Sunday, November 27, 2016
Don’t rush to approve the $30bn loan request by the Federal Government
By Rev Echi Nwogu
I wish to call on members of the National Assembly not to rush into approving the $30b loan request of the president for the following reasons:
1. This president and his party campaigned against high external debts when our national external debt stock was supposedly high. Those who voted for them believed they won't increase the external debt stock and it amounts to 419 for them to do what they campaigned against.
2. Giving a blanket approval without knowing the sources of the loans and the attached conditions will mortgage Nigeria to foreign interests. For instance, a loan from Saudi Arabia and other Islamic states will come with religious conditions that are likely to subvert our non secular status.
3. We recently borrowed from China and they added conditions that made it compulsory for Chinese companies to execute the contract with mostly Chinese workers. Our people totally lost in that deal as we didn't get the job or profit benefits and yet we are bound to pay. That to me wasn't a loan but rather economic colonization of a sovereign nation by other means.
4. We need all the related infrastructure projects spelt out in the President's request with the geopolitical spread made known to all. Don't let the President take money and push the bulk of the funds to his area under any guise. It is the whole of Nigeria that will owe and repay from resources mostly in the SS and SE.
5. We should not borrow if we cannot first cut down on our corruption and frivolous expenditure. The cost of governance is too high in Nigeria and we need to work on that at all levels. Let's save money by amending the constitution to do away with our bicameral legislature, 36+ ministers and all manner of political hangers on with cost to our national economy. Delivering on part time legislature alone will save more money than we want to borrow. Added to that are our countless repetitive bureaucracies like EFCC, ICPC and CCC. Harmonize and do away with all that rubbish and we will save money rather than borrow money.
6. Oil prices are going up and currently above $50/barrel and we budgeted at $38/barrel benchmark. What have we done with the excess of $12/barrel? Yet we have not done up to 60% implementation of 2016 budget so far. Funny enough we have devalued the Naira many times over and yet cannot pay local debts with the excess flow. Who is fooling who?
7. How many years will it take us to repay $30b? Which generation is going to bear that cost? If we cannot help the current generation by thinking smart why should we mortgage future generations? Obviously our current leaders, who are mostly in their 70s, are not the ones that will pay and they are all past productive age. They should not be the ones borrowing for us and our children.
8. Instead of government borrowing money to spend/waste why not make the funds available to private entrepreneurs to help create real jobs and jumpstart the economy? More than 70% of those in our civil service actually do nothing but earn more than 60% of our recurrent expenditure. If we create real jobs through the private sector they will find productive jobs and help support our economy. Private operators can actually fix roads and build rails. If we enter into good "build operate and return" arrangements with toll gates and train tickets there are Nigerians that will take the task of infrastructure development off the govt. Give them that $30b through a sovereign guarantee instead of allowing perennially inefficient governments to manage such funds and allow it to go into our endless corruption cesspool.
9. This administration has not shown capacity to be prudent in resource management. All we have witnessed is government by propaganda without substance. Even the President is engaged in de marketing our country and economy. That shows there is absence of knowledge at the government level on how to manage a modern economy. We cannot afford to hand over $30b to this team of leaders for any reason. Where is the economic management team of the president and what is the pedigree of those in that team? Are they even powerful enough to influence the choices of the President in critical matters? Or are they people under the control of a cabal of political opportunists pursuing narrow and shadowy objectives?
10. Are the folks at the current National Assembly capable of reviewing the terms of the loans? Do they have the political will to say no or yes based on facts? Have they previously demonstrated capacity, through non corruption induced oversight activities, to understand the economy and what it needs now? Are they not the same people working hard to cover up budget padding after exposure by one of them that was schemed out? I strongly doubt their fitness to review and approval a national commitment of the magnitude demanded by the president. $30b is literally Huuuuuge.
Make no mistake about this; I am not generally anti-loans or borrowing. I believe that when you borrow and apply judiciously you can achieve great results and also deliver on other development objectives. I just don't think we have enough information or right team in place on the proposed loans to decide as a people the need for it. I also have my fears on the motive behind certain sources of loans as well as the planned deployment.
The president is asking the National Assembly to vire billions to the north east whereas the real need is in the oil producing areas and the industrial hubs of the country. What do they produce in the north east that can repay the funds being injected from home and abroad?
What the people of the north east need at this time is an end to Boko Haram insurgency to enable them return to their farms and schools. Our President already told us that he has defeated Boko Haram and we naturally should expect that he will hastily return those at IDP camps back to their homes, if he is telling us the truth. There is no need to cut grasses at IDP camps with hundreds of millions of naira since those our brethren are supposed to be home bound.
