Debt: nige­ria risks bank­ruptcy, says Obasanjo

The Punch - - FRONT PAGE - Je­suse­gun Alagbe

For­mer Pres­i­dent Oluse­gun Obasanjo has said Nige­ria risks im­pend­ing bank­ruptcy over the con­tin­u­ous ac­cu­mu­la­tion of debt by the gov­ern­ment.

Obasanjo said things might get worse eco­nom­i­cally as Nige­ria, as well as other African coun­tries, kept pil­ing up debts, say­ing he was wor­ried for the fu­ture gen­er­a­tions who would have to pay such loans.

The ex-pres­i­dent said this on Fri­day in La­gos as a key­note speaker at the “Why I am Alive” cam­paign.

The ini­tia­tive, tagged ‘The Nige­rian Story,’ had the founder of Trin­ity House, Pas­tor Ituah Igho­dalo, as chair­man of the Board of Ad­vi­sors.

Pre­sent­ing his speech, ti­tled ‘Nige­ria: The chal­lenges of debt and sus­te­nance of democ­racy,’ a copy of which was made avail­able to our cor­re­spon­dent, Obasanjo said as at 2015, Nige­ria’s to­tal ex­ter­nal debt was about $10.32bn.

By March 2019, the for­mer Pres­i­dent said the coun­try’s ex­ter­nal debt had in­creased to $81.274bn, not­ing that to ser­vice this cur­rent level of in­debt­ed­ness, Nige­ria must com­mit at least 50 per cent of its for­eign earn­ings.

“Such a sit­u­a­tion talks about an im­pend­ing bank­ruptcy. No en­tity can sur­vive while de­vot­ing 50 per cent of its rev­enue to debt ser­vic­ing,” Obasanjo said.

“It has re­cently been pointed out that in 2018 that to­tal debt ser­vic­ing took over 60 per cent of gov­ern­ment rev­enue. What’s more, we are not do­ing enough to ad­dress the fun­da­men­tal, deep-seated and struc­tural chal­lenges that in­hibit the ex­pan­sion of our econ­omy,” the ex-pres­i­dent added.

Obasanjo, who served twice as a demo­cratic Pres­i­dent of Nige­ria be­tween 1999 and 2007, said to worsen mat­ters, the present gov­ern­ment was cur­rently seek­ing to add another $29.6bn loan to “our al­ready over­bur­dened debt port­fo­lio.”

The Pres­i­dent, Ma­jor Gen­eral Muham­madu Buhari (retd), had re­cently sub­mit­ted a loan re­quest of $29.6bn to the Na­tional Assem­bly for in­fras­truc­tural de­vel­op­ment.

Al­though sev­eral eco­nomic ex­perts and Nige­ri­ans have knocked Buhari for the lat­est loan re­quest, there are in­di­ca­tions that the loan pro­posal will be ap­proved by the leg­is­la­ture.

The Se­nate Pres­i­dent, Dr Ah­mad Lawan, and the Speaker of the House of Rep­re­sen­ta­tives, Mr Femi Gba­jabi­amila, have re­peat­edly said any­thing Buhari does is in the best in­ter­est of the coun­try. Note­wor­thy, the Se­nate has al­ready be­gun moves to ac­cede to the re­quest.

How­ever, Obasanjo said al­though debt could be used to fi­nance growth and/or de­vel­op­ment, he said it was a “dou­ble-edged sword” that must be wielded with a high de­gree of dis­ci­pline, re­spon­si­bil­ity and fore­sight.

He said, “A well-cal­i­brated debt for in­fra­struc­ture and other de­vel­op­men­tal goals could be very pos­i­tive. How­ever, we do not need to spec­u­late. We need to ex­am­ine our his­tor­i­cal ex­pe­ri­ence.

“Every­one knows that our gov­ern­ments are no­to­ri­ously de­fi­cient in se­ri­ous and ad­e­quate dis­ci­pline and most of­ten lack com­pe­tence and con­sis­tency as well.”

The ex-pres­i­dent said, for in­stance, the coun­try bor­rowed to build a light rail in La­gos, em­barked on the project, but a gov­er­nor aban­doned the project for his full term of four years at 65 per cent com­ple­tion – when the coun­try should have started pay­ing down on the loan.

At the same time, the for­mer Pres­i­dent said there were bus ter­mi­nals that were de­clared open but not used.

He said this type of sit­u­a­tion was not in La­gos alone but in other states like Rivers and Cross River.

He fur­ther said, “The Fed­eral Gov­ern­ment built a nice looking ex­ten­sion to the Mur­tala Mo­hammed In­ter­na­tional air­port that looks com­pleted from out­side but not in ser­vice.

“To rub ‘aboniki’ on the in­jury, some clowns are talk­ing of de­mol­ish­ing the main air­port and re­build from scratch. Where on earth is a poor coun­try wast­ing re­sources that way?”

Obasanjo said his fears were born out of his ex­pe­ri­ence about jumbo loans “and my agony in get­ting rid of our ex­ter­nal debts and de­vel­op­ing a sus­tain­able ap­proach to ad­dress our do­mes­tic debts.”

He said, “It was a painstak­ing ex­er­cise that in­volved not just a na­tional strat­egy but a con­ti­nen­tal and in­ter­na­tional one which even­tu­ally yielded sig­nif­i­cant gains.

“To now see all those ef­forts, go to waste barely less than 15 years af­ter that wa­ter­shed mo­ment is more than dis­turb­ing. It is painful and ret­ro­gres­sive.

