Incompetence may be harmful, but misplaced objectivity is lethal – Sandeep Sahajpal

Since they know we are a disengaged public and are assured that there are no consequences for poor or ill-timed decisions that negatively affect the commoner, they have come again! They just informed us, without consultations, that they are borrowing another $800 million as a palliative to cushion the effects of fuel subsidy removal. Because they have little value for citizen engagement in a democracy, especially on fiscal matters that border around national debt, they are just informing us on the pages of newspapers or after those preposterous contract-awarding sessions called the Federal Executive Council (FEC) meetings.

Before addressing the need for the debt, let’s analyse our debt issues under democratic regimes within an eight-year bracket from 1999. President Obasanjo met our external debt at $29 billion. By 2007, it was down to $15 billion. Between President Yar’Adua and Jonathan, they ballooned it to $32 billion by 2015. By the end of 2022, President Buhari shot our total public debt to $103 billion, which comprises federal, state, FCT, and domestic components. So, Obasanjo decreased it by $14 billion, Yar’Adua increased it by $17 billion, and Buhari boomeranged it by $73 billion! Reuters projects that at the current rate, it will rise to $172 billion this year after a loan swap and new borrowing to fund the 2023 budget.

Neo-liberal economists will haste to argue that there is nothing wrong with debt and use illogical arguments of the debt-to-GDP ratio as if GDP can pay debt. What use is the GDP size if your revenues are inefficient in servicing the economy through robust economic output – and servicing the debt? Debt-to-GDP is an excuse by some officials who support the borrowing jamboree, and we have now reached the level where by December 2022, our debt service-to-revenue ratio was at 80.6% — a figure far above the World Bank’s suggested 22.5% for low-income countries like Nigeria. The International Monetary Fund (IMF) has said Nigeria may spend almost 100% of its revenue on debt servicing by 2026. But we still go there to borrow. And really, what is there to show for all we have borrowed so far? Just last week,the Ministry of Aviation bought 12 firefighter trucks for N1 billion each.

There is need to get away from this debt discussion, since the executive always manages to get the approval of the National Assembly to mortgage our future. The $800 million new debt is because they want to remove “price modulation” since that’s the voodoo term they formulated around 2016 to deceive Nigerians that they were no longer paying subsidies on PMS.

Discussing their inability to solve the criminal activities around the oil industry is pointless. But it’s necessary for context because most of the splurge for borrowing is hinged on low revenue generation. So the facts are: they can’t solve the oil theft problem, can’t fully liberalise NNPC, can’t prosecute oil thieves, nor monitor distribution to reduce smuggling. Evidently, they can’t fix four refineries nor create the enabling environment for new ones to be built by investors. The sold the refineries in 2007 and reversed this a few years later. Till date, they are paying salaries for refineries that have not worked for two decades. They borrowed a billion dollars to fix them last year after several turn-around maintenances that gulp millions of dollars. So, their only option is to remove the subsidy to finance budget deficits, 65% of which is on recurrent expenditure. To affirm impudence, they sometimes tell us that NNPC is remitting nothing! This is the same NNPC that is supposed to be a player in the industry but still operates with regulatory and supervisory functions.

To ease the pain of the removal of fuel subsidy, they intend to distribute the $800 million to 50 million Nigerians. What criteria were used in selecting the 50 million out of the 133 million people who are multidimensionally poor? That leaves us with a balance of 83 million people. What happens to those? Which database are they using to distribute the funds? And, if they diligently distribute every dime of the $800 million at the exchange rate of N750 to the dollar, each recipient will receive just $16/N12,000 each! With the current Consumer Price Index by the National Bureau of Statistics on food inflation at 24,32%, what relief does N12,000 bring to anyone and for how long? Also, when you pump in that amount, especially within a short period, the purchasing power of the N12,000 will drop because of inflation, and wipe out at least 20% of that N12,000. That brings the amount to about N9,600 to alleviate the poverty of one who lives on less than $2 per day!

They first misinformed us that it was a grant until BusinessDay newspaper and BudgIT established that it is a loan to be paid between 2027 and 2051. For whatever it’s worth, the federal government should please desist from taking this loan. But they won’t heed such advice since there will be vested interest involved through consultants and other avaricious public officers. They should therefore lend the funds to Dangote to speed up the completion of the refinery. If they are too jealous to do that, they could give each local government $1 million to invest in education, healthcare or agriculture. In the long run, the returns on investment will be more than N9,600 per person.