A government that is not telling us the truth about the state of the insurgency in the north east cannot be asking us to vote more money to the northeast and even borrow to fund projects that are expected to be sited there.
Frankly, I don't want this $30b loan until i have details. Convince me and others like me or forget it.
Copied Oby on recession I'm not her fan, neither am I willing to be, but I think Madam Oby Ezekwesili made a whole lot of sense about the economy, and there is the need to prove her wrong if you have a contrary opinion.
“I still find it funny that most people don't know why Nigeria economy went into recession, they love the incompetent lies of Lai Mohammed about the past government ruining everything.
It's also myopic to think that if Jonathan were to still be inpower, we would be worse off.
The truth about Nigeria's recession is this; it was caused by the president's unguided rhetoric and uncultured body language.
Firstly, there is nothing we are buying today that we weren't buying 5 years ago, therefore it's not our purchase that put pressure on Naira but withdrawal of funds by foreign investors.
After the election, the president created instability with his unguided statements about how everyone is corrupt and how everyone is going to jail. The instability made foreign investors to liquidate their investment and change their money to dollars. In the process of trying to flee, they were willing to buy dollars at any price, which lead to high exchange dollar rate.
Even though some of them were not ready to run away, but want their money in dollars to save their
investments from devaluation, the president gave a bad signal by banning deposit of foreign currency
into dormiciliary accounts. That was enough for free market believers to see the draconian handwriting on the wall, hat was the beginning of dollar rush.
To make matters worse, the president came up with another outrageous policy of rationing dollar to certain sectors and blocking many sectors out. That was the nail in the coffin which facilitated the emergence of free FALL.
In the end, foreign investors took over $80B out of the economy within a short period and everything went
down to free fall. To those who believe it will be worse if Jonathan is still there, you are all wrong. Policy continuity and political stability will not let billions of dollars leave our shores within such tiny time frame. Even though the government might have income shortage, the private sector will weather the storm by their confidence in the market.
The fear of the unknown created by PMB is responsible for the economic downturn not low oil price. Interest
rate in America is currently at 0.5% while it is 12% in Nigeria. JP Morgan Chase will not mind borrowing $50 billion from Feds at 0.5 and put in Nigeria for return of %2000 profit.
Citi bank will do the same, likewise US Bank Corp. Chase gave Buhari warning about the repercussions of
his fixing policy before they pulled out, but his illiterate cyber warriorsand misseducated e-soldiers said
JPMORGAN can go to hell, they no longer believe in economic metrics since their messiah is in charge.
Funny enough they are all suffering today because of the stupid policy, but they find relief by blaming it on past administration and Gucci appetite of average Nigerians. For your information, if the president continues with his unguided rhetoric, Naira will go down to N1000/1 $. But we thank
God, he is no longer talking".
Dear Nigerians, you are aware of the recent letter by PMB to NASS requesting them to approve a loan of $29.9b for a three year rolling plan 2016-2018 which is made up of:
1) Project and Programme loan. $11.270b
2) Special National Infrastructure
3) Euro bonds. $4.500b
4) FG budget Support. $3.500b
Total loan required for approval. $29.960b
According to the letter, $575m is earmarked for North East to cover :
1) Polio eradication routine
Immunization project. $125m
2) Community/Social Dev. Project.
3) Nigeria State Health Investment
4) State Education Investment
5) Nigerian Youth Employment/
Social Support Project. $100m
6) Fadama III Project. $50m
I find these bogus figures highly unnecessary at this time of recession. Why is the government hiding under the cover of dollar to raise these claims that translates to multi trillions of Naira. No wonder kidnappers now ask for their ransom in dollars.
The folly in the sum earmarked in the North East is clear and I believe we all can see it All the items these are veritable source of fraud. We would also demand that all the other projects earmarked for the loans be itemized too.
On the average, the loan translates to $9.986b annually. What borders any sane borrower, be it a person, government and corporate body is source and how to defray or payback the loan. Considering the current economic predicaments, is the loan a sensible and viable project to embark on? Could the government please tell us how they intend to payback this loans and all the outstanding ones?
In the past slaves are in chains but the vogue now is that slaves are in debt. Therefore, any loan that is not about projects that can generate good returns is not good enough for consideration.
In my view the proposed three year rolling plan is a hogwash and in fact a washout. It's approval will be the greatest injustice the 8th Assembly will unleash on Nigerians.
