Foundation for Environmental Rights Advocacy and Development, FENRAD, an environmental rights and pro-democracy group, is worried that the federal government, inspite of Nigeria’s current harsh economic realities, is set to get a loan of 1.5 billion USD ($1.5bn) as recently approved by the National Assembly – through the Senate Committee on Local and Foreign Debt on External Borrowing Plans. This, FENRAD cries out, should not be happening now.
Aware that the current economic regime in Nigeria calls for financial discipline and for judicious use of available but thinning resources than endangering the future of the nation’s unborn through unsustainable loans, FENRAD wishes to sound an alarm to the federal government and the leadership of the senate that time is now to do the work of fixing the economy than growing national debts at the expense national economy and reserve.
Current widespread hardship plunges Nigeria deeper into hyperinflation as purchasing power among the rural and urban poor keeps declining, evidently seen in prices of food stuff (which has recently gone elastic) with salaries owed workers by state governments.
The global pandemic indeed had taken a heavy toll on oil – which is the principal foreign exchange source for Nigeria – and the danger of not saving in the rainy days faces Nigeria today. The alternative, says FENRAD, is not in growing public debt but in thinking up a way out of this quagmire. Currently, unemployment stands at 33%, inflation at 18.7% – worst in six to seven years – amid endless primitive and reckless consumption at all government levels.
Worst are the laurels of shame that the nation keeps bagging with 14 million out-of-school children; Nigeria being declared as world poverty capital and the recent one where Nigeria was adjudged one of the most miserable sub-Saharan nations going by the global misery index!
FENRAD, after studying the paper presented by Eze Onyekpere entitled The Rising Public Debt in Nigeria and the Challenges for National Development presented during a one-day national dialogue by Action Aid Nigeria, cautions against national economic eclipse.
The paper had raised concern that over 80% of revenues in the federation goes to debt servicing. This, the paper detailed with hard facts and statistics. The dangers ahead if Nigeria does not begin to build buffer around the already fragile and contracted economy to further enhance macroeconomic stability cannot be overemphasized.
FENRAD worries more because this loan ($1.5 billion), as approved by the senate, comes on the heels of the claim by the governor of Edo State, His Excellency Godwin Obaseki, that for the March 2021 Federal Accounts Allocation Committee (FAAC) disbursement, the federal government, through the CBN printed ₦60, 000, 000, 000 (sixty billion naira).
Though finance minister came out to deny this as the CBN Governor said that printing money is in line with the duty of the apex bank which calls for no alarm, FENRAD condemns this as lack of policy harmony. Fact, FENRAD posits, remains that the federal government is drawing excessively from its overdraft account with the CBN beyond reasonable margins.
Again, since the CBN has the duties of issuing national currency (the naira) and lending money – through possibly printing and minting – to the federal and state governments as part of the states’ and FG’s borrowing (domestic debts) plans just as the same apex bank holds cash reserves for money deposit (commercial) banks as bankers’ bank, how can Nigerians deny that monies were ever printed to facilitate FAAC disbursement?
According to a recent Flinch report, Nigeria is drawing from her overdraft account with the apex bank thereby tending away from the threshold of sustainable debt. With debts – both domestic and external – running in their billions (of USD ) and trillions (of naira), certainty is that Buhari-led federal government alone will not be the one to amortize the said loan which has grown by more than 50% since 2015. Poor Nigerian tax payers – both present and future – will. This informs FENRAD’s fear, laregly.
FENRAD calls on the FG to review public finance and public spending, ensure robust monetary and fiscal policies. Budget deficit has plagued Nigeria over the years due to excess borrowing to finance the budgets even as recurrent expenditure keeps dwindling the capital.
Time is now to: plug leakages; invest in critical infrastructure to boost local production and consumption; create enabling environment for small scale businesses mostly of the informal sector to thrive; reopen the borders entirely to enable Nigerian manufactures find external market so that Nigeria can leverage the African Continental Free Trade Agreement, AfCFTA package; reduce borrowing and open up her democratic space which encourages and atracts investors like Twitter and the like.
Recent events where the AfCFTA and Twitter took their headquarters to Ghana do not bode well for the “largest economy in Africa.” Such, to FENRAD, aside being a major snub, equally represents clear foreign direct investment (FDI) dislocation given Nigeria’s active social media population size and as well the size of her market.
The cost of governance has always been a snag against healthy budgeting. For example, certain monetary provisions in annual appropriation comes under the rubric of statutory transfer which in itself is never known whereas budget should be self-sustaining, open and democratic. FENRAD calls on governments at all levels to, in the interest of the nation, review personnel and administrative costs.
Salaries and sundry perquisites that accrue to public and elected officials have to be reviewed to reflect the current economic realities confronting the nation. Nigeria cannot continue to muddle on else it may plunge deeper into abysmal economic mess hard to recover from.
The National Assembly must, as is necessary, revoke this borrowing plan ($1.5 bn) which has no place in the nation’s economic interest as initial loans and drawings said to have been sunk into buying of war jets heretofore remain unaccounted for, even as the said jets are yet to arrive Nigeria’s shores with the ones available reportedly “missing.” Nigeria, FENRAD cautions, must behave as a nation in the throes of recession as occasioned by the pandemic and decades of successive mismanagement of lean resources or face the self-inflicted consequences of protracted hard times.
To the federal government and her numerous agencies and also to the senate, FENRAD says, “Start thinking, Nigeria is sinking!”