Business Post Contributor
By Jerome-Mario Chijioke Utomi
With a few days to the May 29 inauguration of the new administration in the country, it is glaringly evident that President Muhammadu Buhari-led Federal Government of Nigeria has successfully completed its constitutional two terms of eight years. Though there exists no codified, metered or iron-cast way of assessing the administration’s performance, it is, however, assumed that an administration that spanned eight years must have milestone(s) of achievement to point at.
Indeed, while there are flicker and recognizable flashes of achievements in some sectors of the nation, interim particulars, in my view, suggest that infrastructural provision is the administration’s greatest accomplishment.
The crucial point, then, is how does one define what constitutes infrastructural success and how was it achieved? What are/were the opportunity cost of the purported success?
In February 2021, President Buhari reportedly established the Infrastructure Corporation of Nigeria (InfraCorp), with an initial seed capital of N1 trillion, provided by the Central Bank of Nigeria (CBN), the Nigerian Sovereign Investment Authority (NSIA) and the Africa Finance Corporation (AFC). InfraCorp was also expected to mobilize an additional N14 trillion of debt capital.
Through InfraCorp, Buhari catalysed and accelerated investment into Nigeria’s infrastructure sector via originating, structuring, executing and managing end-to-end bankable projects in the country,
Today, the administration has to its credit 56km Lagos-Ibadan Standard Gauge Rail completed and commissioned within a Nigerian-record-time of 4 years (2017 to 2021); 186km Abuja-Kaduna Standard Gauge Rail Line completed and commissioned in 2016; 327km Itakpe-Warri Standard Gauge Rail completed and commissioned in 2020, 33 years after construction began.
Also, the administration, going by media reports, invested over a billion dollars in three flagship projects: Lagos-Ibadan Expressway (for completion in May 2023), Second Niger Bridge (for completion in May 2023), Abuja-Kaduna-Zaria-Kano Expressway (two of three sections for completion in May 2023), among others.
Even when this piece holds the opinion that the administration demonstrated an understanding of the pivotal role infrastructural provision plays in providing society with the services that underpin the ability of people to be economically productive, it will, on the other hand, objectively qualify the aforementioned achievements as sparse and insufficient, particularly when juxtaposed with a catalogue of adequately unattended sectors (education, security, Power, Niger Delta region labour and employment etc.).
In fact, each time I reflect on President Buhari’s eight-year administration, the fears expressed by a friend in 2015 about the present administration come flooding.
Adding context to the discourse, my friend, amidst euphoria triggered by the declaration of the 2015 presidential election result, cautioned me with these few words; “men will change their ruler expecting to fair better; this expectation induces them to take up arm against him, but they only deceive themselves, and they learn from experience that they have made matters worse.”
Still, in that milieu, I had reminded him that the result ushered in a season of integrity in the country, and he again replied thus; “no single attribute could be identified as a virtue. Remember,” adding that, “Politics has its own rules.”
Eight years after that conversation, I cannot categorically say that my friend was right or wrong in his prediction. But the present instinct in the country explains two things; first, apart from the fact that the shout of integrity which hitherto rend the nation’s political space has as the light faded, jeer has since overtaken the cheers of political performance while fears have displaced reason -resulting in an entirely separate set of consequences – irrational hatred and division.
The reason for this spiralling feeling is understandable!
Take, as an illustration, in 2020 alone; there were outright abridgements of the masses’ welfare by the federal government via the increase of Value Added Tax (VAT) from 5 per cent to 7.5 per cent, re-introduction of Stamp Duty Charge, re-introduction of Stamp Duty on house rents and C of O transactions, electricity and petrol price hikes crisis among others. These were inextricably linked both in their causes and solutions.
Each of these challenges has its roots in the administration’s payment of little attention or lip service to expert warnings about the poor state of the economy, and further fed by the federal government’s persistent formulation of policies with no clear definition of the problem, the goals to be achieved, or the means chose to address the problems and to achieve the goals; adoption of coquettish tactics that make the masses fall in love with excitement while they (leaders) remain inwardly detached; keeping them in control.
There are very recent examples.
According to a recent report by the National Bureau of Statistics (NBS), it stated that in April 2023, the headline inflation rate rose to 22.22% relative to March 2023 headline inflation rate, which was 22.04%. Looking at the movement, the April 2023 inflation rate increased by 0.18% compared to the March 2023 headline inflation rate.
Similarly, on a year-on-year basis, the headline inflation rate was 5.40% points higher compared to the rate recorded in April 2022, which was 16.82%. This shows that the headline inflation rate on a year-on-year basis increased in April 2023 compared to the same month in the preceding year (i.e., April 2022).
