The chairman of the senate committee on local and foreign debt in the 8th National Assembly, Mr. Shehu Sani, has said that the eighth national assembly rejected President Muhammadu Buhari’s request for a $29.96 billion loan to save Nigeria from sinking into debts.
It would be recalled that Buhari had yesterday sought the approval of the senate, via a letter, for reconsideration of the federal government’s 2016-2018 external borrowing plan which was rejected by the 8th senate headed by Dr. Bukola Saraki.
In a letter to the senate president, Mr. Ahmad Lawan, and dated November 26, 2019, Buhari said the 8th national assembly approved only a part of the external borrowing request forwarded to it in September 2016.
The letter entitled ‘Request for the National Assembly to re-consider and approve the Federal Government’s 2016 and 2018 External Borrowing Plan’ reads: “Pursuant to Section 21 and 27 of the Debt Management Office (Establishment) Act, I hereby request for Resolutions of the Senate to approve the Federal Government’s 2016 – 2018 External Borrowing plan, as well as relevant projects under this plan.
“Specifically, the Senate is invited to note that: While I had transmitted the 2016-2018 External Borrowing Plan to the 8th National Assembly in September, 2016, this plan was not approved in its entirety by the Legislature.
“Only the Federal Government’s Emergency projects for the North East, (Four (4) States’ projects and one (1) China Exam Bank Assisted Railway Modernisation Projects for Lagos – Ibadan Segment) were approved, out of a total of thirty-nine (39) projects.
“The Outstanding projects in the plan that were not approved by the Legislature are, nevertheless, critical to the delivery of the Government’s policies and programmes relating to power, mining, roads, agriculture, health, water and educational sectors.
“These outstanding projects are well advanced in terms of their preparation, consistent with the 2016 Debt Sustainability Analysis undertaken by the Debt Management Office and were approved by the Federal Executive Council in August 2016 under the 2016 – 2018 External Borrowing Plan.
“Accordingly, I have attached, for your kind consideration, relevant information from the Honourable Minister of Finance, Budget and National Planning the specific outstanding projects under the 2016 – 2018 External Borrowing plan for which legislative approval is currently sought.
“I have also directed the minister to make herself available to provide any additional information or clarification which you may require to facilitate prompt approval of the outstanding projects under this plan,” he stated.
Reacting to the president’s fresh request for the loan, Sani said in a statement that the last senate turned down the request so as to stop Nigeria from being “recolonised by creditor banks.”
He said the country’s external debt in 2015 was $10.32 billion before Buhari assumed power and lamented that the figure escalated to $22.08 billion in the second quarter of 2019.
“If we had approved that loan request, our external debt could have catapulted to over $52bn and that is not sustainable.
“With the current escalation of borrowing, we will be walking into debt slavery and move from landlords to tenants in our own country.
“They will always tell you that even America is borrowing and I don’t know how rational it is to keep on borrowing because another country is borrowing.
“If we keep listening to bankers and contractors, we will keep borrowing and burying ourselves and leave behind for our children a legacy of debt burden.
“Loans are not charities. Most of those encouraging more borrowing are parasitic consultants, commission agents, rent-seeking fronts and contractors,” he said.
Also reacting, the lead director, Centre for Social Justice, Mr. Eze Onyekpere, said for the president to have made a request for $30 billion loan means he did not have the grasp of what simple governance entails.
“What does he need the money to do? This is a disaster. What manner of president is this? After introducing the Finance Bill to tax Nigerians more to raise more revenue now, he wants to borrow additional $30 billion. For what? If this is approved, Nigeria is gone to the dogs. $30 billion on top of the existing $82 billion we owe? When will we pay back? How do we pay back? He wants to pile up loans for generations to pay”, he said.
For his part, a developmental economist, Mr. Odilim Enwegbara, challenged the president to show the sustainability of the loan plan.
Enwegbara who described the loan request as the height of insensitivity and crass demonstration of cluelessness said: “Let him (Buhari) show us the debt sustainability plan. What infrastructure is $30 billion going to be used for? How do we pay back? If he says he wants to build infrastructure, the bulk of it is domiciled in the states.
“Let the states come in here and arrange a PPP to address the infrastructure gaps we have. The federal government can’t continue borrowing money, and saying it’s addressing infrastructure, when what we are actually doing is borrowing money to enrich a lot of people close to government or in government.
“You can’t continue to accumulate debts we can’t pay. Government should allow restructuring so that regions can build their own infrastructure.
For the director general of Nigeria Employers’ Consultative Association (NECA), Mr. Timothy Olawale, the loan is not sustainable and could harm the nation on the long term.
“Figures released by the DMO earlier in the year showed that the Federal Government’s domestic debt profile rose to N15.814 trillion in September, 2018 from N15.629 trillion in June, 2018 (1.19 per cent increase). This figure becomes more worrisome when we look at the total public debt stock, comprising external and domestic debt of the FGN, the 36 states and the FCT hitting the US$73.208billion (N22.38 trillion) recorded in June, 2018. This bourgeoning debt profile calls for concern as our appetite for debt skyrockets.
“This trend, which is very disturbing, could have a negative effect on the developmental capacity of Nigeria despite government’s financial managers’ argument that the rate of increase is within a manageable limit. While the effect of the increasing debt may not be immediate in totality, it could be catastrophic in the long term with a chunk of revenue consumed by debt servicing to the detriment of infrastructural development. This, sadly, is the current reality as a chunk of the 2020 budget would be used for debt servicing rather than developmental projects.
“We are only appealing that the government should not make it difficult for the incoming generation to survive,” he said.
