By Stephen Ubanna ,
President Muhammadu Buhari, a retired Army General, appears to have responded to former President Olusegun Obasanjo’s , accusations of mismanagement of the country by justifying the domestic and external borrowing over the last five years to run the government.
The Katsina state born Nigerian President , who, Financial analysts believe ought to be apoligising to the people for throwing the country into heavy debt burden over the last five years of his Administration on Tuesday, September 15, 2020,disclosed that the government took the loans, which the Senate had put at over N33 trillion, after its approval of $27 billion in March, 2020, to finance the provision of basic infrastructural facilities in the country.
He had told the members of the Presidential Economic Advisory Council, PEAC, Headed by Ayo Salami, a Professor, that the government had to take the loans ‘’to fix the roads , rail and power, so that investors will find the country attractive to put their money’’.
An aggrieved Buhari, had regretted the failure of past governments to provide the infrastructure for effective transportation which had deprived the country’’its well-deserved status as the West and Central African Sub-regions hub for air cargo transportation and trans-shipment of goods’’.
Political Observers opined that he may have been forced to speak out after listening to the PEAC, members who were said to be opposed to the continuous sourcing of loans from the domestic Capital market and external lenders to run the country.
The retired Army General Nigerian President was said to have expressed the challenges posed to the economy by the collapse of the International oil market and the decision of the government to abide by the reduced oil production quota allocated to the country by the Organisation of the Petroleum Exporting Countries, OPEC, to avoid playing into the hands of the Middle East Producers who are ready to flood the Oil market with cheap oil.
He may have informed the PEAC members that money generated from the oil market under the present circumstances may no longer be sufficient to run the government and still provide the basic infrastructural facilities for the people . ‘’The politics of oil is that’’ the less you produce, the less money you earn’’, he had said. He may have opened to justify the government continuous borrowing to fix the broken down infrastructural facilities in the country.
Much of the billions of dollars sourced externally to fix the country’s broken down infrastructure between 2015 and now , were said to have been securedd from the IMF, World Bank, Islamic Development Bank and the African Development Bank, AfDB, under the close watch of Akinwumi Adesina, a former minister of Agriculture and Rural Development, under former President Goodlock Jonathan’s Administration. The Buhari government was said to have also borrowed from the African Export Bank and Export –Import Bank of Brazil.
Financial analysts , however, believe that the reckless external borrowing by the Buhari Administration, may have encouraged him to throw his weight behind the former Nigerian minister to ensure that he emerged as the AfDB President as recommended by the then President Jonathan, in 2015 and followed it up in 2019, which facilitated his re-election bid.
Even Former President Olusegun Obasanjo’s recent comment that Buhari government played a key role to the emergence of the AfDB President speaks volume. He had given kudos to him for supporting Adesina to emerge as the AfDB President.
It is interesting to note that the fresh loan of 6.9 billion which the Presidency had requested the approval of the Femi Gbajibiamila led House of Representatives to borrow from the International lenders, according to National Assembly sources, was basically to counteract the impact the COVID 19.The IMF, Executive Board were said to have approved the $3.4 billion requested from it, the World Bank, $2.5 billion, AfDB, $1 billion, and Islamic Development Bank, $0.113 billion.
The COVID 19 pandemic, may have also provided another opportunity for the Buhari Administration to throw the country deeper into external debt burden. The AfDB, alone was said to have approved $0.125 billion to strengthen the country’s healthcare system in order to improve its response to the pandemic, and an additional $23 million for financing Small and Medium scale, SMEs, farmers to mitigate the food security impact due to the disease.
The Islamic Development , which was said to have also been approached by the Buhari government were said to have granted a $0.6billion loan to the country, African Export-Import Bank, $0.5 billion, and Export –Import Bank of Brazil, $0.995 billion, to finance the mechanization of Agriculture and agro-based processing industries in the country.
The successful sourcing of loans from these external lenders without any problem may have informed why Hajia Zainab Ahmed, minister of Finance, Budget and National Planning had said that the government would continue ‘’its engagement with the lenders to access concessional funding to support the implementation of the 2020 Fiscal budget’’. Last April, the Daura born politician had requested the Senate’s approval to raise N850 billion or $2.36 billion loan from the domestic capital market in order to adequately finance projects listed in the 2020 Fiscal budget.
He had told the Lawmakers that the some of the external borrowing would be made from the domestic capital market instead of the International market because of the impact of COVID 19, on the global economy. He had said that that the decline in oil prices in the International market had made it unattractive to borrow from the International Capital market any longer.
The most worrisome of the external debts was that owed China. As at march 31, 2020, the total borrowed debts by the former President Jonathan’s Administration and the Buhari government from China was put at about $3.121 billion.
The Chinese loans, was said to have been tied, to the execution 11key projects in the country which included Nigerian Railway modernization Project, Abuja Light Rail Project, Nnamdi Azikiwe International Airport, Abuja, Aminu Kao Airport, Kano, Murtala Muhammed International Airport, Ikeja, Lagos, and Port Harcourt International Airport – Terminals Expansion Projets. This is in addition to the rehabilitation and upgrading of the Abuja-Keffi- Markurdi road Project and several other ongoing road Projects across the country.
Given that the substantial part of the loans obtained from the Export-Import Bank of China,had been borrowed by the Buhari government, an official of the DMO, told The Value News that the Railway Contract , Power and most of the key, Road Projects, across the country are being handled by the state owned Chinese Civil Engineering and Construction Company, CECC, an indication that the Buhari government is still ploughing back the borrowed money from the Asian country back to the chinese economy to the disadvantage of the Nigerian’s economy.
Reports from the Debt Management office , NMO, shows that past and the present governments had spent billions of dollars to service these borrowed Funds owed the domestic and the Multi-lateral Financial Institutions. The Buhari Administration alone was said to have spent N7.04 trillion of the country’s generated revenue to service the debts under the Administration over the last five years.
The question on the lips of most people was : how can a country that spends much of its internally generated revenue and revenue from sales of oil produce to service debts develop?. Far from it, they said. This may have informed why Nigeria is still being ranked as a developing economy why the Asian country of Malaysia, which took Oil palm seed from Nigeria to plant in their country had been ranked by the World Bank as a fast developed economy.