Many Nigerians can’t wait to see the exit of the Muhammadu Buhari administration that expires today. One of the reasons that many Nigerians are in a hurry to see its end is the debt binge it went into, especially in the twilight years of its life.
By 2022 ending, Nigeria owed N46.25 trillion long-term loans. But if you add the N23 trillion Ways and Means debt owed to the Central Bank of Nigeria and some other recent loans taken so far in 2023, it shoots up to about N77 trillion. This further compounds the debt servicing regime of the government.
If you factor in the $800 million World Bank loan that President Buhari was trying to browbeat the National Assembly to approve, Nigeria’s debt servicing bill goes way beyond the excessive.
In 2021, Nigeria spent 83.20 percent of its revenue on debt servicing. It increased to 96.30 percent in 2022. At the beginning of 2023, the World Bank projected that Nigeria would be spending 123.4 percent of its revenue to service debts. This suggests that Nigeria will be taking loans or selling assets to service its loans.
Nonagenarian and attorney, Afe Babalola has counseled Bola Tinubu, who is being sworn in today as President, to consider asking for forgiveness of Nigeria’s debt to at least eliminate the foreign element of debt servicing. This was the route taken by Babalola’s friend, former President Olusegun Obasanjo.
Many are heaving a sigh of relief because the $800 million loan that the government wanted to obtain from the World Bank to waste on a “subsidy” for 50 million Nigerian households is not likely to come through.
Many think the usually pliant 9th National Assembly (which operates more like its master’s voice) somewhat slowed down the approval process. Many also think that the Tinubu administration that is being inaugurated today will think through before taking the loan, if it will not jettison the foolish idea.
To be sure, it is not wrong to take loans. It is the purpose to which the loan is put that matters. Other considerations could be the timing, conditionality for the loan or whether there is really a need to take a loan.
Many knowledgeable Nigerians have drawn attention to the need to plug the obvious leakages that are causing the gaps between what Nigeria has to do and the money that is needed to accomplish the same.
Interestingly, these steps are simple and obvious, not rocket science. For instance, it does not require so much hard work for the political class and the public servants to decide not to divert or steal public funds.
Online newspaper Premium Times recently reported that an Abuja Federal High Court, headed by Justice Emeka Nwite, has ordered the Buhari administration to “account for the spending of $460 million Chinese loan to fund the failed Abuja Closed-Circuit Television (CCTV) project.”
Meanwhile, the real big elephant in the room of government corruption is the Big Government that is sustained by duplication of agencies, offices, duties and responsibilities and allocation of public funds without rhyme or reason.
The Stephen Oronsaye Commission that advocated a slimmer government bureaucracy has been ignored by those who profit from the wasteful job for the boys phenomenal that appoints lackeys into positions in which they are unqualified.
Catholic Bishop of Ekiti Diocese, Most Reverend Felix Ajakaye, is suggesting that President Tinubu should look for ways to reduce the cost of government and ensure the completion of outstanding projects.
One must admit that President Buhari has been good in this regard. He completed many projects, like railway lines, Second Niger Bridge and several highway projects that were not completed by previous governments.
It is also not too difficult for policymakers and other state actors to decide to adopt and prioritise appropriate macroeconomic and monetary policies that will always put Nigeria’s financial resources on the right track.
All the tiers of the Nigerian government have too many economists, planners, finance and investment experts, to fail to make the right choices most of the time, if not at all times. There are just no excuses for the abject failure to always make the right policy choices.
If the policymakers make the right and appropriate choices, the Nigerian economy should produce most if not all, that it needs. Thus, importation, which drains Nigeria’s oil revenue, will be reduced drastically.
You know too well that most of Nigeria’s strategic consumer goods are imported. These include foodstuffs, clothing, building materials, pharmaceutical drugs, petroleum products, and the more ridiculous, like toothpicks, Kleenex and Pringles.
If Nigeria will just run its four government-owned petroleum refineries efficiently, along with the Dangote Refinery that was commissioned eight days ago, and the country can process more than 1 million barrels of petroleum per day, you can imagine how much savings that will mean to the Nigerian exchequer. That is a huge chunk of the import bill saved.
It also reduces pressure on Nigeria’s currency viz-a-viz the so-called hard currencies, like the American dollar that is currently facing a stiff challenge from the Russian Ruble and the Chinese Yuan, as the Ukrainian-Russian War rages.
Kashim Shettima, who is being sworn in as Vice President to President Bola Tinubu today, has acknowledged many of these submissions in his speech at the launching of the Dangote Refinery last week Monday. One can only hope that he and his principal can get the act going.
If the government pays attention to the Naira, and it becomes much stronger than it is right now, Nigerian importers will need lesser volumes of the Naira to exchange for the hard currencies in which international commerce is traded.
This idea should be a lightning rod that can be used to arrest the drift and rapid depreciation that the Naira has experienced in the last eight years: In 2015, the Naira’s exchange rate was N199 to $1.
Today, when President Buhari is leaving office, the exchange rate is somewhere between the N435 official rate to more than N700 in the parallel market. Many Nigerians are too happy that once the inaugural ceremonies at Eagle Square are concluded today President Buhari will not be returning to Aso Rock Villa to cause more confusion.
Two corollaries to the sense in running the local refineries are the need to curb oil theft from the creeks and remove the fuel subsidy regime that both President Buhari and Labour Party presidential candidate, Peter Obi, agree is a fraud.
If oil theft is significantly curbed, that should significantly improve government revenue and reduce the need to borrow money. Of course, when you end fuel subsidies, you eliminate another drain on the already inadequate revenue of the government.
And then, there is the all-important issue of taxation. The government needs to be more efficient and effective in its capability to collect all the taxes. Some argue that the idea is not to raise taxation, the way Value Added Tax was raised from 5 to 7.5 percent, but to spread the tax net.
The Buhari administration has been reckless in taking loans, profligate and reckless in spending, indulgent in reining in corruption and negligent in curbing theft of crude oil and refined petroleum products in the pipelines.
The Tinubu administration should be intentional in avoiding the debt booby-traps.
