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Nigeria And Debt Burden

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Amidst conflicting claims that Nigeria external debt has blown up again after the country’s exit from Paris club, the House of Representatives summoned the Minister of Finance, Alhaji Mansur Mukhtar to appear before its ad-hoc committee on foreign loans on 16th February , 2010 to clarify issues pertaining Nigeria’s external debts .

Nigeria’s exit from the Paris club debt was in 2005/2006. of course the country’s debt dropped from what it used to be before the exit process commenced, the external debt stock stood at about United States $35.94billion by the end of December, 2004.

Murhktar urged the house committee to disregard insinuating of the increase in the country’s debt asserting emphatically that the debt stock dropped dramatically and substantially after the ccountry’s exit from Paris  Club (in 2005/2006). He said ; “By end –December 2006.  The stock was a much lower amount of USB 3.54 billion. The debt stock figure by end-december ,2007 was USD 3.65 billion, by end – December,2008 it was USD 3.72, and by end –December, 2009, it was USD 3.97 billion”.

It is worthy to note that….the constitution of the Federal Republic of Nigeria did not specifically make provision on borrowing. However, under the second schedule, section 4, item 7, of the exclusive legislative list, the National Assembly is conferred with the powers to make laws in respect of borrowing of money within or outside Nigeria for the purpose of the federation of a state. Pursuant to this power the National Assembly has enacted the debt management Act, 2003 and the fiscal  responsibility Act , 2007.

In particular , section  19 (1)and(2) of the DMO Act requires that the borrowing programme for every succeeding year be approved by the national assembly . In compliance with this requirement, the borrowing programme for fiscal 2010 has been included as part of the 2010 appropriation bill.

The Finance Minister clarify that state governments are not allowed to borrow directly from external source. And that a state government or its agency can obtain external loans only through the federal Government. (Fiscal Responsibility Act, Section 47 (3)). In accessing external loans, a government or its agency has to comply with the relevant guidelines and requirements which derives from responsibility Act  and the DMO Act .These include: the national debt management framework , the external borrowing guidelines and the sub- national borrowing guidelines. External borrowing by the federal and state governments within the borrowing programme included in the budget are still subjected to these guidelines by the debt management office under the authority of the minister of finance .In essence , there is effective control to ensure compliance with the provisions of the constitution and other external laws and guidelines.

In line with the current national borrowing guidelines, Nigeria’s external borrowing since the exit from the Paris Club and London Club debts has been limited to concessional sources. These credits, essentially from the international development association(IDA) and African development fund (ADF) windows , of the World Bank and the ADB, respectively, have a 40-year repayment period including a 10 –year grace period. (Murkhtar said although several loans were considered, negotiated and processed between 2007 and 2009, only $1,831.60 billion became effective during the period. The total amount drawn down between 2007 and 2009 was $1,318.22 billion , which was made up  of $880.89 million (disbursements on old loans contracted before 2007 ), and $437.33 million (disbursements on loans contracted between 2007 and 2009).

Part of the reason for the misunderstanding of Nigeria’s external debts , He said ,is the non- recognition that when Nigeria paid off its paris  club and London club debts, it did not pay off its multilateral debts, as this was neither necessary nor desirable. Only the problematic and the odious component the external debt was cleared off.

Much of the external debts remaining after the exit from the Paris and London club debts are loans from multilateral financial institution (word bank, African development bank, international fund for agricultural development, etc). The loans from this source constitute about 85% of the country’s external debt stock as at march 31, 2009. It is pertinent to note that about 83% of the interest charges: service charge of 0.75%p.a and long repayment periods of 40 years and above, including a grace period of 10 years.

In view of their long tenors, implying gradual installment payments, it is obvious that some of the outstanding loans were contracted more than 20 years ago and cannot be contributed to the last few years. Indeed, some of the loans were contracted in the 1960s, 1970s and 1980s for various infrastructural and social development projects. It is because their payments were scheduled to be gradual so as not to put serious burden of Fiscal resources, that part of them are still outstanding. That the loans have a long repayment period is beneficial, given the nature of the projects and services they financed – projects and services like basic education, health and rural water supply, as well as roads whose revenue-generating impact is at the best slow, small and indirect. More importantly, it should be noted that much of the loans were applied to the provision of social and infrastructural services over the years. There is no doubt that some of the infrastructure funded in the 1960s, 1970s and 1980s are still useful assets to the people.

