Sad return of 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, 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 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 who commended the government at that time were the Senate President, Senator Ken Nnamani, the Speaker of the House of Representatives at that time, Alhaji Aminu Bello Masari, the former Vice President, Dr, Alex Ekwueme. Others were Alhaji Mohammed Danjuma Goje, Abdullahi Adamu, Otunba Gbenga Daniel, Prince Olagunsoye Oyinlola, Alhaji Bukar Abba Ibrahim, Chief Ebere Udeagu, Mallam Nasir El-Rufai, Senator Udoma Udo Udoma, Chief Sunday Fajimi, Engr. Hamman Tukur, ambassador Agboola Isaac Aluko-Olokun, Honorables Farouk Lawan, John Agoda, Kayode Amusan, Kelechi Nwagwu, Oba Rilwanu Akiolu, Oba Omo N’Oba Erediauwa, Reverend Dr. Wilson Badejo, Mrs. Oluremi Oyo, Alhaji Mansur Ahmed, Alhaji Lateef Owoyemi, Mr. Charles Ugwu, Dr. Sonnu Folorunso Kuku, Dr. Cecilia Ibru, Comrade Adams Oshiomhole, Chief Frank Kokori, Mr. Harry Nwana, Dr. Elizabeth Solere, Brig. Gen(rtd.) Mohammed Buba Marwa, Prince Chidi Chukwuani, Mr. Kenneth Orkuma Hembe, Comrade Zik Gbemre, Mr. Cordel Okafor, Mr. Bisi Olawunmi, Dr. Uma Eleeazu, Dr. Stanley Macebuh, Prof. Nimi Briggs, Mr. Chijama Ogbu, Mr. Joseph Omowa, Mr. Adesoji Olugbenga, Mr. Moses Olurunwa, Dr. Boniface Chizea and others.

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”.

Let me say a word about Prince Attah. He was educated at Okene Elementary and Middle Schools between 1926 and 1935. In 1936 he entered the Achimota College, Ghana, and studied there until 1944 when he went to Belliol College, Oxford, England, graduating in 1947 in Politics, Philosophy and Economics. Returning to Nigeria the following year, he entered the government service as Cadet Administrative Officer in the then unified Nigeria Public Services. He served in Calabar, Opobo, Ikot-Ekpene and former Southern Cameroons, all then under the Eastern Region, and after the division of the Public Service continued to serve in that Region; he was District Officer in Umuahia before obtaining the important post of Private Secretary to Dr. Nnamdi Azikiwe, Premier of the Eastern Region. Then he was Secretary to the Agent-General for the Region in Britain; Training Officer in the Regional Ministry of Finance, Enugu; and Secretary for Annang Province. He moved to the Federal Public Service as Administrative Officer. Class III, in 1958 and was promoted Permanent Secretary in 1960, and headed in turn the ministries of Defence, Communications, Industries and Finance. He occupied the vital post of the Permanent Secretary, Finance, from 1966 through the years of civil war with all its effects on the country’s finances. In December 1970 he was appointed Administrative Officer (Principal Grade), and became Secretary to the Federal Military Government and Head of the Federal Civil Service. Alhaji Attah died on June 12, 1972 at the Royal Free Hospital, London.
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. Further details of the total N15.456 trillion Federal Government debts stock by instruments of as at the date under review showed that FGN Bonds of N11.241 trillion, or 72.75 per cent; Nigerian Treasury Bills N2.760trillion, or 17.86 per cent; Nigerian Treasury Bonds N100.988 bilion, or 0.65 per cent; FGN Savings Bond $12.984billion, or 0.08 per cent; FGN Sukuk N362.557billion, or 2.35 per cent, Green Bond N25.690billion, or 0.17 per cent, and Promissory Notes N951.740billion, or 6.16 per cent.

Details of the debts stock of the 36 states and the Federal Capital Territory stood at about N4.190 trillion, with Lagos N493.32 billion; Rivers N266.94 billion, Akwa Ibom N239.21billion and Delta N235.86 billion among the top debtors in the country. The four states are among the richest states in the country.

