Buhari’s $30 Billion Loan: A Looming Trap, By Ken Tadaferua
Senate throws out President Buhari’s request for its approval to borrow $30 billion, which it seeks to use for infrastructural projects between 2016 and 2018. – News
Ten years ago, in 2006, President Olusegun Obasanjo’s government successfully negotiated an unprecedented deal. It was a debt relief for $18 billion with the Paris Club of creditors and an additional buy back of $12 billion with other creditor groups, resulting in a reduction of Nigeria’s external debt stock by $30 billion, leaving only $3.5 billion as debt.
Today, President Muhammadu Buhari’s government is going, cap in hand, to the same creditors of yore, the international financial institutions from which Obasanjo sprung the nation out of debt, to borrow $30 billion. A pitiful nation is one that learns no lessons from the past and thus repeats its sad history.
It is interesting that in 1999, President Obasanjo met a thin reserve of $3.7 billion, a foreign debt stock of $33 billion, with oil price at $9 per barrel, yet his administration cut the foreign debt stock by $30 billion and more than doubled the GDP in his tenure. On the other hand, President Buhari met $30 billion in reserves, a foreign debt stock of only $10 billion and oil price at around $40 per barrel, yet he has led the economy into recession and wants to increase the nation’s foreign debt with a $30 billion loan.
The loan story has even more curious turns. It was reported only a few days ago that foreign investors and global financial institutions, led by the World Bank and International Monetary Fund, had rebuffed Nigeria’s plans to borrow foreign loans. Why? It is said that the Buhari administration seeking billions of dollars in loans had no comprehensive economic blueprint detailing its utilisation plans for the loan. So it was nicely advised to go do some serious homework and produce an economic blueprint or a policy support instrument, if indeed it is to get the ears of the international financial institutions.
It was while the country was still reeling from this rebuff that Mr. President sent a letter to the Senate, the upper house of the National Assembly, requesting an approval to borrow $30 billion. The Senate dumped the president’s loan request without as much as a debate on its borrowing plan. Why? There was reportedly no attached borrowing plan to the president’s letter. Imagine a request, half way into Buhari’s four year term, for a loan bigger than the entire 2016 Federal Government budget, with no attached comprehensive blueprint.
We the citizens of this country need to pause and ponder the challenges the Buhari government might have with producing a comprehensive economic plan in the 17 months it has been in power. It is either the government is too deaf to hear the strident calls for the economic plan or is too intellectually ill-equipped to produce one. Or perhaps it is being deliberately opaque and obtuse in these matters. Whatever the reason, Nigeria cannot afford the luxury of being a rudderless ship on a stormy economic sea.
One other luxury we cannot afford is to assume that the rejection, by the Senate, of Buhari’s request is cause for celebration, in the hope that the upper house is in defence of the people. That will be a most erroneous assumption. The Presidency and the Senate are members of the same family of rampantly voracious politicians. So once the little technical matter of attaching some sort of plan to the letter is executed, the Senate will approve the huge loan without the rigour of scrutiny for performance as the international financial institutions would do. Election campaigns will be underway in a few months and this is the time to fill up the war chest for the bruising political battles to come. Elections apart, there is also the niggling matter of the politicians maintaining unearned billionaire lifestyles – the parasitic elite who can hardly wait to gobble up the $30 billion under the guise of building national infrastructure.
The historical standard ploy of Nigerian leadership and governments, which in the main lack initiative and visionary thinking, is to focus on only three sources of easy unearned money: crude oil revenues, taking loans and raising fuel prices. Today, global oil prices remain low and oil production is hampered by militant activities in the Niger Delta. In frantic response to these, the government has called in the military, while in negotiations with the militants in a bid to increase oil productivity.
The second easy money option is to obtain loans. This government has, for 17 months, been trundling, cap in hand, around international financial institutions for loans with no results to show. It seems that the requirement of a comprehensive economic blueprint for a loan request is asking too much of basic diligence of the Buhari government. Perhaps like the Jonathan government, which turned from the West to seek Chinese loans – a move that seemed to enrage the West, in particular America, the Buhari administration may soon turn East.
In the face of the slow responses from the two options above, the government will most likely embark on the third easy source of money: To hike the price of fuel. Despite raising the price of fuel to the highest level ever in Nigerian history, Buhari will, in desperation, hike fuel prices again. The promise to fully deregulate the fuel sector and get the refineries working is colossal deception so far.
As it stands today, the tradition of squandering by the political class has put it in a desperate quandary. Easy money is not longer easy to come by, but their profligacy must continue. The people must remain beasts of burden. The National Assembly will approve the Buhari loans. It will okay another horrendous hike in fuel prices. Mark my words.
So it is up to the people to challenge the leadership and demand answers to the questions: Why another heavy debt burden? If it is imperative, why is it so difficult to produce an economic blueprint detailing the loans’ projects and programmes timelines, milestones, targets, quality standards monitoring, financing plans, contractors, short to long term benefits, repayment plans, performance measuring review standards, among others
The people must ask questions about transparency in government finances to build confidence that the $30 billion will be judiciously used: How much revenues has flowed into public coffers in the past 17 months and how were they expended in job creation, boosting agriculture and improving social services? Before shopping for jumbo loans, has the government reviewed and restructured its corrupt, leaky and inefficient financial systems and structures that is still being ruthlessly exploited by hordes of thieving politicians, contractors and civil servants across the country? What exactly does the government mean by projects and programmes that will gobble $11.274 billion, or the special national infrastructure projects, which will lick up a princely $10.686 billion and the Federal Government budget support that is to swallow $3.5 billion, among others?
I can see our dodgy government officials, crooked politicians and unprincipled contractors licking their lips in hot anticipation of the loans. And let nobody speak here of the irritation called Buhari’s body language or the padded language called incorruptible integrity. Or else I will puke violently. This is not about politicking. This is about our country. We must not borrow and throw the country into the hock for a bleeding $30 billion on the basis of whimsical emotions or political bias. We cannot sit idly and watch in languor while our future is fed to vicious parasites.
The $30 billion is a trap we can ill afford as a wasteful venture. It is not funny. We must be extra vigilant.
Ken Tadaferua is a media and marketing communications consultant. Twitter: @ktadaferua