Dipo Olowookere
By Oremade Oyedeji
In one of my previous articles published a few months back titled Pandemic of the Prodigal Generation, I predicted that Nigeria’s politics will reset to align with the coming post-pandemic changes in world political thought and the balance of power.
This is because it is no longer business as usual. Pretty much is former president Olusegun Obabsanjo shaking things up with his comments and captioned in news headlines like Nigeria is a fail state. I strongly encourage former President Goodluck Jonathan to follow suit.
In response to his comments, I saw this screaming headline on the internet (Vanguard) Buhari prevented Nigeria from becoming failed state, Obasanjo now divider-in-chief — Lai Mohammed on September 14, 2020. Seeing this headline, I couldn’t but laugh in Chinese 大笑Dà xiào.
Speaking through the Minister of Information, the presidency challenged former President Obasanjo to help in proffering solutions to the problems plaguing the country instead of being Nigeria’s Divider-in-Chief. (Me: at least they are now asking for help).
The Minister claimed that President Muhammadu Buhari’s assumption of office in 2015 prevented Nigeria from becoming a failed state.
Hmmm… anyways, it is still the same old Economics or Buharinomics they now call it – same old stories if you ask me.. Who will love Nigeria better if not this same Divider-in-Chief?
There is an African adage that says Ogbon die Omugo die ohun ni Oba fi nto ilu (meaning: little wisdom mixed with little foolishness is how a king builds the city). I rest my case.
Talking of the old story of Economics, we have heard of how a former CBN Governor turned a town hall meeting into an Economics 101 class even in the presence of top professionals including a renowned World Bank expert, Mrs Ngozi Okonjo–Iweala.
I knew there is a problem, same old story where Lamido Sanusi Lamido at his time as CBN chief (another example) said Nigerians are eating up the GDP through the consumption of ponmo (cow skin) delicacy. At that point, I knew all these professors have all run out of ideas; they are all speaking big grammar.
Ponmo is a commercially run trade and is probably employing over two million women in the distribution chain in western Nigeria alone and a whole agriculture and butchery ecosystem in Ijebu Igbo. For some to say this trade is not adding to the GDP, I beg to differ.
“We produce cotton, we import textiles. We have hides and skin but we import shoes and bags from China. Not that we don’t kill the cattle, but what do we do with the leather? We eat ponmo. It is a delicacy; we consume our GDP,” the deposed Emir of Kano was quoted as saying.
Same old Economics and please tell me, must we destroy the trades done by over two million women or the thriving butchery business in Ijebu Igbo or the agriculture ecosystem for the leather industry so as to grow Nigeria’s GDP? Walahi, this life no balance o; same old story if you ask me, I am beginning to believe this is their “hate & love” for Nigeria and a desperate attempt to hold on to power again. No wonder anyone with a solution for Nigeria is now the Divider-in-Chief. Nigeria I hail o.
Contrary to the Minister of Information comment, the Daily Times recently said in one of its headlines on September 7, 2020, that Nigeria’s economy is collapsing — Yemi Osinbajo.
On Monday, our dear Vice President, Prof. Yemi Osinbajo, said the coronavirus pandemic has diminished revenue and foreign-exchange earnings in the country.
I even want to ask, what exactly is the problem of Nigeria; is it foreign debt to GDP ratio, revenue to GDP or is Nigeria officially a fail state really?
In summary, the higher the debt-to-GDP ratio, the less likely the country will pay back its debt and the higher its risk of default.
A study by the World Bank said if the debt-to-GDP ratio of a country exceeds 77 per cent for an extended period of time, it slows economic growth.
Okay, let us understand it from Nigeria’s six geopolitical zones or the federating states. Who among them is a debtor and who among them will meet its debt obligation? Simple Economics you say.
An African adage says Olowo kan larin atoshi mefa atoshi ni gbogbo won (meaning, a rich man among six poor men is also poor).
In fact, we need more Dividers-in-Chief to speak up, I am appointing myself as P.A to the Divider-in-Chief and it will be a great honour.
The Debt Management Office (DMO) listed Nigeria’s debts to World Bank, AfDB, China, Germany, and others on September 13, 2020. Nigeria’s highest external debt stock to a multilateral or bilateral financial institution is $10.46 billion (N3.965 trillion at the official rate of N379/$) and it is to the World Bank Group and it associates including: International Development Association ($10.05 billion) and International Bank for Reconstruction and Development ($409.51 million).
