49.84 per cent) of the domestic debts.
The states and the FCT owe about
N1.539 trillion, or $4.263 billion (about 4.96 per cent) of the total external
debt figure, and about N4.190 trillion, or $11.606 billion, (13.51 per cent) of
the total domestic debt figure.
The DMO said additional
promissory notes would be issued in the course of the year, along with new
borrowings by state governments which would further increase the public debt
stock.
Details of the debts stock,
showed that the multilateral loans category consisted IMF $3.359 billion, while
the World Bank Group and African Development Bank (AfDB) Group $16.36 billion.
The three financial institutions accounted for about 52 per cent of the
country’s total $31.477.14 billion debt stock.
The breakdown of the debt to
World Bank’s affiliate institutions showed International Development
Association (IDA) $10.05 billion; and the International Bank for Reconstruction
and Development (IBRD) $409.51 million.
Similarly, the debt to African
Development Bank stands at about $1.326 billion; Africa Growing Together Fund
$0.14 million; African Development Fund $921.91 million; Arab Bank for Economic
Development in Africa $5.88million; European Development Fund $52.52million;
Islamic Development Bank $30.22million, and International Fund For Agricultural
Development $201.68million.
On the bilateral level, Nigeria’s
total debt to various institutions is about $3.949 billion, or 12.54 per cent
of the total debt stock.
They consist of those to Chinese
financial institutions, including a Exim Bank of China $3.241billion; French
institutions (Agence Francaise Development) $403.65milion; Japanese (Japan
International Cooperation Agency) $76.69million; India (Exim Bank of India)
$34.87million, and Germany (Kreditanstalt Fur Wiederaufbua) $192.71 million.
Commercial debt instrument debts
totaling $11.16.35 billion, which account for about 35.48 per cent of the total
debt, include Eurobonds $10,868.35bilion; Diaspora Bond $300million.
Further details of the total
N15.456 trillion Federal Government debts stock by instruments of as at the
date under review showed that FGN Bonds of N11.241 trillion, or 72.75 per cent;
Nigerian Treasury Bills N2.760trillion, or 17.86 per cent; Nigerian Treasury
Bonds N100.988 bilion, or 0.65 per cent; FGN Savings Bond $12.984billion, or
0.08 per cent; FGN Sukuk N362.557billion, or 2.35 per cent, Green Bond
N25.690billion, or 0.17 per cent, and Promissory Notes N951.740billion, or 6.16
per cent.
Details of the debts stock of the
36 states and the Federal Capital Territory stood at about N4.190 trillion,
with Lagos N493.32 billion; Rivers N266.94 billion, Akwa Ibom N239.21billion
and Delta N235.86 billion among the top debtors in the country.
The four states are among the
richest states in the country.
I grew up in an age that insists
that he who goes a-borrowing, goes a-sorrowing. It was an idiom used by the
American Nationalist, Benjamin Franklin (17 January, 1706-17 April, 1790).
Borrowing makes our lives unfortunate, but we are the ones who borrow, so we
face problems simultaneously. To borrow means ‘to take and use something that
belongs to somebody else, and return it to them at a later time. Does this
action lead to unpleasurable consequences? Borrowing is a doomed cause. It ends
with its beginning, like a closed circle and never lets you go away.
It grabs you with its tentacles,
until it completely tears you to pieces, like a fierce beast, and then leaves
you to the vultures and jackals. People borrow things, and money especially,
when they are in need. But this need is caused in most of the cases by person’s
laziness and foolishness and mismanagement too. If the individual is ambitious
and clever enough, he will never sink in the mud puddle of need. If he is smart
enough to limit himself and determine his needs to his abilities. Even if you
borrow with a good will in mind, an idea, what guarantees that you will be able
to return what had been lent to you? Then you will have to borrow again, and
again, and…except.
My late mother, Madam Juliana
Adekolarin Teniola, cautioned me that I should not make borrowing a habit as I
will suffer for it in the end. She also instructed me that self-discipline will
help me achieve greatness and that people who tend to borrow often are usually
slow in settling debts. But as I grew older, I realized that debt is a major
development issue and there can never be any growth without incurring some
level of debt. One needs to borrow from commercial houses to make for progress
and profit in any enterprise. When too much debt is obtained it definitely
becomes a burden.
Debt has a significant effect on
global poverty. For example, borrowed money accrues interest which adds to debt
and can lead to impoverished lands suffering because massive interest payments
drain funds that are needed for things like infrastructure investment. Compound
interest over a matter of decades can soon render a serviceable debt
unsustainable.
Addressing the media on December
30, 2019, my friend, the Minister of Information, Mr Lai Mohammed said
Nigeria’s debt servicing to revenue ratio has been higher than desirable. The
minister put the country’s current debt profile at $83.8 billion and dismissed
reports that the country’s external debt was 81billion. According to him, the
entire debt profile comprises 27.163billion external and 56.720billion domestic
debt. He said the debt figure represented the cumulative borrowings by
successive government and that the total public debt stock in 2015 was 63.80
billion, comprising 10.31 billion of external debt and 53.49 billion domestic
debt.”
Presenting his budget on October
8 last year to the National Assembly, President Muhammadu Buhari, GCFR, said
“we have provisioned N3.12 trillion for this in 2021, representing an increase
of N445.57 billion from N2.68 trillion in 2020. A total of N2.183 trillion has
been set aside to service domestic debts while N940.89 billion has been
provided for foreign debt service. N220 billion is provided for transfers to
the Sinking Fund to pay off maturing bonds issued to local contractors and
creditors”.
Like every Nigerian, I am worried
by the rising Nigeria’s debt profile because debt is the principal cause of
poverty, leading to human suffering and misery and hampering economic
development. This is not what we should handover to our children and
grandchildren.
I have to make reference to the
speech by then President Olusegun Obasanjo when he addressed the National
Assembly on debt on July 26, 2005.
He said on that day that “I am
very pleased at this opportunity to brief you today on issues relating to our
nation’s debt relief, the contours and struggle for debt relief, the terms of
the relief we were granted by the Paris Club, and the opportunities that this
opens up for our dear country Nigeria. Let me start by thanking you, members of
the National Assembly for your understanding, encouragement and support during
the struggle for debt relief. It is the courage and vision that you exhibited
in standing firm with the Executive that made it possible for us to carry out
the arduous negotiations that resulted in this unprecedented relief for
Nigeria.
Let me say at this point that
this pattern of cooperation should not end here. We have more national and international
challenges before us and only cooperation, commitment, mutual respect can
ensure victory for our ideas, initiatives and actions. In this brief, in
respect of debt relief, I will speak on the inherited debt overhang, the impact
it had on our effort to grow and develop the economy, the struggle for debt
relief, the results of this struggle, the benefits to our country and people,
and the future. Of course, not all Nigerians know the truth, the importance or
impact of debt relief, and the opportunities that it provides for our country”.
Now we are in a dilemma over our
debt profile. I am sure we are not expecting another debt relief again. The
potential problems of government borrowing is that it will lead to higher debt
interest payment and also lead to increase rate in taxes, thereby leading to
inflationary pressures. The prediction in 2005 was that paying the debt will
free up cash that will push towards capital expenditure and bring the desire
economic boom. Instead what we have now is that we spend more on recurrent
expenditure and limited capital expenditure. We are back in full cycle. Poverty
and conflict are closely interconnected.
Now we are being told that
Nigeria total debt profile will hit N33 trillion by next year. The rate at
which we are going, in terms of our debt profile, may lead to Nigeria being put
up for sale.
Very sad indeed.
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