We can now address the question raised in the first part of this two-part piece, to wit, are we sinking in debts? Affirmative, if you believe the World Bank, IMF, and the other experts. Negative, if you believe President Buhari’s oiled alternative facts. He told his Bloomberg interviewers sometime in June this year that his successor in Aso Rock next year will have “a better economy to manage…”
Not so fast, say the experts. The economic indicators are too bleak to support that optimistic assertion by the president. Inflation was higher at 17.7% in the month of May; the debts hit the roof at N41.60 trillion in June; fuel pump price was N87 per litre in 2015, it is now officially N167 per litre and rising; unemployment is 33.3 per cent. All these, to borrow from the experts, are indisputable evidence that the economy is under greater pressure than in 2015 when Buhari took over from Goodluck Jonathan.
Who wants Buhari out of office now?
To get at the facts, you have to wade knee-deep through the lagoon of propaganda intended to applaud Buhari on his expert management of the national economy. We have to save ourselves that bother. We need to say, however, that if this were an examination, even a corrupt lecturer would think more than three times before awarding the president a pass mark for his management of the economy. Everyone knows it is down, down, down, in the doldrums.
Massaging the president’s ego does not change the fact that under the watch of the man who believes he has the right answer to all our problems and came with the determination to clean up what he called mess, our country has once more become a debtor nation. Poor luck is piling it on. Our country is the poverty capital of the world with 83 millions of its population living below the poverty line. And now, it has to reel and squirm under the burden of heavy foreign and domestic loans.
You don’t have to be an economist to see that under Buhari’s watch, the economy is marching south and taking our hopes and aspirations with it. It is not about to reverse course. The Buhari administration has borrowed more and more from domestic lenders and foreign do-gooders. Foreign debts alone amount to more than $100 billion. The Debt Management Office, DMO, put the public debt stock in the first quarter of this year at N41.60 trillion. Perhaps, it is higher now because this administration has anchored its economic management on easy recourse to loans.
When the president first asked the senate to approve a jumbo loan of $30 billion early in his presidency to fund infrastructural development, eyebrows were raised because we knew the country was about to trek back to easy money but a heavy debt burden. The federal government has borrowed from China, IMF, the World Bank, European Bank, Africa Development Bank and other countries and financial institutions that had the goodness of heart to lend us money to shore up our dwindling economic resources.
I thought the president was right to seek financial assistance to tackle our dilapidated infrastructures. The collapse of those infrastructures had retarded our economic development. But I thought that it should be possible for him to explore domestic alternatives to the loans as well—and treat the loans as a temporary measure, not as a paradigm shift in his economic management. No nation, I argued repeatedly in my columns, ever became great as a debtor nation. Given its rich natural and human resources endowments, Nigeria can tighten its belt, grit its teeth, lower its sight and commit to exploiting those endowments in a radical shift in the proper management of its economy.
But once the president tasted the jumbo loan, there was no convincing him that loans were and are bad for our economy. He keeps borrowing more and more. The government is now forced to commit more and more of our dwindling finances to debt servicing at the expense of other needs of the country.
Successive federal administrations have had a poor record in debt management. By the time Olusegun Obasanjo became president in 1999, the debt burden threatened to scuttle all his developmental ambitions. It was a burden his administration could not discharge without crippling everything else in the country. His solution was to plead with the creditors in the Paris Club to forgive part of the debts. His minister of finance, Dr Ngozi Okonjo-Iweala, took up the negotiation with the creditors. The creditors were kind enough to forgive part of the debts. Nigeria paid up what remained. By the time the president left office in 2007, Nigeria was a debt-free nation.
But our national relief was short-lived. The late President Umaru Yar’Adua and his successor, Dr Goodluck Jonathan, resumed the loan regime, signalling our possible return to the path we verily believed our nation would never be seen trekking wearily along it again. Buhari’s assumption of office as president raised some hope that he would halt the slide back towards the Golgotha. The gods snarled; they did not smile. In 2016, less than one year after Buhari assumed office the economy went into recession. Recovery from it became the urgent task the government faced. Recession is bad for an economy and worse for one that is less focused than other national economies.
In 2015, the Debt Management Office put the country’s debt at N8.8 trillion. Now, it is N41.60 trillion. Experts believe the true figure might be N50 trillion. Not a great leap out of debts but a great leap into debts. This might be much worse than you thought.
Dr Muda Yusuf, former director-general of the Lagos Chamber of Commerce, recently said that “government’s actual revenue can now hardly cover the country’s recurrent expenditure, which implies that the entire capital budget and part of the recurrent expenditure are being financed from borrowing. This is surely unsustainable. As of November 2021, debt service to revenue ratio was 76 per cent.”
Zainab Ahmed, the minister of finance, budget and national planning, admitted recently that “we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate, so it is a very difficult situation.” She underlined that with this: “We are in some kind of cross roads (because) rising crude oil prices are posing significant fiscal challenges to our economy and may lead to some negative receipts and indeed we have started seeing already those negative receipts.”
The World Bank says the fiscal time bomb is ticking. We can hear it. We can also hear the footsteps of the chickens coming home to roost. It is payback time. Even with the best will in the world, the next president will inherit a burdened and struggling economy: higher debts, high inflation that will only deepen the current level of poverty rate, unemployment, higher fuel prices, a foreign exchange regime that makes nonsense of our national currency, and of course, the arresting capacity of insecurity.
Yep, the chickens are on their way home to roost. (Concluded)
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