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The jumbo loan cometh


Now comes the jumbo loan. The senate has, as it is wont to do, given the president the thumbs up. The jumbo loan had been a source of consternation by those who feared that the country was already struggling with the weight of new debts and that a new straw might make the camel groan.

The rationale for the loan was assailed by those experts who argued that the $22.7 billion loan would worsen rather than improve our current problems with the national economy. A flurry of well-intentioned pieces of advice flooded the public space to make the government rethink its decision. The government refused to back down. No one really expected a government comfortable in the comfort zone of its own wisdom and profoundly allergic to the jarring voices of expert opinions, to say no to the do-gooder foreign lenders. It must be difficult for ours and other governments not to salivate over $22.7 billion. It is good money, very good money.


Two things flow from this latest development in the management of our stubborn national economy. Firstly, it is obvious that with this new loan, the government has made our debt burden heavier, not on itself but post its watch. We are talking of a scary N33.07 trillion debt here. A crushing burden, obviously.

The new loan offers a brief glimpse of paradise – federal super highways, the miserable 4,000 megawatts of electricity generation and distribution becoming history, modern railways and modern trains, the lot. The reality, when the loan is drawn down, would be less than paradise. The new loan would not be the magic wand in either helping the government to effectively guide the economy through the woods or making a radical paradigm shift in its management. What effect, short-term or long-term, would it have on the lives of the 100 million extremely poor among us? The refuse dumps would still be the place of miserable sustenance for the thousands of our harried fellow Nigerians.

The resort to foreign loans is always attractive to developing countries. Lenders are willing to lend not out of benevolence or altruism but because that is how they make their money. The borrower must repay the loan with interest.


Loans are always easy options when a country finds itself sinking in debts, foreign and domestic, and is forced to catch at anything, including the straw, to try and keep it afloat with well-oiled excuses such as tackling its neglected infrastructure that had no choice but to sink into dilapidation. No one, I am prepared to wager, woke up this time around to find that our roads are death traps, our electricity, having gone through a series of cosmetic changes, is still a national shame; nor would anyone reasonably suggest that the neglect of the railways, once the most viable means of transportation for human beings and the evacuation of goods from the ports to the hinterlands, happened last night while we slept.

The hospitals would still remain consulting clinics for the poor because no single national hospital would be suddenly transformed into a centre of excellence. The rich would still seek good health services in other countries, such as India. My favourite pet theory is that the chickens always exercise the wisdom to eventually come home to roost. Let me borrow from Solon and say, go ye to the chickens and be wise.

In the past five years, the federal government has had to spend N8 trillion on debt servicing, a fancy term for loan repayment with interests. The well-oiled loan principle is, eat now, let others pay later. It is a pernicious principle in human and resources management but one that still remains attractive to countries that cannot afford the luxury of hard-headed thinking on other possibly viable options available at home, as in the exploitation of their natural resources.


Two, the new loan tells us an unsettling story about the management of the economy. The old ways still hold sway with our dependence on crude oil the crutch that helps to move us forward. Nigeria is potentially great because given its natural and human resources the country ought to be a lender of first choice by other countries struggling to save their own economies. It is an irony that a country this blessed and this potentially rich continues to be a dependent nation that, at the first signs of the national treasury becoming empty, goes a-borrowing to fill up the treasury and entertain the luxury of believing that it has made it into the upper league of the rich nations. Borrower nations are not rich nations.

Our governments have had a poor record of managing potential poverty since the first major oil glut hit the global market in 1982, forcing the late President Shehu Shagari to introduce a regime of austerity measures to force the people to change or moderate their consumptive patterns to save the scarce foreign exchange. Pressed to the wall, the president requested the IMF/World Bank for a bridging loan of $2.7 billion. This was accounted by the generals who toppled him as evidence that the country came to that sorry pass because the economy had been “hopelessly mismanaged” by his administration.

When General Ibrahim Babangida took over, he asked Nigerians to decide on the loan. Fellow Nigerians gave it the thumbs down. We did not want the loan because the experts convinced us that it was a sure path to the nation’s economic ruin in both the long and the short terms, given the conditionalities attached to such loans by the global financial power house.


Something good came out of it. It confronted Babangida and his economic managers with the challenge of thinking out of the box in the management of the national economy. Thus, was born the structural adjustment programme, SAP. If you would please excuse its unfortunate acronym, you would see that it represented the first radical thinking on the national economy and its management. SAP was the first opportunity this country had to look at the structural base of the national economy. What was it really built on? Nothing tangible. It was built on assembly plants. It was built on local industries that depended entirely on imported raw materials. It was built on crude oil earnings. None of them was a pillar of industrial and economic development. Taken together, they amounted to nothing substantial in our nation’s quest to be a big economy.

SAP failed because when the pains hit, as they must with such a radical change in the structural base of the economy, the generals panicked and sabotaged it. Chief Obasanjo told his military colleagues that the programme should have a human face and the milk of human kindness. The advice was a total disservice to the nation. Nations, like individuals, must take painful decisions


No one even pretended to remember then that SAP unleashed the creative ingenuity of Nigerians in all the sectors of the national economy. We lost the one golden opportunity we had, SAP pains and all, to make structural adjustment of the economic base a permanent feature of our economic management. Thus, we are condemned to the weary trudge along the path that is only a vicious circle. Things appear to change just as the mirage appears to suggest water in the desert.

Obasanjo lightened our debt burden when he persuaded our foreign debtors to forgive us part of the debts. Some of us thought we would never walk that path again. But here we are with the president and his economic managers convinced there is no alternative to walking the path again. The problem is that debts have a nasty habit of begetting debts. The result is the debt trap. I need say no more.


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