President Muhammadu Buhari’s plan to borrow $29.96 billion in the next three years from the World Bank, African Development Bank (AfDB), Japan International Co-operation Agency (JICA), Islamic Development Bank (IDB) and China EximBank has raised the country’s political temperature a notch higher.
The argument became more intense when his request for Senate approval was thrown out without debate on Tuesday, October 29.
Senate Leader, Ali Ndume, disclosed that Buhari’s letter had no detailed information about the loan bid, even though it referred to an “attached” breakdown in the first paragraph.
So divided were Nigerians on the issue that Senate President, Bukola Saraki, appealed to the public on Friday, November 4 not to politicise it.
And the government was so buffeted over the sloppiness of its officials that on Thursday, November 3, Finance Minister, Kemi Adeosun, rushed out details of the loan which she claimed will be used to execute key infrastructure across the country between 2016 and 2018.
The borrowing (rolling) plan of $29.960 billion is for projects and programmes ($11.274 billion), special national infrastructure ($10.686 billion), Euro bonds ($4.5 billion), and budget support ($3.5 billion).
The government said the loan will target projects across all sectors with special emphasis on infrastructure, agriculture, health, education, water supply, growth and employment generation, poverty reduction through social safety net programmes, governance, and financial management reforms, among others.
According to Adeosun, federal government will take $25.8 billion out of the total amount, states ($4.1 billion), infrastructure development ($18.3 billion), federal projects ($14.6 billion), and state projects ($3.7 billion).
- Mambila Hydro Electric Power project will get $4.8 billion.
- Abuja Mass Rail Transit phase two ($1.6 billion).
- Completion of the railway modernisation from Calabar to Port Harcourt-Onne Deep Sea Port ($3.5 billion).
- Lagos-Kano railway modernisation ($2.4 billion).
- Lagos-Ibadan segment ($1.3 billion).
- Kano-Kaduna segment ($1.1 billion).
- Euro bonds acquisition ($4.5 billion).
- Federal government budget support ($3.5 billion).
- Federal and state education and healthcare projects ($2.2 billion).
- Federal and agricultural projects ($1.2 billion).
- Economic management and statistics ($200 million).
On the face value, this looks convincing though the South East seems, as usual, to be holding the short end of the developmental stick.
But despite this breakdown, many Nigerians are still skeptical for good reason.
Though the loan will be paid back in 30 years’ time at little or no interest, Nigerian governments are not known for their fidelity in managing loans.
If approved, the external loan will be the biggest in Nigeria’s history. This has not helped matters.
For a country that paid $12 billion to exit a debt trap that kept it in bondage only a few years ago, walking back into the same debt peonage is drinking hemlock.
That is what taking this loan means. Literally.
Even without Buhari’s jumbo loan, Nigeria’s debt profile as of June is N16.29 trillion, representing $61.7 billion at N283/$1 exchange rate, according to the Debt Management Office (DMO).
In the 2016 budget, N1.48 trillion is earmarked for debt servicing, far higher than the country’s N221.7 billion budget for health and N369.6 billion for education.
Some who support the proposed loan claim that Nigeria is grossly under-borrowed with its debt to Gross Domestic Product (GDP) at about 20 per cent.
Others argue that a country in recession such as Nigeria needs to borrow and spend itself out of it.
That may well be true. But such arguments don’t allay the fears of the majority who argue that the government will simply mortgage the country’s future.
Even if there is the need to borrow, the Policy Support Instrument must show in clear terms the repayment model.
In other words, the question of how Nigeria will pay back must be squarely addressed. Who will make sure the loans will be used to address the problems for which they are obtained?
Others believe Nigeria does not need to borrow money to finance its budget.
It only needs to intensify efforts at recovering our stolen patrimony, cut down the cost of governance and plug other sources of revenue loss, especially tax loss, which result from excessive and unnecessary tax waivers granted rich multinationals and large corporations.
If this loan must be approved there must be definite items of expenditure, and sanctions should the money disappear into the usual black holes.