“Nige­ria’s lead­er­ship was key in the cam­paign for debt re­lief in the late 90s/early 2000s. Our re­lapse into debt will be wrong, sig­nalling to the rest of the con­ti­nent and could be tan­ta­mount to back­ing the en­tire con­ti­nent into another era of ‘high­lyin­debted poor coun­tries.’”

Stat­ing that it would be ir­re­spon­si­ble to be­queath debt to fu­ture gen­er­a­tions, Obasanjo said, “For once, all Nige­ri­ans need to rise up and shout in one voice and call on the Na­tional Assem­bly to rise up to its core duty and re­spon­si­bil­ity and save our chil­dren and our grand­chil­dren and great­grand­chil­dren from be­ing mired in debt.

“Let us use other op­tions. Saudi Ara­bia, I un­der­stand, will be rais­ing over $20bn to fi­nance projects through pri­vate eq­uity. We can do like­wise.

“We have sev­eral na­tional as­sets that could be used to raise some of the funds that we need in this re­spect for in­fras­truc­tural de­vel­op­ment to give as­sur­ance to pri­vate sec­tor in­vestors and PPP (Public-pri­vate Part­ner­ship) in­vestors, if nec­es­sary.”

Mean­while, the ex­pres­i­dent said things would get worse when oil and gas that Nige­ria re­lies on would no longer com­mand pre­mium de­mand as in the past.

He stated that 50 per cent of coun­tries in Africa had dis­cov­ered oil and gas in rea­son­able quan­ti­ties and were of­fer­ing more at­trac­tive terms to in­vestors than Nige­ria was of­fer­ing and so the coun­tries were draw­ing away “se­ri­ous” in­vestors from Nige­ria.

He said, “There are even more dis­cov­er­ies out­side of Africa that have given bet­ter at­trac­tions to in­ter­na­tional oil and gas in­vestors. There are al­ter­na­tives in the wind, so­lar and other forms of en­ergy that are be­com­ing cheaper by the day with ever-im­prov­ing tech­nol­ogy in th­ese ar­eas.

“The is­sue of cli­mate change is daily mak­ing oil and gas less im­por­tant than they had been up till now. Elec­tric cars and so­lar-driven forms of means of mo­bil­ity and trans­porta­tion will make oil and gas more in the ground than be­ing ex­ploited for trans­porta­tion.”

To make the fu­ture sus­tain­able, Obasanjo urged the gov­ern­ment to fo­cus on key ar­eas such as ed­u­ca­tion; health and so­cial well-be­ing; man­u­fac­tur­ing and in­dus­tri­al­i­sa­tion; in­fra­struc­ture; and agribusi­ness.

Amid ris­ing debts, the In­ter­na­tional Mon­e­tary Fund also re­cently warned Nige­ria, stat­ing that the coun­try’s debt to gross do­mes­tic prod­uct ra­tio at 28 per cent had in­creased but was still be­low the av­er­age for sub-sa­ha­ran Africa and Africa as a whole.

The IMF Se­nior Res­i­dent Rep­re­sen­ta­tive and Mis­sion Chief for Nige­ria, Mr Amine Mati, said at the public pre­sen­ta­tion of the ‘Fall 2019 is­sue of the re­gional eco­nomic out­look for sub­sa­ha­ran Africa,’ that the Fed­eral Gov­ern­ment needed to in­crease its drive to cre­ate more jobs and re­vamp its fis­cal con­sol­i­da­tion.

•L-R: Head of Me­dia, Dig­i­tal and Spon­sor­ship, Nige­rian Brew­eries Plc, Wa­siu Abi­ola; Port­fo­lio Man­ager, Na­tional Pre­mium Brands, Sarah Agha; Re­gional Busi­ness Man­ager, Abeokuta, Idowu Adeshina; Brand Man­ager, Star Lager, Onye­buchi Nwangwu; and Port­fo­lio Man­ager, Main­stream Brands, NB Plc, Omo­tude Ade­nusi, at the launch of the new STAR Lager la­bel in Abeokuta... on Fri­day. Photo: NB

•L-R: 2013 Fu­ture Africa Lead­ers Award win­ner, Pas­tor Sharon Ajide; a mem­ber, Cen­tral Ex­ec­u­tive Coun­cil, Love World In­cor­po­rated, Pas­tor Am­brose Is­esele; Se­nior Ex­ec­u­tive Of­fi­cer, Trauma Care Foun­da­tion, Pas­tor Jummy Akin­sanya; and Se­nior Ex­ec­u­tive Of­fi­cer, Fu­ture Africa Lead­ers Foun­da­tion, Pas­tor Dave Og­baka, dur­ing a press con­fer­ence on the 2019 nom­i­nees of Fu­ture Africa Lead­ers Award in La­gos... on Fri­day. Photo: Odu­tayo Odu­sanya

•L-R: Di­rec­tor, Hope in God Foun­da­tion, Pas­tor Olanireti Ad­e­dugbe; Chair­man, Pas­tor Taiwo Ad­e­dugbe; As­sis­tant Pas­tor, The Re­deemed Chris­tian Church of God, Unity Mega Area, Pas­tor .Pa­tience Akanni; and a guest of hon­our, Mrs Rose­line Akin­lonu, at the 2019 Care Day in La­gos... re­cently. Photo: Odu­tayo Odu­sanya

•L-R: Manag­ing Di­rec­tor/ceo, Ay­oola Foods Ltd, Mr Se­gun Olaye; Kan­ny­wood ac­tor, Ali Nuhu; and Ex­ec­u­tive Di­rec­tor, Ay­oola Foods Ltd, Mr. Ay­o­dele Olaye, at the for­mal sign­ing of Nuhu as brand am­bas­sador of Ay­oola Foods in La­gos... on Fri­day. Photo: Ay­oola Foods

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