Likewise, the report added that on a month-on-month basis, the All-Items Index in April 2023 was 1.91%, 0.05% higher than the rate recorded in March 2023 (1.86%). This means that in April 2023, on average, the general price level was 0.05% higher relative to March 2023. The percentage change in the average CPI for the twelve months ending April 2023 over the average for the previous twelve months was 20.82%, showing a 4.37% increase compared to the 16.45% recorded in April 2022.
While the above qualifies as an occurrence that its pain is deepened by the fact that it was avoidable, it is important to underline further that if there is a particular area where the present administration cannot boast of clean hands, it is in the incessant debt accumulation(foreign and domestic).
It is common knowledge that in January 2023, Patience Oniha, the Director-General of the Debt Management Office (DMO), while fielding questions from journalists at the public presentation and breakdown of the highlights of the 2023 Appropriation Act in Abuja, noted that the incoming federal government would inherit about N77 trillion as debt by the time President Muhammadu Buhari’s tenure ends in May.
Aside from signalling an indication that Nigerians should expect a tough time ahead or, better still, may not anticipate a superlative performance from the incoming administrations as they will, from inception, be overburdened by debt, what is, however, ‘newsy’ is that each time the present federal government went for these loans, Nigerians were usually told that the loan seeks to stimulate the national economy, making it more competitive by focusing on infrastructural development, delivery of inclusive growth and prioritizing the welfare of Nigerians to safeguard lives and property; equipping farmers with high tools, technology and techniques; empowering and enabling mines to operate in a safe and secured environment and training of our youths through the revival of our vocational institutions to ensure they are competitive enough to seize the opportunities that will arise for this economic revival.”
Again, it is evident from the above that the nation did not arrive at its present state of indebtedness by accident but through a well-programmed plan of actions and inactions that engineered national poverty and bred indebtedness. The state of affairs dates back to so many years in the life of the present federal government.
As noted in my recent and similar intervention, the nation was warned with mountains of evidence that this was coming; it was also pointed out that under the present condition of indebtedness, it may be thought audacious to talk of creating a better society while the country battles with the problems of battered economy arising from indebtedness, yet, our leaders who are never ready to serve or save the citizens ignored the warnings describing it as a prank. Now we have learnt a very ‘’useful’’ lesson that we can no longer ignore.
In 2019, the rising debt profile of the country dominated discussion when the Senate opened debate on the general principles of the 2019 Appropriation Bill. Most of the contributors to the referenced debate asked the executive to exercise some level of caution on its borrowing plan to not return the country to a heavily indebted nation it exited in 2005 through Paris Club debt relief.
Senate Leader, Mr Ahmed Lawan (as he then was), kicked off the debate when he read, “A Bill for an Act to authorize the issue from the Consolidated Revenue Fund of the Federation the total sum of N8,826,636,578,915 only, of which N492,360,342,965 only, is for Statutory Transfers, N2,264,014,113,092 only, is for Debt Service, N4,038,557,664,767 only, is for Recurrent (Non-Debt) Expenditure while the sum of N2,031,754,458,902 only is for contribution to the Development Fund for capital Expenditure for the year ending on 31st day of December 2019.”
While noting that the budget deficit will be funded through borrowing, Lawan, among other things, stated, “About 89% of the deficit (N1.65 trillion) will be financed through new borrowings while about N210 billion is expected from the proceeds of privatization of some public enterprises. Debt Service/Revenue Ratio, which was high as 69% in 2017, has led to concerns being raised about the sustainability of the nation’s debt.”
Reacting to Lawan’s words, many Nigerians raised the alarm about the country’s rising debt profile. They noted that though the budget estimates should be given expeditious consideration and passage in view of the time already lost, the borrowing plan contained in the Bill should be properly scrutinized. They insisted that scrutinizing the borrowing plan became necessary to prevent the country from exceeding its borrowing limit when juxtaposed with the ratio of Gross Domestic Product (GDP).
Even some Senators, in their submissions, frowned at the nation’s increased borrowing proposals on our yearly budget, which they described as becoming unbearable.
“Yes, money must be sought by any government to fund infrastructure, but it must not be solely anchored on borrowing, which in the long run, will take the country back to a problem it had earlier solved.
“Besides, there are other creative ways of funding such highly needed infrastructure.”
Others at that time were particularly not happy that the debt profile of the country would soon rise to $60 billion from less than the $20 billion it was before the present government came to power in 2015. While they noted that the components of the $60 billion debt profile include $23 billion external debt and $20 billion local debts, these concerned Nigerians observed with dissatisfaction that another $12 billion was already being processed for presentation to the National Assembly to finance Port Harcourt to Maiduguri rail lines.
