NIGERIA’S RISING FOREIGN DEBT AND COVID-I9
Due to the sweeping grip by the Corona Virus (also referred
to as COVID – 19) pandemic on global attention, several other major changes and
even turn-arounds especially in Nigeria, were side stepped. One of these was
the sudden suspension by the Federal Government of the $23.7 billion foreign
mega loan bid, with China billed to contribute a substantial part of it. The
federal government had since November 2019 requested the Ninth National
Assembly to approve the loan package with the latter not obliging until
recently, when after a cycle of contentions on the floor of the Senate, the Red
Chamber approved it.
However, even before the ink of the endorsing signatures in
the Senate had dried, the same federal government announced the suspension of
the loan package. It had hit the rocks on many grounds, leaving it currently in
suspended animation. In one vein was its
sudden loss of traction in the House of Representatives which should have
simply passed it in concurrence with the Senate, but did not.
According to the Speaker of the House of Representatives
Femi Gbajabiamila, the stalling of the loan package in the Green Chamber was
due to the exclusion of projects in the South East geopolitical region, and
implied lopsidedness in its provisions. Meanwhile, the Minister of Finance,
Budget and National Planning Zainab Ahmed, had blamed the suspension of the
loan on “current realities in the global economic landscape”.
Addressing the 2020 version of the ‘International Conference
on Nigerian Commodities’ organised by the Securities and Exchange Commission
(SEC), Ahmed had stated that “the current market indices do not support any
external borrowings at the moment, despite that the parliament is still doing
its work on the borrowing plan”.
Hence while Gbajabiamila and his legislator-colleagues would
still be working on balancing the impact of the loan in compensating the South East zone over their
share of the loan, the dividends of such enterprise may still be determined by
factors beyond their control. Ostensibly, the unfavourable “market indices” in
the global landscape which Ahmed was referring to, include at least two factors.
On one hand is the recent drop in global price of crude oil,
which is the mainstay of Nigeria’s economy – a situation that has diminished
the country’s revenue prospects. Another and perhaps more significant is the
escalating scourge of the Corona virus referred to as COVID-19, which has held
the entire world hostage, with its virulence and daily mounting mortality. It
is really tempting to ask if Nigeria is finding a positive value in this
death-dealing dispensation of the COVID -19 pandemic.
In a world where wonders will never end, it may actually be
unwise to rule out such a likelihood especially for Nigeria.There are many
reasons why this development can be hailed or decried depending on the
background factors and the perspective of the observer. In the first place it
is easily recalled that this current loan package was the substance of a long
drawn out conflict between the Presidency and the Eighth National Assembly when
it was first proposed in 2016 as a $30 billion facility.
The National Assembly
then eventually conceded the sum of $4.5 billion. But that was not before the
associated legislative process was laced with a prolonged jostle between the
NASS and the Presidency. A striking feature of that interaction was that a
spate of insinuations of bad blood between the two institutions superseded the more realistic scenario of the National
Assembly calling for caution over the
unbridled profligacy in government and attendant poor debt management in
Nigeria’s fiscal regime.
From historical records, much of the loans
procured by Nigeria and which are nominally designated for capital,
infrastructure development, ended up in recurrent subheads, from where they
migrated to private pockets. Hence as at then and as at now, the overriding
concern in Nigeria’s public space has been over the country’s capacity to
service its ballooning indebtedness, both for now and in the future.
China with its global expansionist agenda, operates a policy
of trapping unwary, financially distressed countries like Nigeria, with
mouthwatering loan packages which the latter’s leaders were ever willing to
procure even without much regard to the future interest of the country. For the
purpose of clarification, it must be conceded to Nigeria to obtain loans and
any other assistance from any party in the world, as long as such venture falls
in line with the nation’s overall interest, both for now and in the future.
Nigerians are concerned over the unbridled passion of the
present government for borrowing huge
sums of money without concrete plans for repayment – a situation that offers
nothing but economic enslavement of present and future generations of the
citizenry, to creditor countries. This scare has become real with China – a
major creditor nation to Nigeria, making no bones of its readiness to
confiscate the public assets and even sovereignty of debtor nations, who
default on its loans.
With the advent of the Corona Virus China is ironically
afflicted with the proverbial dilemma of the wood pecker bird. As legend has
it, the wood pecker bird which is believed to be able to carve holes in every
known type of wood, boasted of carving a hole in hard rock when its mother
would die. However on the eve of its mother’s death the bird developed a boil
on its beak. In the raging pandemic of the COVID -19, China – Nigeria’s ‘Father
Christmas’ of sorts, has remained one of
the most hard hit countries and clearly has more than enough domestic concerns
to engage its attention than chase an endless stream of loans for Nigeria.
This signal from China, remains more authentic than whatever
euphemism that may have been deployed by Finance Minister Ahmed to mask the
real reason for the suspension of the loan.
In a more poignant context, the interplay of these two
factors has once more, graphically betrayed the hollowness and failure of the
government’s policy and knee-jerk enterprise in fostering the long held agenda
of diversifying the Nigerian economy. It would seem that like in times past,
catastrophes only spur the country’s leaders to mouth remediation plans for
such contingencies, only to return back to the old ways of doing things, once
The most recent of such knee-jerk dispensations was the 2016
economic recession that midwifed the
Economic Recovery and Growth Plan (ERGP). As at present the positive
dividends of the ERGP remain only in the claims of government officials as the
economy still gropes and misses its performance targets. Given that by its
pervasive impact on the global economy, the ravages of COVID-19 may not abate
in a hurry, who knows how far the ‘benevolence’ of China and other creditors to
Nigeria, will be retained in respect of providing loans in the spirit of
business as usual – hopefully after the reign of COVID- 19?
Until that dispensation comes, this is thanking COVID-19:
even in its fatalistic odiousness, for coming to the country’s rescue in
helping cage the unbridled passion for cheap but booby-trapped foreign loans,
by Nigeria’s leaders.