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Why we are turning to debt, by Buhari


Nigerian President Muhammadu Buhari speaks with US President Barack Obama(not seen) during a bilateral meeting on the sidelines of the 71st United Nations General Assembly in New York, on September 20, 2016.  / AFP PHOTO / JIM WATSON

Nigerian President Muhammadu Buhari speaks with US President Barack Obama(not seen) during a bilateral meeting on the sidelines of the 71st United Nations General Assembly in New York, on September 20, 2016. / AFP PHOTO / JIM WATSON

Nigeria’s President Muhammadu Buhari has said the country is looking to raise funds by borrowing from World Bank, the African Development Bank, the Chinese Ex-Im Bank and other development finance partners but with a promise that the borrowed funds would not be frittered away.

Buhari said in an article published online by Bloomberg that his government had already begun to raise a $1 billion Eurobond, the country’s first in three years, as part of broader plans to revive Nigeria’s almost comatose infrastructure and strengthen local food production capacity.

“In the face of dwindling oil revenues, we are turning to debt,” Buhari said. “We have begun raising a $1 billion Eurobond, our first in three years.”

“We are also raising debt from the World Bank, the African Development Bank, the Chinese Ex-Im Bank and other development finance partners.”

“Unlike in the past, when borrowed funds were frittered away on unproductive ventures, we will ensure their investment in the revival of stalled road, rail, power and port projects, and in agricultural initiatives that will significantly boost domestic production of food.”

The president reaffirmed his commitment to repositioning the country’s economy but noted that the challenges it currently faces were occasioned by the failure of the country’s past leaders to convert the gains recorded during years of oil boom “into more jobs and significant improvements in standards of living.”

Nigeria is in recession as a result of plunging global oil prices and production but Buhari expressed optimism that with private sector partnering with the government, Nigeria may be able to rebound sooner than later.

He said, “This is why one of our main priorities is creating an environment in which private-sector capital can thrive. We are in particular using Public-Private Partnership models to support game-changing private-sector projects in power, refining, gas transportation and fertiliser production.”

Nigeria  depends on oil sales for 70 percent of government revenue but that has been slashed by low prices worldwide in the last two years.

The situation has complicated the task for the government, which has complained of being left a “virtually empty” treasury by the previous administration and the theft of vast sums of public funds.

It has struggled to pay public sector wages, while the naira currency has weakened, foreign exchange dried up and investment stalled.

However, Buhari said the economic reforms his government put in place has been yielding positive results.

“Our economic recovery plan is already showing positive results,” he said. “Investment’s share in gross domestic product is at its highest since 2010. Inflation is slowing; manufacturing confidence is rising. People are seeing and seizing opportunities to make money catering to the needs of Africa’s most populous country.

“People are seeing and seizing opportunities to make money catering to the needs of Africa’s most populous country.”

The president hoped the situation would improve next month when the government’s ambitious Social Investment Programme would have commenced.

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  • larr

    Buhari has the most corrupt cabinet in the history of Nigeria. The international community knows this. No country is board a sinking ship. Nigeria is a sinking ship. Niger-delta is gone, Biafra is gone. Buhari is gonna sell his camels to pay for the loan. Brain dead certificate forger.

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  • Alvin Ekes

    I do not believe that the government can properly borrow and successfully invest money and produce dividend, at least not in the current economic and social atmosphere of the present Nigeria. Joint ventures, and outright corporate investments is what is needed. If our government can shore up the confidence of investors by laying down investor friendly ground rules, investors will take the risk as they have done in other regions of the world. We Nigerians do not need to reinvent the wheel, we just need to learn from others who have already done it. We are too unaccountable and don’t seem to hold ourselves to account, and this goes all the way from the top to the bottom of society. Having said that, good intentions are good intentions but results are what matters. Our president need not be a super hero, and a go-it-alone super-gentleman, rather he needs good counsel. Engage those who have previously succeeded and you will continue to wittiness success. Engage those who have previously failed, and you will continue to fail.

  • Abokinyang

    If borrowing will take us out of this recession let them do it fast. The masses are really suffering

  • ola
  • Musa

    Spending is not the answer. The more you spend the more cash people have to purchase $$. According to the law
    of supply and demand the price of dollar will rise, leading to more inflation. That is the heart of the problem.
    Wholesale importation of US govt policy is totally uninformed. American $$ is a reserve currency. Nigeria’s currency, the naira, is not.The mad rush to spend money will create a situation similar to what happened during the Udoji award in 1970’s. In the aftermath of the Udoji award there was a mad rush for consumer goods which effectively stifled, if not totally crippled, local production. That set us on this course we have been on for decades now. More cash means higher propensity to consume foreign-made goods.

    The best spending is expenditure on capital goods – infrastructure in particular, highway, bridges, ports, power, communication, agriculture. There is no post office service to speak of in Nigeria yet there’s a huge amount for it in the Federal budget.

    Which leads to the next area of effort, making government more efficient. Ghost workers are still a big problem in states and local governments. All governments (Fed, state and local) should make realistic budgets and implement them as planned.
    Budgeting is a joke in all MDA’s in Nigeria. You will see they budget for power but hardly pay their power bills. They budget for capital projects but spend the money on make-believe seminars related to capital budgets where they give away souvenirs such bags, pay hotel bills and such. Quite often travel, entertainment and seminars consume unduly large chunk of the capital budget amount.

    There are lots of things govt can do to make the economy more efficient. One example, it takes average of 3 years to get a trademark registered in Nigeria.You want to attract FDIs some of them need to obtain a trademark for intellectual property (IP) protection. In the EU or USA, barring any problem it could take as little as 5-6 months to get a trademark registered.
    So if you don’t have your IP protection, it’s additional risk starting your production. You ask the trademark office and they say there’s no budget.
    By the way, the TSA is a good example of how leakages can be reduced leading to increased efficiency. Bravo Mr. President on this one.

    About agriculture, I will like to see the president do something like champion the consumption of locally-made rice. The president has the advantage of the so-called bully pulpit which he can use to make it fashionable to consume local made rice. While visiting a state or other function of the state, the president can feign annoyance at being served imported rice. The press can assist by giving the story prominent headlines. The president can actually refuse to eat his food until a locally-produced rice is served.

    Giving more money to states to pay salaries is totally ill-advised. A good part of the money will be looted and used to purchase $$. I think CBN monetary policy is right on the money (no pun intended).

    I can go on and on. But the fact is that what we need is smart government and we don’t have it yet. I strongly recommend we get a better finance minister. At that level it’s about policy formulation and implementation (re: Okonjo-Iwealla, Emir Sanusi and cohorts) NOT bean counting like keeping the books for profit and loss.

    In conclusion, anybody copying or recommending US policy is ill-informed.. First of all Nigerian economy is in a depression NOT just recession so if we have to even compare at all it should be American policy in the 1929-38 period leading to WWII (recall FDR’s the “only thing we have to fear is fear itself). Part of the problem then was psychological as we have now in our economy. Even people with money in Nigeria are not spending. Everybody is on a wait and see, hence the accumulation of $$ cash.

    There should be a forum where citizens can make presentation to govt.
    Finally there’s absolutely NO NEED for economic emergency power.

    Thanks for reading.

  • Ify Onabu

    The Mullah in Aso Rock has ‘assured’ that the borrowed funds will not be wasted. The bigger question is: who will pay Buhari’s debt and why on earth does he want to rope Nigeria into another cycle of debt? Why, why?