Recently, Nigerian Senators raised an alarm over the increasing debt of the nation which has hit N33trillion with the latest approval of N22.7 trillion foreign loan requested by President Muhamadu Buhari.
However the latest data released by the Debt Management Office (DMO) shows that Nigeria’s total debt stock as at December 2019 stood at 27.4 trillion; this is includes 21.7 trillion owed by the Federal while 5.6 trillion is owed by states.
Within the five years of Buhari’s regime, the federal government has borrowed monies from various banks including, China, Russia, America, United Kingdom, IMF, World Bank, African Development Bank, Islamic Development Bank, German Development Bank and others.
Similarly, the federal government is again seeking $6.9 billion from lender to fund the fight against the corona virus. According to the Minister of finance, Zainab Ahmed $3.4 billion is from International Monetary Fund (IMF), $2.5 billion from World Bank and $1 billion from the African Development Bank (AFDB).
With the seemingly unending borrowing and accumulated debt, Nigeria has little or nothing to justify how the huge amount of monies borrowed are being spent. Supporting this view, the senate chairman House Committee on local and foreign debts Sen. Bima Enagi at a public lecture organized by the National Institute for Legislature and Democratic Studies (NILDS) on public debt in Nigeria observed that loans are meant to run the economy of a nation on the condition of Judicious use of the loan for the intended projects.
He maintained that, “the realities on ground including the required infrastructure and the debt accumulated between 2006 till date did not show any correlation and Nigeria does not have anything to show for these huge accumulated debts.”
The question by many Nigerians is if and how Nigeria can pay off such debts, more so that the important sectors such as, health, education and agriculture have been neglected over the years.
In recent times, it has become clear that the cost of servicing these loans is enormous as Nigeria is said to be spending 50% of its Internally Generated Revenue (IGR) on debt servicing yearly.
Analysis of data obtained from the budget office and Debt Management Office (DMO) reveals the following; Nigeria spent the sum of 2.16 trillion to service debts in 2018, the cost of debt service rose by 2.16% between 2017 and 2018 while in the last four years 2015- 2018, Nigeria has spent a whopping sum of 6.46 trillion to service debt. However, the country’s public debt both domestic and external stood at 24.3 trillion which is about 19% of the country’s Gross Domestic Product (GDP).
The International Monetary Fund, IMF earlier this year questioned Nigeria’s ability to repay its 24.39 trillion debts. The IMF also expressed concerns about the rollover risks arguing Nigeria’s capacity to re-finance debt might drop in the future.
In all of these, it is evident that former CBN governor, Sanusi Lamido Sanusi is right when he said Nigeria is going bankrupt while delivering a speech during the 3rd National Treasury Workshop Organized by the office of the Accountant General of the Federation. To establish Sanusi’s claims, it has been revealed that Nigeria spent N11 trillion on outstanding subsidy claims in the six years. Recently, the committee headed by Senator Kabir Marafa approved the payment of N129 billion as outstanding subsidy claims to 67 petroleum marketers. It can only get worse if urgent action is not taken.
Without gainsaying the fact, Nigeria is on the verge of bankruptcy if it continues on this economic pathway. The government has not done enough to demonstrate how it intends to grow its revenues enough to cover for its rising debt service. This leaves many to wonder if the nation is not treading the path to slavery should it eventually fail to pay back such debts. Whilst it focuses on dishing out government handout, bailouts, and subsidies, it hasn’t presented a cogent plan of boosting its revenues.
A report in the Business Day, said that former Nigeria Vice President, Atiku Abubakar had in a piece titled “endless borrowing will lead to endless sorrowing”, criticized the Nigeria’s rising external debt profile under president Buhari and warned such borrowings could cost the future of the country that recently became both the global capital of extreme poverty and out-of-school children, unless there is a change towards visionary leadership and a display of business acumen. He advised that rather than turn in regular losses as consistently done, the best thing to do with the Nigerian National Petroleum Corporation is to reform it.
The truth of the matter is that the Nigeria government lacks accountability, transparency, and responsibility to refund its loans, according to Dr. Bongo Adi, the Director of Center for Infrastructure Policy Regulation and Advancement (CIPRA) at the Lagos Business School.
Be that as it may, the House of Representatives mandated some of its committees to investigate all China- Nigeria loan agreements from 2000 to date. The intention of the green chamber here is to ascertain the viability of the facilities, then regularize and renegotiate them, especially as the country is expected to slide into recession this year.
One of the legislators, Senator, Ben Igbakpa moved a motion on the need to review and renegotiate existing China-Nigeria loan agreements. The motion which was adopted Igbakpa argueing that there were global concerns about the alleged fraudulent, irregular, and underhand features of Chinese loan contracts with some African countries, which had resulted in a new form of economic colonialism foisted by china.
Meanwhile, Nigeria has obtained 17 Chinese loans to fund different categories of capital projects, and Nigeria will still be servicing the Chinese loans till around 2038, which is the maturity date for the last loans obtained in 2018.
The lawmakers’ concern is worthy to be considered. According to www.nairametricsfund, the history of Chinese loans, especially in Africa is a growing concern. Several observers, including some of the United States Representatives have warned many nations on what they described as Chinese Debt trap Diplomacy, as the Asian nation allegedly used finance as a weapon against many developing countries.
It is an established fact that all Chinese loans are tied to infrastructural development; some of the African nations have had to forfeit their stakes in the infrastructure, which they used as collateral after they defaulted. For instance, $7.4 billion of Zambia’s total $8.7 billion foreign debt is owed to China, representing a large debt burden, given the relatively small size of Zambia’s economy. It was reported in late 2018 that the Zambian Government was in talks with China that might result in the total surrender of the state electricity company ZESCO as a form of debt repayment since the country has defaulted on the many of Chinese loans for Zambia’s infrastructure projects.
Similarly, Kenya may soon lose its largest and most lucrative port; port of Mombasa to its creditor (China) after it defaulted in the refund of its loans from China, this could force relinquish control of the port to China.
One of the most cited examples of alleged debt-trap diplomacy by China is a loan given to the Sri Lankan government by the Exim Bank of China to build Magampura Mahimba Rajapaksa port and Mattala Rajapaksa international airport. The state-owned Chinese firms China Harbour Engineering Company and Sinohydro Corporation were hired to build the Magampura port at a cost of $361 million, which was 85% funded by China’s State-owned Export-Import Bank at an annual interest rate of 6.3 %. But due to Sri Lanka’s inability to service the debt on the port, it was leased to the Chinese state owned China Merchants Port holding company limited on a 99-years lease in 2017.
Nigeria like other African Countries if it fails to repay its loans will certainly become slaves to the countries they owe. With the recent declaration that Nigeria might plunge into another recession soon, there are growing concerns that it is going to be almost impossible to repay these loans unless something urgently is done to revamp the already existing infrastructures which have over the years been neglected. Such issues should make every right thinking Nigerian worry that our leaders have mortgaged the future of our children selling them into slavery for selfish gains.