How Buhari administration emerged the highest debtor government since 1960
The leadership of International Society for Civil Liberties and the Rule of Law: Intersociety, has received with shock the moves by the Administration of Gen Muhammadu Buhari to further mortgage Nigeria and its future into chronic and harmful indebtedness.
This by legislatively seeking to borrow a whopping sum of $30 billion or N9.12 trillion, using the current official exchange rate of N283 per US$.
The Buhari Administration has in the past one year, covering 30th June 2015 to 30th June 2016; according to the Debts Management Office-DMO, borrowed a total of N2.25 trillion or $11 billion.
This numerically translates to average of $10.3 billion in a year; out of 2016, 2017 and 2018 fiscal periods; the first of its kind in the history of Nigeria.
The most alarming and shocking part of it all, in practical reality, is that the borrowings are not capable of yielding dividends for their repayment including payment of principal sums, their possible penalties and agreed interests.
Nigeria leaders are notoriously known worldwide as serial and crooked borrowers; using public infrastructures and other public reasons as a cover to obtain such loans; only to channel them into wasteful overheads and personnel costs squander-mania; otherwise called “recurrent expenditures”; with the most crooked of them being overheads and allowances.
There is no difference between the moves by the Administration of Gen Muhammadu Buhari to borrow the loans under reference; reasons so adduced and the country's previous borrowings.
Reasons given for seeking such harmful loans (i.e. social and infrastructure developments) are not different from “borrowing to run government or offset government overheads and personnel costs”.
This is because such borrowings and their expenditures are unproductive; incapable of generating requisite outputs for the liquidation and servicing of the loans.
Borrowing, traditionally and scientifically speaking, is productive centered and any loan not capable of generating output for its repayment is not worth borrowing.
Nigerian public borrowings since 1999 have been hugely stomach or consumption oriented.
Lies and cover-ups have successfully been applied by successive and present political leaders in Nigeria in connivance with crooked agents or officials of the borrowing countries or institutions to deceive Nigerians so as to secure such loans which end up in private pockets; thereby plunging Nigeria in the quandary of perpetually indebtedness and associated chronic under-development and “highly indebted poor countries status”.
Just like official fraud inherent in government currency exchange management; chronic fraud also abounds in the so called “debts servicing management”; where, for instance and according to the DMO, a whopping sum of $47.99 million was spent between 30th of June 2015 and 30th of June 2016 in servicing the country's foreign debts; which currently stands at $11.26 billion.
This is more so when the amount budgeted by Federal Government in its 2016 debts servicing (N1.47 trillion or $5.02 billion) is slightly lower than the sum allocated for capital projects (N1.8trillion or about $6.5billion; using the current official exchange rate of N283 per US$) meant for the general welfare of 174 million citizens of the country.
That is to say that a whopping sum of N1.47 trillion or $5.02 billion is already squandered to service the Federal Government's foreign and local debts, which currently stand at $45.08 billion or N12.73 trillion (as calculated by DMO using the new official exchange rate of N283.00 per US$); out of the country's total debts of $61.4 billion or N16.29 trillion (see DMO records of 30th June 2016).
Globally, government borrowings are on steady decline.
This follows the increased influences and roles of Information Computer Technology (i.e. mental wealth creativity and revolution) and Private Sector or independent entities or institutions.
Through governance prudency and decency; recurrent oriented borrowings are drastically cut; and through robust Public-Private-Partnership; capital oriented borrowings are drastically reduced, if not eliminated.
That is to say that Nigeria ought not and does not have to borrow; because it is a land flowing with milk and honey.
To governmentally go borrowing in Nigeria, clearly shows governance ineptitude, failure, armchair, incompetence, confusion, misdirection and parasitism.
For the purpose of records and public awareness, the Federal Government of Nigeria, the 36 States, the Federal Capital Territory (FCT), the Niger Delta Region and the country's 774 Local Government Areas (LGAs) had in the past 17 years or since June 1999; appropriated and squandered a total sum of not less than $672 billion or N134 trillion.
Out of that, the Federal Government appropriated and squandered $266 billion or N53.8 trillion; while the FCT and the 36 States including the Niger Delta Region appropriated and squandered $300 billion or N59.2 trillion.
The 774 LGAs received and squandered $75.1 billion or N15.2 trillion.
The figures respectively attached to the FCT, the 36 States including Niger Delta Region and the 774 LGAs did not include the appropriated and squandered sums covering 1999 (June), 2000, 2001 and 2002 fiscal periods.
But the calculated block expenditures of the said periods, approximated at N6.3 trillion or $31 billion was added; using the former official exchange rate of N197.00 per US$.