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.
Again, a particular secret of successful business persons is that they are effective and efficient managers of scarce resources. 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. Similarly, running a country is not an easy task; ensuring the security of lives and properties, providing basic infrastructure and social amenities such as pipe-borne water, electricity, good road network, and creating a job for the teeming population etc does not just come on the platter of gold.
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”. Regrettably, for some sinister reasons, our government 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 at every passing moment, has placed the nation in a much more precarious position financially.
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.
The loan is not entirely bad, but understanding how it works is of paramount importance. The likes of Jeff Bezos, Bill Gates, Elon Musk, Aliko Dangote etc as billionaires in their respective spheres of endeavours are not entirely free from loans. They understand how the loan works; they understand its positive and negative effects. Even such countries as the USA, China, France etc are not entirely free from loans. The USA’s current total national debt standing according to Wikipedia as at 1st of May 2020 is $24.95 trillion. But how these loans promote and expand their economy and better the lives of their citizens are as crystal clear as the reasons behind their being obtained.
Loans if judiciously used, are supposed to be gateways through which businesses grow, nations are developed and citizens’ lives are bettered. However, in climes as ours, the loan has become quite the opposite.
A perfunctory glance at Nigeria’s debt profile reveals that Nigeria and loan are Siamese twins, their history and bond are deeply 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 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 of June 2015, the country’s debt stood at N12.12trillion. By September 2018, Nigeria’s debt skyrocketed to N22.43trillion. Currently, Nigeria’s debt stock is over N25 trillion with the present administration still borrowing at will and nursing more intentions to borrow for what one may for lack of option describe as “ulterior reasons”.
If one may ask: what are all these loans used for? where according to a report in May 2018 by Brookings Institution, Nigeria is now the poverty capital of the world, with about 83 million people in extreme poverty and thereby, overtaking India which has about 73 million? According to the government, they are making the citizens lives better. They are building infrastructures, repairing roads, generating electricity, providing pipe-borne drinking water etc.
Is this true? Another may ask. A cursory look around will prove obvious. The country is in total darkness and is now fast overtaken by what seems like an infinite dearth supply of portable water. For more than a couple of decades, our taps permanently ceased flowing. In the words of the poet P. O. Umeh, our people now consume mud for water, sit underneath trees for schools and use a candle as light. Our roads turned to dead-traps, are almost altogether un-motorable and are decorated with manifold security challenges. Our fellow countrymen have no jobs and the few that are managing odd jobs are losing them daily. It is now a dog-eat-dog situation, as a good number of Nigerians gladly cling to perpetrating evil seeing that all other means and hopes of survival appear smashed into smithereens. Our hospitals are almost ineffective, under-equipped, poorly managed and neglected to decay, since the wealthy travel abroad to treat minor catarrh and stomach as often as possible. These are a tip from the vicissitudes on the ground. The situation is indeed pathetic and ignominious.
What then is the use of these loans, if they cannot translate into anything good for the citizenry? According to an article written by Cheta Nwanze titled, ‘A short history of Nigeria’s debt habit’ published on Businessday of 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 which suffocates local businesses, while simultaneously deterring and stymying prospective foreign investments from touching our land. The consistent fall in FDI inflows combined with capital flight also leads to the government’s 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 Nigeria’s debt profile’ published on Vanguard in October 2017 captures a lucid picture of our nation’s deplorable condition as it wallows – nearly caught to the point of drowning in the ocean of debt. He observed that if Nigeria takes an attractive or cheap loan to say, a $1bn loan at 7%, it would require N150bn + 7% to service and repay the loan when Naira exchanged for N150=1$. The government would, however, require N300bn+7% to service and repay the same loan when the 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, then it is not a matter of if, the Naira will most definitely tumble down to prostrate flat before the Dollar in the ration of N500=$1 or even beyond. When this eventually happens, our 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 seem to be competing on which among them is the best borrower with nothing substantial on the ground to show for it. Ironically, Nigeria 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 the 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. Besides, is there anything good attached to borrowing? Have we been cursed from being self-sufficient?
Yet, millions of barrels of crude are extracted daily and sold; internal revenues are generated from Natural Resources Revenues, Taxes Revenue, Aids, Direct and Indirect Taxes etc.
What are all these funds 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. 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 is nothing to show for it, and again, since we must service those debts, it is better we concentrate on the funds we use in refinancing and servicing those debts for our development and growth. These loans don’t seem to work for us. Thus, it behoves us to do whatever we have to do to be free from its grip. This should be a collective goal. The economy should be diversified and premium should be given to our local products to reduce our precarious overdependence on Crude oil. We can focus more on Agriculture, empower the youths with resources to farm or set up their businesses and generate revenues from the sales of raw agricultural products. An embargo could be placed on the import of all kinds of materials we can produce to give local producers a window to thrive, and our projects more edge and competitive advantage. While this has numerous auspicious prospects, it will decimate our security challenges, reduce the rate of unemployment, increase our GDP, reduce our debts and limit our rate of borrowing to the barest minimum. This, nonetheless, should be our collective concern, because posterity will speak about what each of you did in office.
And should this problem persist, maybe a visit to Ben Carson for an operation to separate the duo (Nigeria and loan) as Siamese twins will suffice.
Comrade Odugbo Enenche Justin is the author of the ‘Problem With Nigeria: Ensuring A More Cohesive, Peaceful and United Nation’.
He is a young dynamic and energetic Nigerian youth, a blogger and an erudite speaker.
He is highly passionate about the Nigerian project.