Sad return to the broken chains

In June 2005, we were so ecstatic in celebrating the debt relief offered us, a relief of over $20billion dollars, which was beyond the total revenue of Nigeria for one year. So happy were we that President Olusegun Obasanjo as he was then) GCFR, had to make a broadcast to the nation on June 30, 2005. He followed the broadcast by appearing before the joint sitting of the National Assembly on July 26, 2005 to speak on the issue. In the broadcast, he declared, “How did we work to get out of this debt quagmire? We did it by resolving and working hard to break with the past; by identifying new voices and new leaders; and by rejecting business as usual and voting for new values of accountability, transparency, fair competition, social justice, and the upliftment of the living standards of Nigerians. We revamped our institutions and put in place an economic agenda that reduced the role of the state in the economy while strengthening the place and role of private investors. We mounted a vigorous global campaign to make a good case for debt relief”. He commended the economic management team and assured that Nigeria will never fall into such trap again.

“How about the future? We must learn from the past. We must all show collective responsibility to prevent a return to the past. We must all commit ourselves to protecting, rather than squandering the future of our children. We must all agree not to remove the solid blocks on which our nation stands by accumulating debts that we cannot repay. May God never let us go through this painful path again”, he declared. We were all so happy at that time. Several people commended the government for the action including Cardinal Olubunmi Okogie and General Yakubu Gowon (rtd), GCFR. Others outside Nigeria who commended the central government at that time were the British Prime Minister, Mr. Tony Blair, Hilary Benn, International Development Secretary UK, Mr, Idrissa Thiam, Senior Resident Representative of IMF in Nigeria, Ms Romilly Greenhill, Policy Officer, Action Aid and Mr. Marc Balston, Debt. Strategist Deutsche Bank, London.

To me the comment of General Yakubu Gowon (85),GCFR, was most meaningful. He was in power for nine uninterrupted years and throughout his tenure, 1966 to 1975, Nigeria did not borrow a kobo. He should be commended along with his Ministers of Finance who managed Nigeria’s finance during the civil war, Chief Obafemi Awolowo (6 March 1909 – 9 May 1987), GCFR, Alhaji Usman Aliyu Shehu Shagari (February 25, 1925 – December 28, 2018), GCFR and the Permanent Secretary in the Ministry of Finance at that time, Prince Abdul Aziz Attah (1920-1972), son of the late Attah of Igbirra in Kogi state.

General Gowon said at that time “Let’s hope that no government will ever again commit the future generation to such a heavy burden of debt”. In July 2005, the Federal Ministry of Information celebrated the debt relief by publishing a pamphlet titled “Broken Chains”

Now sixteen years after, we are back to square one. Sixteen years after we are back to the unbroken chains. I do not know what will happen now, but certainly we have messed up. In terms of the management of our economy, we have missed our way. We are back to recession again. And in spite of the optimism being expressed by the Minister of Finance, Zainab Shamsuna Ahmed, we do not know how to get out of the recession and when we are going to get out of it. Between 2005 and now, we cannot point to anything substantive we have done with the money we borrowed.

According to a report by Premium Times, Nigeria’s total public debt stock increased by about N2.38 trillion, or $6.593billion, as of June 30 last year. The Premium Times quoted the Debt Management Office (DMO) that the country’s total debt portfolio grew from about N28.628 trillion, or $79.303 billion, as of March 31 to over N31.009 trillion, or $85.897 billion, in the period under review.

Details of the increment, the DMO said, showed about $3.36 billion came from Budget Support Loan from the International Monetary Fund (IMF), while the balance are new domestic borrowings to finance the revised 2020 Appropriation Act. The new domestic borrowings include a N162.557 billion Sukuk and promissory notes issued to settle claims of exporters. The data showed the new debt figure comprised the debt stock of the federal government, the 36 state governments and the Federal Capital Territory.

The total external debt stands at about N11.363 trillion, or $31.477 billion, about 35.65 per cent of the overall outlay, against total domestic debt of about N19.945 trillion, or $54.419 billion, about 63.35 per cent of the total portfolio. Of the total external debt stock, the federal government accounted for N9.824 trillion, or $27.214 billion (about 31.6 per cent) of external debts; and N15.456 trillion, or $42.814 billion (about 49.84 per cent) of the domestic debts.

The states and the FCT owe about N1.539 trillion, or $4.263 billion (about 4.96 per cent) of the total external debt figure, and about N4.190 trillion, or $11.606 billion, (13.51 per cent) of the total domestic debt figure.

The DMO said additional promissory notes would be issued in the course of the year, along with new borrowings by state governments which would further increase the public debt stock.

Details of the debts stock, showed that the multilateral loans category consisted IMF $3.359 billion, while the World Bank Group and African Development Bank (AfDB) Group $16.36 billion. The three financial institutions accounted for about 52 per cent of the country’s total $31.477.14 billion debt stock.

The breakdown of the debt to World Bank’s affiliate institutions showed International Development Association (IDA) $10.05 billion; and the International Bank for Reconstruction and Development (IBRD) $409.51 million.

Similarly, the debt to African Development Bank stands at about $1.326 billion; Africa Growing Together Fund $0.14 million; African Development Fund $921.91 million; Arab Bank for Economic Development in Africa $5.88million; European Development Fund $52.52million; Islamic Development Bank $30.22million, and International Fund For Agricultural Development $201.68million.

On the bilateral level, Nigeria’s total debt to various institutions is about $3.949 billion, or 12.54 per cent of the total debt stock.

They consist of those to Chinese financial institutions, including a Exim Bank of China $3.241billion; French institutions (Agence Francaise Development) $403.65milion; Japanese (Japan International Cooperation Agency) $76.69million; India (Exim Bank of India) $34.87million, and Germany (Kreditanstalt Fur Wiederaufbua) $192.71 million.

Commercial debt instrument debts totaling $11.16.35 billion, which account for about 35.48 per cent of the total debt, include Eurobonds $10,868.35bilion; Diaspora Bond $300million.

To be continued tomorrow.

Teniola, a former director at the Presidency wrote from Lagos.