I grew up in an age that insists that he who goes a-borrowing, goes a-sorrowing. It was an idiom used by the American Nationalist, Benjamin Franklin (17 January, 1706-17 April, 1790). Borrowing makes our lives unfortunate, but we are the ones who borrow, so we face problems simultaneously. To borrow means ‘to take and use something that belongs to somebody else, and return it to them at a later time. Does this action lead to unpleasurable consequences? Borrowing is a doomed cause. It ends with its beginning, like a closed circle and never lets you go away. It grabs you with its tentacles, until it completely tears you to pieces, like a fierce beast, and then leaves you to the vultures and jackals. People borrow things, and money especially, when they are in need. But this need is caused in most of the cases by person’s laziness and foolishness and mismanagement too. If the individual is ambitious and clever enough, he will never sink in the mud puddle of need. If he is smart enough to limit himself and determine his needs to his abilities. Even if you borrow with a good will in mind, an idea, what guarantees that you will be able to return what had been lent to you? Then you will have to borrow again, and again, and…except.

My late mother, Madam Juliana Adekolarin Teniola, cautioned me that I should not make borrowing a habit as I will suffer for it in the end. She also instructed me that self-discipline will help me achieve greatness and that people who tend to borrow often are usually slow in settling debts. But as I grew older, I realized that debt is a major development issue and there can never be any growth without incurring some level of debt. One needs to borrow from commercial houses to make for progress and profit in any enterprise. When too much debt is obtained it definitely becomes a burden.

Debt has a significant effect on global poverty. For example, borrowed money accrues interest which adds to debt and can lead to impoverished lands suffering because massive interest payments drain funds that are needed for things like infrastructure investment. Compound interest over a matter of decades can soon render a serviceable debt unsustainable.

Addressing the media on December 30, 2019, my friend, the Minister of Information, Mr Lai Mohammed said Nigeria’s debt servicing to revenue ratio has been higher than desirable. The minister put the country’s current debt profile at $83.8 billion and dismissed reports that the country’s external debt was 81billion. According to him, the entire debt profile comprises 27.163billion external and 56.720billion domestic debt. He said the debt figure represented the cumulative borrowings by successive government and that the total public debt stock in 2015 was 63.80 billion, comprising 10.31 billion of external debt and 53.49 billion domestic debt.”
Presenting his budget on October 8 last year to the National Assembly, President Muhammadu Buhari, GCFR, said “we have provisioned N3.12 trillion for this in 2021, representing an increase of N445.57 billion from N2.68 trillion in 2020. A total of N2.183 trillion has been set aside to service domestic debts while N940.89 billion has been provided for foreign debt service. N220 billion is provided for transfers to the Sinking Fund to pay off maturing bonds issued to local contractors and creditors”.

Like every Nigerian, I am worried by the rising Nigeria’s debt profile because debt is the principal cause of poverty, leading to human suffering and misery and hampering economic development. This is not what we should handover to our children and grandchildren.
I have to make reference to the speech by then President Olusegun Obasanjo when he addressed the National Assembly on debt on July 26, 2005.

He said on that day that “I am very pleased at this opportunity to brief you today on issues relating to our nation’s debt relief, the contours and struggle for debt relief, the terms of the relief we were granted by the Paris Club, and the opportunities that this opens up for our dear country Nigeria. Let me start by thanking you, members of the National Assembly for your understanding, encouragement and support during the struggle for debt relief. It is the courage and vision that you exhibited in standing firm with the Executive that made it possible for us to carry out the arduous negotiations that resulted in this unprecedented relief for Nigeria. Let me say at this point that this pattern of cooperation should not end here. We have more national and international challenges before us and only cooperation, commitment, mutual respect can ensure victory for our ideas, initiatives and actions. In this brief, in respect of debt relief, I will speak on the inherited debt overhang, the impact it had on our effort to grow and develop the economy, the struggle for debt relief, the results of this struggle, the benefits to our country and people, and the future. Of course, not all Nigerians know the truth, the importance or impact of debt relief, and the opportunities that it provides for our country”.

Now we are in a dilemma over our debt profile. I am sure we are not expecting another debt relief again. The potential problems of government borrowing is that it will lead to higher debt interest payment and also lead to increase rate in taxes, thereby leading to inflationary pressures. The prediction in 2005 was that paying the debt will free up cash that will push towards capital expenditure and bring the desire economic boom. Instead what we have now is that we spend more on recurrent expenditure and limited capital expenditure. We are back in full cycle. Poverty and conflict are closely interconnected.

Now we are being told that Nigeria total debt profile will hit N33 trillion by next year. The rate at which we are going, in terms of our debt profile, may lead to Nigeria being put up for sale.

Very sad indeed.