Nigeria in debt robe

Written by Oluwasanmi

The current state of Nigeria has shown that the gain made at the independence has been poorly managed. This systemic profligacy has reduced the country to a crippling giant in Africa and a parasitic state on the global stage, with an unabated enlargement in her debt rob. Quest for solutions seems to have become rocket science with the intensity in the velocity of policy somersault and inconsistency in the political space.

While addressing the nation on October 1, 2022, the President, Major General Muhammadu Buhari (retd.), stated that the increase in the country’s debt profile is a necessary step to provide the infrastructure that would expand opportunities for economic growth and turn Nigeria to El Dorado. However, despite the unprecedented debt, the country continues to feature among the “super poverty” infected countries.

In the latest report by the World Bank, more than 95.1 million people are living below the poverty line in Nigeria. With the increase in the inflation rate, it’s obvious that more people would fall into this threshold. The country’s inflation rate accelerated to the highest ever recorded since September 2005 in July 2022 and had grown from 19.64% to 20.52% in August, with an astonishing 23.12% in food inflation.

No wonder Nigeria was ranked first among the countries with the worst malnutrition cases in Africa and second in the world by the United Nations Children’s Fund and the World Health Organisation in 2021. More than 17 million children are undernourished, setting the country off track to achieving Sustainable Development Goal 2 – “Zero Hunger” by 2030.

This is worsened by the security laxity that has created so much fear in the land to the extent that many farmers, especially those in the northern part of the country, have abandoned their farmland(s) because of the report of killings, maiming and kidnapping that continue to dominate the media space.

Failure to nip this in the bud has triggered the exodus of investors from the country and prevented many foreign investors from investing in the economy. The capital flight has debilitated the base of the country’s economy and created stunted Gross Domestic Product that has aggravated the thirst for borrowing.

The rising debt has moved Nigeria from the fifth position she occupied in June 2021 to fourth position on the World Bank debtors’ list with $13bn IDA debt stock as of June 30, 2022. This is different from the outstanding loan of $486m from World Bank’s International Bank for Reconstruction and Development cum the ones collected from China and other countries.

It took great efforts of the pundits to resolve the confusion that erupted from the controversies that characterised a clause in commercial loan agreement signed on September 5, 2018 between the Federal Ministry of Finance and the Export-Import Bank of China for the Nigeria National Information and Communication Technology Infrastructure Backbone Phase II Project when it was being examined by Nigerian lawmakers.

The clause stipulates that “the Borrower [i.e., the state of Nigeria] hereby irrevocably waives any immunity on the grounds of sovereign or otherwise for itself and its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets.

Though, this appears to be the standard in Chinese loan contracts. However, it generated so much controversy because of the insinuation that some political class are ready to trade the nation’s sovereignty for personal aggrandisement, particularly with the increase in the report of looting and counter-looting circulating in the media space.

Despite the loan, most of the projects stated in the agreement seem to remain in comatose with an unending postponement in the completion date. For instance, the Lagos-Ibadan expressway which seems to be the most sung achievement by the government seems to have created more challenges for the users than benefits since the commencement of its rehabilitation in 2015.

The seven years of traffic jam occasioned by the construction has led to the loss of lives of hundreds of people and aided the nefarious activities of the unscrupulous elements threatening the safety of people at the long bridge side of the road.

First, it was reported that the road will be commissioned in 2019 before it was shifted to 2020, 2021, 2022 and now 2023. The reason for this postponement seems to be centred around the 2023 election so that the commissioning ceremony can be fresh in people’s memories. However, a critical look at the previous postponement suggests that it is being used as means to divert monies to another direction.

This can be deduced from the government’s plan to divert General Sani Abacha’s loot, recovered from the United States of America in recent times, to the projects such as the 2nd Niger Bridge, and Lagos-Ibadan expressway among others that have received tranches of funds since 2015. Although the rising of the exchange rate has affected the prices of most of the materials being used for construction in Nigeria, it further buttresses the claim that the government has failed to fulfil its promise.

In 2015, it was widely circulated that President Buhari had promised to reduce the exchange rate of naira to the dollar, which was hovering around N160 then, to N1 if elected. However, seven years after being elected, the opposite seems to be the case. The current dollar exchange rate at the parallel market is N730/735 while the official rate continues to revolve around N420/430.

Hope to tame this pathetic situation seems to have been lost with the cascading revenue that has degenerated to an alarming level. The Minister of Budget and National Planning, Zainab Ahmed, at the interactive session with the members of the Senate Committee on Finance and heads of revenue-generating agencies in June 2022, stated that the proposed 2023 budget of N19.76 trillion is embedded with a N12.43 trillion deficit.

The struggle to reduce this deficit has generated questions on the reason the country continues to sustain fuel subsidy in its budget when the reports of corruption radiating the spectrum have shown that the tenets of its existence have been eroded.

A country being confronted by these kinds of humongous challenges needs a change that will resuscitate her economy and reconfigure the security architecture. Hence, the process of diversification must be given proper attention in order to strip the country’s debt rob.

• Oluwasanmi writes from Ibafo, Ogun State, Nigeria.