While the Post-Paris Club external debt stock has remained sufficiently restrained, it does vary up and down within reasonable limits even if no new loans have been incurred. This is because old loans could still be disbursing while, at the same time, repayments of principal amounts due could be taking place. The direction of the swing in the outstanding debt stock, therefore, depends on the net result of disbursements and repayments.

Nevertheless, the Finance Minister assumed that government is committed to ensuring debt sustainability and avoiding a replace into the pre-Paris Club debt exit situation. In line with this posture, the Debt Management Office has developed a National Debt Management Framework (NDMF) to guide the policy and strategy for external and domestic borrowing by the federal and states governments, as well as their agencies. The NDMF contains specific guidelines for borrowing, designed not only to limit borrowings to sustainable levels but also to ensure that there is a value for money and that the use of funds leads to the growth, employment and poverty reduction. Further, the DMO working closely with the Ministry of Finance, the CBN, the National Planning Commission and other agencies conducts annually, a Debt Sustainability Analysis (DSA) to keep track of the statics and dynamics of the public debt sustainability under changing local and external scenarios.

For the same reason, the DMO he said is making significant progress in implementing the Template foe helping every of the 36 States of the Federation.

 

Justus Awaji

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Opinion

The Fuel Subsidy Removal Plan

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The contract between the estate where I live and the facility manager will expire in a couple of days. The manager is interested in having the contract renewed but the executive members of the estate’s residents’ association wouldn’t unilaterally decide on whether to renew the contract or not. The opinion of all the residents must be sought before such an important decision is taken. In view of that, an online questionnaire was created to enable the residents to assess the performance of the facility manager and decide whether the estate should continue with its services or not.
Hardly anything is done in the estate without the opinion and support of the residents being sought and, that way, there is cooperation of virtually everyone in developing the estate and solving whatever challenge the community may face. I have no doubt that a similar scenario plays out in many other estates in different parts of the country.
Looking at what happens in the larger society, especially in the political sphere, one wonders why our political leaders cannot adopt this democratic way of doing things in the administration of our local government areas, states and the nation. Why are Nigerian citizens rarely given the opportunity to have a say on how things are done in the country?
Often, projects or programmes are initiated without first feeling the pores of the people for whom those projects are meant. Many times the government’s mindset towards certain issues in the country or some government plans are made known either during interviews outside the shores of the country or at other public functions.
Let’s take a look at the current controversy over the government’s plan to remove fuel subsidy and payment of N5,000 transport grant to poor citizens of the country. The Minister of Finance, Budget and National Planning, Zainab Ahmed, released the bombshell during the launch of the World Bank Nigeria Development Update (NDU) last week. The reactions that have trailed the disclosure indicate that the necessary consultation and reaching out were not done before the announcement.
Otherwise, how can the National Assembly, the representatives of the people, not be aware of the proposal? The Chairman, Senate Committee on Finance, who described it as a rumour, told newsmen: “if there is something like that, a document needs to come to the National Assembly and how do they want to identify the beneficiaries. This is not provided for in the 2022 budget proposal, which is N2.4 trillion”.