Nigeria’s total indebtedness to the multilateral institutions during the period under review was put at $16.36 billion, representing 51.97 per cent of the country’s total external debt stock.
The DMO put the country’s indebtedness to the AfDB Group at $5.896 billion.
Others are Arab Bank for Economic Development in Africa ($5.88 million), European Development Fund ($52.52 million), Islamic Development Bank ($30.22 million) and International Fund for Agricultural Development ($201.68 million).
Further analysis of the country’s external debts showed that Nigeria’s total indebtedness to some bilateral organisations, which in this case include foreign nations, was $3.948bn as of June 30.
This alone represents 12.54 per cent of the country’s entire $31.477 billion external debt stock during the period under review.
Nigeria’s indebtedness to China (Exim Bank of China) was $3.24 billion, while its debt to France (Agence Francaise Development) was $403.65 million.
The country’s debt to Japan (Japan International Corporation Agency) was $76.69 million, while Nigeria owes India (Exim Bank of India) $34.87 million. Nigeria also owes Germany $192.7 million.
Still under Nigeria’s external debt stock as of June 30, the DMO put the country’s Eurobonds at $10.87 billion, while its Diaspora Bond was $300 million.
Eurobond and Diaspora Bond are commercial external debt stock and account for $11.168 billion, representing 35.48 per cent of the country’s external debt stock.
Is Nigeria A failed state?
As contained in the Medium-Term Expenditure Framework and Fiscal Strategy (MTEF/FSP) report recently released by the Federal Ministry of Finance, Budget, and National Planning, Nigeria’s debts reached a new milestone with the country’s debt service as a percentage of revenue rising to 99 per cent in the first quarter of 2020.
A cursory review of the data obtained from the MTEF/FSP report showed that in Q1 2020, Nigeria paid N943.12 billion to service its debts (interest on the loans) while the federal government retained revenue was put at N950.56 billion. This means Nigeria’s debt service to revenue is now 99 per cent, meaning for every N100 the country generated as revenue, it used N99 to pay interest.
The continued depletion in Nigeria’s revenue is raising questions around the solvency of the Nigerian economy. Generally, debt sustainability can be explained using either debt to GDP or debt service to revenue ratio. With these yardsticks, Nigeria’s total public debt is below 30 per cent of GDP. The reality is that, debt-to-GDP is not regarded as the best indicator of debt sustainability, especially in Nigeria where tax-to-GDP is low.
For Nigeria, a better indicator of debt sustainability is the debt service-to-revenue ratio, which has in recent years risen to worrying levels, and now 99 per cent as at Q1 2020. Did I hear you say Buharinomics?
Let conclude this article on a lighter note, with a line from a late Abeokuta born musician, Fela Anikulapo-Kuti.
♫ ♬.. When we dey pikin – FATHA/MAMA BE TEACHER
When we they for school – TEACHER BE TEACHER
Now dey University – LECTURER BE TEACHER
When we start to work – GOVERMENT BE TEACHER
♫ “Who be Government Teacher ♫ ♬.. CU-ULTURE AND TRADITION – Cu-ulture and Tradition♬.
Facts about ancient Ijebu Igbo Town
1 – Ijebu Igbo is the home to ponmo Ijebu. The town has over 30 ponmo making industries known as buka, employing thousands of men and women. Ijebu Igbo is the major supplier of ponmo to over 20 million consumers of the delicacy living in Lagos, Oyo and Ogun States.
2 – Ijebu Igbo is the home of cow meat and the town is one of the originators of butcher business locally called alapata. Ijebu Igbo is one of the major distributors of cow meat to Epe, Aja, Sagamu and all other towns within and around Ijebu land with around 40 million people.
People come from most parts of the country to buy cow meat in Ijebu igbo because it is blessed with professional butchers. Butchery is a proud profession of men who provide food for their families in Ijebu Igbo.
3 – Ijebu Igbo has an agricultural ecosystem and is the second largest town in Ogun State in terms of GDP and landmass. The land is arable for farming. There are hundreds of towns, villages and hamlets under Ijebu Igbo and there major occupation is farming and they depend on organic wastes from the town.
