April 20, 2024

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Nigeria’s Debt: From China to Brazil

3 min read

By Femi Oluwasanmi

Recent acceleration in Nigeria’s debt profile and servicing has created a climate where almost everyone has become an analyst given what they see as the dire future of the country in years to come. This is perhaps inevitable, considering what happened to projects that were financed with borrowed funds in the past.

While addressing the House of Representatives Committee on Finance in Abuja on November 3, Minister of Finance, Budget and National Planning, Zainab Ahmed, stated the intention of the federal government to borrow $1.2billion from the Brazilian government to address issues in the agriculture value chain.

Prior to this time, the nation had secured loans from different bodies at the international capital market. One of the most controversial loans was the one secured from China where the government allegedly agreed to cede the nation’s sovereignty to the lender in case there is a default.

As it is today, Nigeria has no choice than to shop for loans because of the state of her economy against the failure of the government to carry out genuine diversification.

However, looking at the number of abandoned projects across the country, it seems the government only borrowed because of project count rather than development.

For instance, despite the huge amounts borrowed from both local and international capital markets since the country returned to democratic rule in 1999, the nation’s paper mills in Iwopin, Jebba and Oku Iboku remains comatose; same with the steel complex in Ajaokuta.

Similarly, the refineries that could have save Nigeria lot of dollars in foreign exchange, if repaired and upgraded, still remains in comatose because of the thirst of the government for project count rather than development. These have really created rooms for wastage, unemployment and poverty.

In a society where development takes preference over ‘project count’, the government would have taken count of the abandoned projects first and then move to complete them.

Today, people are hungry, yet the government is borrowing money to construct railway to Niger Republic, paying jumbo salary and allowances to political holders, renovating the National Assembly Complex with part of the money borrowed to finance the nation’s budget. These are part of the reasons the country is trapped with humongous debts.

Interestingly, some of the projects commenced by the government in 2016 are still uncompleted despite the promises made by the government to complete them before the end of 2019. These projects might remain uncompleted till the next electioneering period when the contractors will be made to work day and night – part of the ploy to garner votes.

It is shocking to note that up till date, the 500,000 N-power volunteers that were transited by the government to an undisclosed next level programme in June/July are still waiting to hear the details of the programme from the government even after four months of no stipend.

Yet, President Muhammadu Buhari promised to uplift 100millionNigerians from poverty in the next 10 years even when Npower volunteers have been returned to the unemployment pool.

Now that Nigeria has travelled to Brazil to request for $1.2 million in order to revolutionise the agricultural sector, the government should take a step further by asking the government of the country and other developed countries how they acquired the culture of honesty and integrity so that the nation will stop traveling from North to South, East to West and to the uttermost part of the world to shop for loans to finance future budget and projects.

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