The Nigerian labour leaders also expressed shock over the minister’s announcement because according to them, it was a unilateral decision without the input of Labour. In the words of the Secretary-General of the Trade Union Congress of Nigeria (TUC), Musa Lawal, ”We are surprised and shocked with the government’s pronouncement. We do not know how the government came about it. The government is calling for trouble if they think they can go ahead with subsidy removal without labour. The Presidential Committee made up of government representatives and Labour has not concluded its assignment. Our last meeting was in April. This new position is totally unacceptable to us”.
My point is that governments at various levels in Nigeria should begin to make deliberate efforts in carrying the people along in whatever they do. Opinion of the people should count. This will reduce a lot of friction between the leaders and the led and help in building trust between the two parties and a better nation.
Why can’t the government use every means possible to sensitise and educate the citizens on the benefits or otherwise of fuel subsidy removal. A lot of people are asking the criteria that will be used to determine who the ‘poor citizens’ are; how the decision to give payment of N5,000 each to about 40 million citizens came about and others; and it is the duty of those in power to provide sincere answers to these questions before going ahead with the project.
It is the responsibility of the leaders to convince Nigerians that the proposed N5000 monthly stipend will not go the way of other social intervention schemes of the government like conditional cash transfer, tradermoni, COVID-19 palliative, free school feeding and many others.
Some useful suggestions have been made on how to cushion the effect of subsidy removal should it materialise instead of the paltry sum of N5,000 which, by the way, the Minister of Finance said is not going to last for more than a year. One of them is that the government should deploy such funds to free medical services and free transport schemes for the target category of citizens. Nothing could be as reliving to a poor farmer for instance, as knowing that there is free movement of his goods from the farm to the locations where they will be sold and that he is sure to receive free, quality medical attention when faced with a health challenge. Government must listen to this strong view.
That being said, one thinks the labour unions, the students’ union and other bodies and individuals kicking against the total removal of subsidy should try to engage properly and consider  the long term benefit of the removal. Many business men, economic experts and players in the oil sector have posited that the gains of the removal far outweigh its retention, that though the initial hardship will be inevitable, in the long run, Nigerians will be better off just as it is currently happening in the telecommunications industry.
The Director of Green Zeal Oil and Gas Ltd, Mr. Christian Wigwe in a chat noted that as long as the government continues to subsidize the importation of fuel, the Nigerian oil sector will never develop. He observed that none of the International Oil Companies (IOCs) licensed to operate in Nigeria has been able to build refineries in the country because it is not profitable owing to the fact that the government subsidises the importation of fuel from other countries.
He opined that if we do not take the bull by the horn now, stop the subsidy and grow our economy, if we keep borrowing money from all corners of the planet to run the country while also collateralising the loans with public infrastructure, a time will come when our creditors will take over the railways, the airports and other collateralised infrastructures and the cost of transportation we are running away from will be ten times what it is today.

