In May last year, the Nigerian Senate tripled the government’s borrowing from the constitutional provision of five per cent to a whopping 15 per cent. To get that change implemented, the Senate set out to alter the relevant provisions in the law that set up the Central Bank of Nigeria.
“This amendment is very consequential, and it needs the support of us all. This is to enable the federal government to embark on very important projects that will inflate and rejig the economy. I, therefore, urge you all to support the passage of this bill.” These were the quotes of the sponsor of the bill, urging his fellow distinguished colleagues to support the motion.
Today, in March 2024, the Senate of the Federal Republic of Nigeria is ready to probe former President Buhari’s borrowing spree and is getting ready to invite him to come and account for all the money his administration borrowed. The Senate has set up a committee to probe the unrestrained borrowing binge of the former administration.
The CBN Act 2007, states quite clearly that the government’s borrowing from the Ways and Means window of the regulator must not exceed five per cent of the government’s revenue in the previous year. The Act, in Section 38 (2) & (3) states, “that Ways and Means shall not exceed 5% of the previous year’s revenue of the federal government”.
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That was a great disservice by the Legislature to the Nigerian people. As of the time this was happening, the government had accumulated debt of N22.7 trillion through its exploitation of the Ways and Means window. That amount was raised from the CBN in clear violation of the limit set in the CBN Act.
The government had also contravened the requirement that no further advances would be given to the government until previous balances had been repaid.
This is one of the contradictions in our policy space, under one administration a certain action is acceptable but abhorrent under another. It was a classic example of the Legislature’s failure in the discharge of its duties. In the distribution of functions in Abuja, the Senate, and the House are the counterweights of the Presidency in the formulation of policies to build and grow Nigeria.
Rather than standing on its regulatory position, the Senate (and the Assembly in general) capitulated and instead invented the need for the theory of the need to support the then-president to continue with the good work he was said to be doing. The whole episode was a well-orchestrated drama. First, about a month earlier, the President brought before the lawmakers a request for approval for a whopping N22.7 trillion in Ways and Means borrowing.
They granted the request. That was the balance as of December 19, 2022. The following day, President Buhari sent two separate letters to the Senate and the House, requesting for approval for the restructuring of the debt, along with a fresh N1 trillion to fund the N819.5b 2022 Supplementary Budget. These subsequently raised the amount for restructuring to N23.7 trillion, from the Ways and Means largess.
President Buhari’s letter stated that he had approved the securitization of the amount of N23.7 trillion, with a tenor of 40 years and a rate of nine percent. Records of the proceedings of the Senate session on January 17, 2022, show that there was stiff opposition to the plan from some of the Senators; in the end, those in support had it!
The impetus to investigate Buhari has arisen in part from the virtual collapse of the Nigerian economy, despite the so-called “very important projects that will inflate and rejig the economy”. The current administration and many others whose opinions matter have blamed Buhari and his administration for the current embarrassing condition of the economy. There is so much hunger in the country. Inflation has hit the roof and Nigerians cannot feed themselves.
As the probe begins, may I suggest that the 13 members, while they are investigating the actions of the government, should know that the Senate as an institution is also under probe. The truth is that when the regulator looks the other way, everything goes wrong. As regulators, our Senators looked the other way while the government did whatever it deemed fit. Our representatives failed the Nigerian people when it mattered most. In the eight years of Buhari’s presidency, the economy was never run on a professional basis. And those who were in the best position to checkmate the excesses of the government played politics with their responsibility.
In addition to the members of the Committee, those who attended the inauguration included the Minister of Finance – Wale Edun; CBN Governor – Olayemi Cardoso; Accountant General of the Federation – Oluwatoyin Madein; Auditor-General of the Federation – Shaakaa Chira; Director General, Debt Management Office (DMO) – Patience Oniha, as well as the beneficiary ministries, departments and agencies, institutions, states, local governments, and others all attended the inauguration.
The presence of these most senior cabinet members of the government shows how seriously the government takes the probe. Mr. Edun has been quite vocal on the matter. He blames the galloping inflation squarely on the unrestrained borrowing by the previous administration. It is clear now that the huge amounts that made all the headlines were not put to productive use. If it were, Nigeria would not be without food as we are now.
By bypassing the provisions of the CBN Act 2007 about the Ways and Means, the government and the lawmakers have made a mess of the talk of monetary policy formulation. And, because the economy is a system, the dislocation caused by these years of unbridled borrowing will take time to correct. We are all in it.