Still, on the 2019 budget borrowing proposal, it noted that “Nigeria is gradually turning to a chartered borrowing nation under this government all in the name of funding infrastructure. “This must be stopped because the future of the country and, in particular, lives of generations yet unborn are being put in danger.” Even with the high level of indebtedness of the country, “the government in power is planning to further devalue the Naira to about N500 to one US dollar,” they concluded.
Similarly, in February 2022, Economic experts going by media reports urged the federal government to seek a debt moratorium and reduce the cost of governance to reduce funds expended on debt servicing, as it stands as the best available option.
This, according to them, will enable the government to suspend payment for now and re-strategize – particularly, the government cannot continue to service its rising debt profile at the expense of meeting the competing needs of the people, a similar expert warning was recently handed by economic analysts that the federal government’s soaring borrowings could eventually suffocate the country if not mitigated.
Indeed, from the above torrents of explanation/concern expressed by these experts, this piece clearly agrees that ‘Nigeria’s debt stock has finally become an issue that calls for a more drastic approach to support the fiscal and monetary authorities to tow the nation’s economy out of the doldrums.
Qualifying the above sad account as a bad commentary is the awareness that despite these prophecies of foreknowledge which deals with what is certain to come, and prophesy of denunciation, which on its part, tells what is to come if the present situation is not changed; both acting as information and warning respectively, the President Muhammadu Buhari led federal government has become even more entrenched in borrowing, ignoring these warning signals.
In 2020, one of the reputable national newspapers in Nigeria, in its editorial comment, among other observations, noted that Nigeria would be facing another round of fiscal headwinds this year with the mix of $83 billion debt, rising recurrent expenditure, increased cost of debt servicing; sustained fall in revenue; and about $22 billion debt plan waiting for legislative approval. It may be worse if the anticipated shocks from the global economy, like Brexit, the United States-China trade war and the interest rate policy of the Federal Reserve Bank, go awry. The nation’s debt stock, currently at $ 83 billion, comes with a huge debt service provision over N2.1 trillion in 2019, but set to rise in 2020. This challenge stems from the country’s revenue crisis, which has remained unabating in the last five years, while the borrowings have persisted, an indication that the economy has been primed for recurring tough outcomes, the report concluded.
The situation says something else.
Another news report within the same time frame indicated that the federal government made a total of N3.25tn in 2020, and out of which it spent a total of N2.34tn on debt servicing within the year. This means, the report underlined, that 72 per cent of the government’s revenue was spent on debt servicing. It also puts the government’s debt servicing to revenue ratio at 72 per cent.
It was in the news that PricewaterhouseCoopers, a multinational professional services network of firms operating as partnerships under the PwC brand, in a report entitled; ‘Nigeria Economic Alert: Assessing the 2021 FGN Budget.’, warned that the increasing cost of servicing the debt would continue to weigh on the federal government’s revenue profile. It said, “Actual debt servicing cost in 2020 stood at N3.27tn and represented about 10 per cent over the budgeted amount of N2.95tn. This puts the debt-to-revenue ratio at approximately 83 per cent, nearly double the 46 per cent that was budgeted. This implies that about N83 out of every N100, the federal government earned was used to settle interest payments for outstanding domestic and foreign debts within the reference period. In 2021, the FG plans to spend N3.32tn to service its outstanding debt. This is slightly higher than the N2.95tn budgeted in 2020.”
Today, such fears raised cannot be described as unfounded, just as this author doesn’t need to be an economist to know that as a nation, we have become a high-risk borrower.
Looking at the above facts, this piece holds the opinion that the present debt profile presently crushing the country may not have occurred by accident.
And, even as the nation goes on a borrowing spree and speeds on the ‘borrowing lane’, and at a time the World Bank indicates that “almost half of the poor people in Sub-Saharan Africa live in just five countries: and they are in this order, namely; Nigeria, the Democratic Republic of Congo, Tanzania, Ethiopia and Madagascar, the situation becomes more painful when one remembers that no one, not even the federal government can truly explain the objective of these loans and whether they were utilized in the masses best interest.
It would have been understandable if these loans were taken to build a standard rail system in the country that would assist the poor village farmers in Benue/Kano and other remote villages situated in the landlocked parts of the country, move their produce to the food disadvantaged cities in the south in ways that will help the poor farmers earn more money, contribute to lower food prices in Lagos and other cities through the impact on the operation of the market, increase the welfare of household both in Kano, Benue, Lagos and others while improving food security in the country, reduce stress/pressure daily mounted on Nigerian roads by articulated/haulage of vehicles and drastically reduce road accidents on our major highways.
Again, it would have been pardonable if the loan were deployed to revitalise the nation’s electricity sector, to re-introduce a sustainable power roadmap that will erase the epileptic power challenge in the country and, in its place, restore the health and vitality of the nation’s socioeconomic life while improving small and medium scale business in the country.