By: Calista Ezeaku

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Opinion

Wailing Women Of N’ Delta

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Whenever a group of concerned women wail aloud in public, obviously such gesture portends a message that should be taken seriously. The wailing women of Niger Delta embarked on a public protest, with a release of the audit report of the Niger Delta Development Commission (NDDC), as a major issue of their protest. There was, indeed, a Forensic Audit of the NDDC whose report has been an issue of foot-dragging. From the grapevine and the gossip mill, the true contents of that report describe the NDDC as a milk cow monopolised by non-Niger Delta power blocks.
The wailing women of Niger Delta, as mothers and home builders that they are, obviously fed the pangs of the agony and apprehension of the Niger Delta people. A part of the agony and apprehension of the people is the fact that the resources of their homeland have been monopolised by stronger power blocks and interest groups, through various strategies. Such current strategy is a Bill for an Act to amend the NDDC for the inclusion of new oil producing areas and states which do not belong to the Niger Delta zone, namely: Bauchi, Lagos and Ogun States.
Like the politics and economics of the Petroleum Industry Act (PIA), the NDDC may follow a similar strategy of serving the interests of stronger power blocks, while the Niger Delta people continue to be marginalised. The Tide Editorial comment of Monday, November 22, 2021, stated that “each time the minority stand to benefit from a policy or law in the country, it will be blubbered and invalidated”, Can it be true that there is a “systematised move by the Federal Government to extirpate the region”?
The wailing women of Niger Delta, as a protest group, was said to have been invited by the police authority, perhaps to forestall the possibility of their protest being taken over by miscreants or bandits. It was good enough that the protest over non-release of NDDC forensic audit report did not result in any sad experience. Such sad experience can include another group of commercial protesters supporting non-release of the NDDC forensic report, thus resulting in some clash among two protesting groups. Obviously the police would not keep quiet when protests become violent.
It has become clear to discerning Nigerians that there are not only commercial and sponsored protesters who can be hired by interest groups, but there are also commercial and sponsored callers on radio programmes. The goals and intentions of such hired groups of people are not difficult to discern, but what is a sad is the danger which such a strategy can portend, with regards to national security. Like the Lekki-Gate incident, which has become a national and international controversy, a peaceful protest can be infiltrated or taken over by hired hoodlums.
For the people of Niger Delta in particular, the oil and gas resources of that region have placed them in the position of endangered people. The aforementioned editorial of The Tide hit the nail at the head, saying: “the NDDC confirms the age-old view that the region has indeed become a toy to be played with by some Abuja politicians and the Federal Government”. The plight of the Niger Delta people was recognised long before 1960, which was why a Willink Commission Report of 1958, recommended a special interventionist programme.
Unfortunately, in line with the peculiar politics of Nigeria, the establishment of a Niger Delta Basin Development Authority (NDBDA), resulted in a replication of various regional Basin Development agencies, for interventionist purposes. Now, since NDDC cannot be replicated in a similar manner, the strategy had been to turn it into a “milk cow” to serve the interests of other power blocs. An attempt by Senator Godswill Akpabio to name beneficiaries of NDDC largesse was halted through shouting him down on the floor of the Senate. Anyone would wonder how long this clever cheating style would continue, with the people of Niger Delta being considered as cowardly or pawns that can be bought and sold.
The wailing women of Niger Delta, apart from asking for immediate release of details of the NDDC forensic audit report, also demanded that the NDDC should remain to address the biting environmental challenges of the people. Those who knew the inside story of the predecessor of NDDC (OMPADEC), would tell us that it was under the control and stranglehold of non-Niger Delta a power bloc. For a similar pattern to repeat itself again would mean that there are some powerful interest groups that do not mean well for the Niger Delta people. Considered stupid?
The story of Oloibiri, where mineral oil was first exploited in commercial quantity over 70 years ago, tells the story of the Nigerian political economy clearly. It is the sad story of ravishing a fair lady in her youth and leaving her destitute and haggard in her old ago, with a “Christmas Tree” planted in her old hut as a reminder of her thankless services. Anybody who knew Oloibiri 1951 would not see much difference in 2021, except the presence of a “Christmas Tree”! To mock!
It would pay the managers of the affairs of this country and their advisers better if they would adopt the policy of fairness and justice as the means of addressing nation-building project. Enthronement of a predatory political economy has never been known to be a helpful system of social engineering, because it breeds parasitism and lingering insecurity.
Hiding or refusing to publish the forensic audit report of NDDC would not show commitment to openness, integrity or accountability. Rather, to delay or alter it would fuel the feeling of the Niger Delta people that they are not getting a fair deal in the Nigerian federation. Would that not add to the growing agitations in the country? With an expectation of a rise in the price of petroleum products next year, whose effects the government intends to address by paying N5,000 monthly to the “poorest of the poor”, how many of the 40 million poor people would come from Niger Delta? Would that not give room for corrupt practices?
How sound is it to remove fuel subsidy, increase fuel price and pay 40 million people the sum of N5,000 every month, and yet retain the practice of free fuel for a large number of political office holders? Managers of the Nigerian affairs can do much better by blocking leakages and sources which would create loopholes for further corruptions. Wailing women of Niger Delta are saying that transparency is better than allowing people to speculate what is going on.

By: Bright Amirize

Dr Amirize is a retired lecturer in the Rivers State
University, Port Harcourt.

