NIGERIA AND LOANS, A SIAMESE TWIN

To run a business is often not an easy task. This is because of the several intrigues and dynamics involved in the process. As such, one needs to be knowledgeable in the art and science of business as a discipline.
A secret of successful business persons is that, they are effective and efficient managers of scarce resources, another is, they understand how to make other people’s money work for them.
Fund therefore, apart from sound managerial skills is one of the cardinal roots of a successful business.
So too, running a country is not an easy task; ensuring security of lives and properties; providing basic infrastructure and social amenities such as pipe borne water, electricity, good road network; creating job for the teeming population etc does not just come on a platter.
Nigeria as a nation is hugely blessed with abundant human and mineral resources. There are over 18 different sectors in the nation’s economy as observed in my second book ‘The Problem with Nigeria: Ensuring a More Cohesive, Peaceful and United Nation” but for a reason best known to the government, they choose to rely hugely on the oil and gas sector.
This has been hugely injurious to the nation’s economy, because, the inflow of funds from the sales of crude oil which seems to be fluctuating haphazardly has placed the nation in a very precarious financial position, and so therefore the need to augment what the sales of crude provides.
Instead of rapidly addressing other sectors of the economy, Nigeria has resorted to foreign debt as a means of addressing the myriad of challenges bedevilling the nation. Loan therefore becomes shockingly, a respite to the nation.
Loan is not entirely bad, but understanding how it works is of paramount importance. The likes of Jeff Bezoz, Bill Gates, Elon Musk, Aliko Dangote etc as Billionaires in their respective spheres of endeavours are not entirely free from loans. They understand how loan works; they understand its positive and negative effects. Even countries, the like of USA, China, France etc are not entirely free from loans. As a matter of fact, the USA current total national debt standing according to Wikipedia as at 1st of May 2020 is $24.95 trillion. But how these loans translate into their economy and the lives of their citizens-the reason it was incurred speaks favourably of them.
Loans if judiciously used, are supposed to be gateways through which businesses are grown, nations are developed and citizens lives bettered. However, in clime as ours, loan has become quite the opposite.
A glance into Nigeria’s debt profile will reveal that Nigeria and loan are Siamese twins, their history and bond, deep rooted.
As at 1979 when the military regime handed over power to civilian administration, Nigeria’s debt profile stood at about $3.744 billion. By 1983, the Shagari’s administration had driven it to over $20 billion.
Fast forward to more recent times, in 2005 Nigeria’s debt profile stood at about $30bn. By this time, the cost of refinancing and servicing $30 billion existing external debt was generally considered as unsustainable. Olusegun Obasanjo as the then President of the country fought for a debt relief and after the ‘debt exit’ in 2006, Nigeria’s’ debt profile became lighter with barely $3 billion as external debt. However, by September 2012, Nigeria’s external debt jumped to $6.2bn with a domestic debt profile of N6.3trillion and as at June 2015, the country’s debt stood at N12.12trillion. By September 2018, Nigeria’s debt had sky rocketed to N22.43trillion. Currently, Nigeria’s debt stock is over N25 trillion with the present administration still borrowing at will.
What are all these loans used for, one may ask. According to the government, they are making the citizens lives better. They are building infrastructures, repairing roads, generating electricity, providing pipe borne drinking water, schools and health care facilities etc.
Is this true? Another may ask. A cursory look around will prove the obvious. The country is in total darkness, no portable drinking water, roads are almost un-motorable, citizens have no jobs and the few that are managing odd jobs are losing them daily, hospitals are almost ineffective, weak schools and haphazard educational system and thriving insecurity etc. These are the realities on ground. The situation is very pathetic.
What then is the use of these loans, if they can’t translate into anything good for the citizenry?
According to an article titled ‘A short history of Nigerias debt habit’ and published on Businessday by Cheta Nwanze on Oct 29, 2019, Nigeria takes trillions of naira in loans but spends trillions each year to subsidise both petrol and an unrealistic foreign exchange rate that distorts the economy. The economic policies of the government have also managed to create an environment in which local businesses struggle while simultaneously deterring foreign investment from entering the country. The consistent fall in FDI inflows combined with capital flight also leads to the government having to borrow more and more money to fund its expenditure.
Debt servicing seems to become the nation’s second anthem, consuming a good portion, about 50% of the nations Internally Generated Revenue (IGR).
Henry Boyo in an article titled ‘Still on Nigerias debt profile’ and published on Vanguard in October 2017 gave a first-class example. If Nigeria takes an attractive or cheap loan say, a $1bn loan at 7%, it would require N150bn + 7% to service and repay the loan when Naira exchanged for N150=1$. Government would however, require N300bn+7% to service and repay the same loan when Naira exchange rate is N300=$1. Clearly, so long as the persistent inexplicable surplus Naira liquidity challenge subsist, and CBN forex auction system remains skewed against the Naira, it is not a matter of if, but when the Naira will tumble beyond N500=$1. When this ultimately happens, government would need over N450+7% to service and repay the same $1bn loan. Ultimately, the foreign creditors would return once again, with another noose around our necks. Will the Nigerian government ever learn?
Regrettably no. The Nigerian government does not seem to learn anything from her excessive and troubling debt profile. If anything, government after government seems to be competing on which is the best borrower with nothing substantial on ground to show for it. Ironically, Nigeria being the poverty capital of the world runs one of the most expensive parliaments in the world whose most duties is approving loan request from the executives or acquiring exotic and expensive vehicles running into millions of dollars mostly from the borrowed funds.
Nigeria is about 60 years since her independence, if debt would do the nation any good, the citizens should have felt it by now. The country has been borrowing, and there’s nothing to show for the huge debt. The government cannot in any holistic way, justify its hobby of borrowing.
Yet, millions of barrels of crude are explored daily and sold; internal revenues are generated from Natural Resources Revenues, Taxes Revenue, Aids, Direct and Indirect Taxes etc
What are all these fund used for, one may again ask? Your guess is as good as mine.
The future of a poor Nigerian citizen is by all means at stake. Because that is what they have mortgaged.
With the incessant borrowing and the money going through other means other than the intended purposes, more hardship seems to lie ahead.
My candid advice to the government is to stop borrowing. Since they have been borrowing and there’s nothing to show for it, and again, since we must service those debts, let’s concentrate on the funds we use in refinancing and servicing those debts for our development and grow gradually. These loans don’t seem to work for us. Therefore it is on us to do whatever we have to do to be free from its grip. Maybe a visit to Ben Carson for an operation to separate the bond will do the nation tremendous good.

Even though I didn't read the long episode, but the headline should have read, Buhari and loans a Siamese twins"