Nigeria’s Terrifying Debt to Revenue Ratio
The federal government currently spends 69 per cent of its revenue on servicing both local and international debts. This is a fact. I thought government officials would come out to dispute this figure when the former Vice-President (Africa) of the World Bank, Mrs Oby Ezekwesili unveiled it. It did not happen. It means that 69 per cent of the expected revenue in this year’s federal budget will go towards debt servicing. It is also pertinent to note that in the 2019 budget proposal still being worked, over N2.1 trillion has been set aside for debt servicing, yet, the government is not disturbed. The binge borrowing continues. This is why I found it shocking that the National Assembly approved FG’s request to raise $2.8 billion in Eurobond to fund the 2018 budget.
With Buhari government’s binge borrowing, in few years, Nigeria may be plunged into insolvency by the huge repayments commitments.
Ezekwesili, a former minister, was apt when she advised government to suspend the Eurobond plans because “it is not good for the health of the economy.”
The former minister added that borrowing more was not a sustainable step as the country was not generating much revenue to cater for its critical development needs.
She remarked: “The Federal Government is digging in instead of digging out. Already, the debt service to revenue is so high. Today it is 69 per cent. 69 per cent of revenue is used to service our debts.
“That is not a sustainable situation. I see the government quote all the time `Debt to GDP ratio’, but that is like a blunt instrument in an environment where your GDP is not reflective of your productivity.
“We measure your productivity by the revenue the GDP generates in the form of revenue of government that comes as a result of the GDP. Your debt to GDP is three per cent and you think that gives you the legroom to borrow and borrow. No, that is not your instrument. Your instrument is your debt service tool, which is the revenue.”
Ezekwesili urged the government to explore innovative ways of increasing revenue and deploying its limited resources only in those areas with massive impact on development, instead of accumulating more debt.
Ezekwesili is an experienced economist. I sincerely hope that the baby economists around our President will learn and act on her incisive analysis, before binge borrowing cripples this country.
It is depressing to note that Nigeria’s debt has been on the rise in the last three years, amid so much poverty. This country has very little to show for this binge borrowing.
The federal government which accounts for over 90 per cent of Nigeria’s total debt profile has been very reckless. The Buhari administration is evidently looking good for the unenviable record of being the most notorious for binge borrowing in the 58 years’ history of this country. Within its first 29 months, it took foreign loans of almost $7 billion. There was a $150 million World Bank loan for our mining sector.
There was also a $1.25 billion in budget support from the World Bank. This is aside the $575 million approved by the same bank for the rehabilitation of the North-east. There was a $1 billion loan from the African Development Bank. There was a $1 billion Eurobond issued, with an additional $500 million from the Global Medium Term Note Programme. The China Exim bank is expected to provide $5.8 billion. There was $300 million raised through a Diaspora Bond issued in June 2017. Perhaps, the debt would have been higher if the Senate had not truncated plans to borrow another $30 billion.
I can clearly remember the Chairman, Senate Committee on Debts, Shehu Sani, remarking that if Nigeria must borrow, it must borrow responsibly: “If we must bequeath to the future generation a pile of debt, it must be justified with commensurate infrastructural proof of the value of the debt. The payment plan of this debt will undoubtedly last the length of our lifetimes and possibly beyond. We must leave behind a legacy that will appease and answer the questions the next generation of Nigerians will ask.”
The burden of these loans on our star-crossed generation and indeed future generation is weighty. Many of the states have accumulated foreign and domestic loans far beyond their repayment abilities. This is one of the reasons many can no longer meet basic obligations to their citizens.
The way the federal government celebrate these loans often leaves me crestfallen. They create the impression that it would be a quick fix for all our problems. Unfortunately, it does not often turn out that way. What hapless Nigerians have been gaining from these massive borrowings are poverty, hunger, disease, malnutrition, unemployment and infrastructure decay.
Kalle village located about 17 kilometres from Maiduguri is now a ghost community after Boko attacked it last Saturday, killing 12 farmers. Residents of three other communities – Dala-Malari, Fuguri and Femari - in Jere Local Government Area have also been displaced after the terrorists attacked them. Three people were killed, with about1300 others displaced, when the insurgents sacked the villages in Jere LG.
Two weeks back, I woke on a Tuesday morning with my pillow soaked in tears; tears for another brutally killed victim of the coldblooded Boko Haram; tears for traumatised residents of Borno and Yobe states, who are persistently deceived by a government that claims to have decapitated the rampaging terrorists.
Hapless Hauwa Mohammed Liman, a Red Cross worker in the custody of Boko Haram, was murdered, despite numerous appeals for her freedom. This is indeed an act of despicable cruelty. Hauwa was the second Red Cross worker to be killed by the terrorists. Saifura Khorsa was the first to be slayed. They were abducted by Boko Haram from the IDP camp in Rann on March 1.
Few months back, I dedicated my column to the abducted aid workers, urging the federal government to rescue them. These patriots defied all pressures to go and assist IDPs in Rann. According to the Red Cross, “Hauwa and Saifura’s deaths are not only a tragedy for their families, but to thousands of people in Rann and other conflict-affected areas of north-east Nigeria where accessing health care remains a challenge.
“How can it be that two female health care workers were killed back-to-back? Nothing can justify this. Hauwa, 24, was full of life, became a midwife at an early age and people who knew her described her as a sociable, dynamic and enthusiastic woman who was loved by family and friends. She was truly dedicated to her work helping vulnerable women in her family’s home area.”
It is disheartening that the federal government failed these patriots. The international community has to step in to save Alice Loksha, the last aid worker being held by Boko Haram. The federal government can no longer be trusted to do this. Of course, they must also not forget Leah Sharibu and the other Chibok girls still in captivity. The rest of the world must assist Nigeria to secure freedom for these hapless girls.
The murder of Saifura and Hauwa, and the persistent attacks across Borno State is a clear confirmation that the terrorists are alive, kicking and control territories in Nigeria. The war against Boko Haram is evidently sagging while the Buhari administration continues with its sham story of success against the terrorists. “Degraded” Boko Haram fighters are the ones taking the fight to our soldiers.