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Opinion

2023: Aso Villa, Not Sick Bay

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Even as its clinic may possess some of the best health facilities a Third World state house can possibly afford, I still doubt that the Aso Rock Presidential Villa in Abuja was designed to cope with some of the serious medical conditions our leaders discreetly convey to the place.
Chapter IV, Part I, Section 131 of the 1999 Nigerian Constitution (as amended) spells out the requirements for election to the Office of the President. They are as follows: citizenship of Nigeria by birth; attainment of 35 years of age; membership of a political party which must be the sponsoring party; and education up to at least School Certificate level or its equivalent.
But even a possession of all these still does not qualify anybody who engages in any one of a plethora of some other never-dos, including presentation of a forged certificate to the Independent National Electoral Commission (INEC). Or, election to such office at any two previous elections. Or even failing to resign from a civil or public service position at least 30 days before election. Disappointingly, in all of the nearly one dozen of these extra conditions, only one directly pertains to a candidate’s health status. And what does it say? Quite simply put – that the person is not adjudged to be a lunatic or otherwise declared to be of unsound mind. Really? Not even through a mandatory professional psychiatric evaluation? Haba, Nigeria!
I still recall that, as a prospective student seeking admission into a unity school in 1974, I was required to present a medical examination report from a government hospital. Also, as a JAMBite five years later, I was requested to go for medicals at my university’s medical centre. And of course, I couldn’t have secured my present employment in the civil service without satisfying a similar condition. It is also common knowledge that this is equally applicable in reputable private sector organisations. So, how come students and workers in Nigeria are required to compulsorily undergo medical examinations to ascertain their fitness for the tasks ahead whereas no such condition is listed for a prospective occupant of the highest and most prestigious office in the land? Have Nigerians opted to remain this naïve or are we indeed a cursed people?
Even in the twilight of military dictatorship in this country, it was mostly a handover of power from one sick leader to the other. In short, of the seven Nigerian heads of government that have so far taken up residence in the Aso Rock Villa since General Ibrahim Babangida hurriedly relocated the seat of power from Lagos in 1991(after a serious jolt from the Major Gideon Orkar-led coup the previous year), only General Abubakar Abdulsalami and Dr Goodluck Jonathan had stepped in there looking healthy and also exited the place in seeming good health.
Babangida was already on record as having been seriously injured in 1969 when a battalion he led encountered heavy Biafran offensive during a reconnaissance operation somewhere between Enugu and Umuahia. He was said to have declined surgery to remove a bullet shrapnel from his knee. But several years later, while in the Villa, the self-styled Evil Genius was known to have alternately travelled to France and Germany to seek medical relief. There were several pictures showing when he got stuck in-between strides with his trade mark gap-toothed smile failing to hide the agonies of a Nigerian military president. It was really pitiable, to say the least.
Next was his successor, late Gen. Sani Abacha, whom the then radical Tell magazine on September 8, 1997 reported as suffering from liver cirrhosis – a serious condition that often results to death. While Abacha’s secret police went after the magazine’s editor, Nosa Igiebor, and members of his household, The News, another dare-devil publication, picked up from where the former left off – reporting how medical experts were secretly flown in from Israel and Saudi Arabia to tend the nation’s seriously ailing but still pretentious generalissimo. Even marabouts from some North African countries were rumoured to have been brought in to pray for him. He reportedly died of suspected food poisoning in the hands of some young Indian belly dancers in 1998.
Abacha was succeeded by Abdulsalami whose administration is still reputed to be the second military regime (after Obasanjo’s in 1979) to successfully complete a transition process and hand over power to a civilian democracy in Nigeria. For want of a trusted person who would serve to assuage the Yoruba over Abiola’s death while in detention, Obasanjo was literally released from certain death (sorry, prison yard) by Abdulsalami to run for election on the ticket of the new Peoples Democratic Party (PDP), after the demise of Abacha who had incarcerated him for joining his NADECO Yoruba brethren to criticise the late general’s regime. Frankly speaking, and to those who knew him while he reigned as military head of state, Obasanjo was still a shadow of his former self when he moved into the Presidential Villa in 1999.
Then entered Alhaji Umar Yar’Adua and, a little later, General Muhammadu Buhari (rtd) both of whose checkered medical stories we already know.
Now, with the 2023 General Elections fast approaching, there have been moves – even if still hazy – by individuals and groups touting the names of their political godfathers as promising presidential hopefuls. But I am seriously concerned that one or two of those names belong to persons who are already as old, sickly and looking worse than the incumbent president’s condition when he returned from his 50-day extended medical vacation in 2017. At that time, Buhari had looked rather too ghostlike that some Nigerians doubted their president and began to reconsider detained IPOB leader, Nnamdi Kanu’s Radio Biafra description of him as a surrogate Jubril from Sudan.
For me, and regardless of their professed leadership acumen, any seriously ailing Nigerian politician who conceals his affliction while campaigning to occupy the Aso Villa is like a confirmed HIV patient who opts to proceed on a raping spree. It is the height of corruption, criminality and wickedness.
Fellow Nigerians (yes, let me sound like them), there is no better time to wake up to this ugly reality than now. We’ve had it up to our neck. Thank you.

By: Ibelema Jumbo

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