Governance: Buhari Justifies Running The Government On Borrowed Funds, Thus Increasing Nigeria’s Debt Burden

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.

Hajia Ahmed: Minister of Finance, Budget and National Planning

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.    

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