As Nigeria’s lawmakers squabble over locations of railroads, Nigerians groan under burden of loans-with-not-much-to-show – Tola Adenle

May 20, 2017

Nigeria

To begin with, it’s important to take a look first at just a few of the donations that have gone towards “reconstructing the Northeast”/resettling the victims of the Islamic terrorist group, Boko Haram (BH) despite which the Nigerian Government as well as state governments in the area and the people keep asking for more.

At the launch of the Victims’ Support Fund in 2014, President Jonathan’s office announced that the N50 billion targeted was overshot by N8.7billion. [http://www.premiumtimesng.com/news/165935-boko-haram-victims-support-fund-target-overshot-by-n8-79-billion-jonathan.html

While the terrorists have wreaked more havoc since then, it is imperative that all monies collected to date be accounted for so that we do not have a situation in which a section of the country is being surreptitiously developed as the North seems to have always been able to get away with. A total of (US) $2.1 billion and (US) 1.085 billion – approximately $3.2 billion – are loans being owed by all parts of Nigeria on behalf of the NE which would not be resented except for the fact that in appointments, promotions, resource locations and sharing, everything is weighted in favor of the North of the country. There have also been direct donations by the Nigerian government.

Last October, Borno State’s governor, Kashim Shettima, told a delegation from UN Fund for Population Activities that some of his NE colleagues were making false claims about BH ravages of internally displaced persons and destruction in their states to rake in donations from philanthropists and international donor agencies.

Here are just a few of the many funding sources to the NE damage that I picked from the web:

  • In July 2015, Nigerian government BORROWED $2.1 billion from IDA of The Bank according to an announcement by President Buhari in Washington, D.C. during a visit. [NOTE: The IDA gives loans mainly to the poorest of the poor of the world.]
  • “Buhari also asked parliament to approve a World Bank $1.07 billion loan “to help rebuild the country’s north east region ravaged by the Boko Haram …” http://www.africanews.com/2017/04/27/nigeria-s-buhari-seeks-parliamentary-approval-for-china-world-bank-loans//
  • The “federal” government earmarked N45 billion in the 2017 budget which a Nortern Senator has described as insufficient [https://buzznigeria.com/rebuilding-north-east-allocation/]
  • Retired General T. Y. Danjuma, Chairman of the Victims Support Fund launched by the central government PLEDGED AND REDEEMED $10million towards return of IDPs to Dikwa, the following: A General Hospital, Secretariat, Police Station & 37 Public Structures. He personally commissioned all the structures in 2016.
  • May 2016: Alhaji Dangote – $6 million early during the crisis plus additional $10 million in July 2016. [http://www.bbc.com/news/world-africa-36255482]
  • Of N54 billion pledged to the Fund, Dr. Ochoche, the Executive Director reported last month that under N30 billion has been redeemed.
  • The Sardauna Foundation led by former Governor Babangida Aliyu           N20 million.
  • The USA pledged $500 million through the World Food Program [May 2017: http://www.vanguardngr.com/2017/05/boko-haram-victims-get-500m-u-s-support/%5D
  • Daily Trust newspapers – $1 million.
  • House of Representatives: N36 million through a N100,000/head levy.
  • Denmark: $2.9 million additional donation to earlier one for a total of $7.1million [http://www.financialnigeria.com/denmark-pledges-2-9-million-aid-for-child-victims-of-boko-haram-sustainable-727.html].
  • At an International Donor Conference in Norway early this year, Norway pledged N50 billion [http://www.premiumtimesng.com/news/top-news/224491-boko-haram-norway-pledges-n60-billion-humanitarian-support-nigeria.html]
  • The World Bank: $800m, March 2016. [http://www.vanguardngr.com/2016/03/boko-haram-world-bank-earmarks-800m-rebuilding-north-east/]
  • As of March 2016, The UN gave $24 million of $248m pledged/

Loans at various government levels in Nigeria, and so-called bonds – which are also borrowings though needing no “oversight” and generally with more favorable terms – as well as grants from foreign donors have been so often written about by this blogger since 2002 (long before this blog) that many posts here continue to deal with the subject.

While loans and other such instruments that should ordinarily fire a country’s growth when used to develop or improve infrastructure, Nigeria’s loans for many years have had little positive results because most of them have not been deployed for purposes intended but have often gone the same route as the hundreds of billions of dollars from oil. 

Loans, naturally, weakens a country’s currency. Despite the sudden “appreciation” of the Naira against major currencies, my belief, despite the lack of book knowledge to back such up is that once the new China $5 billion-Plus loan is granted, the Naira would be let loose from Abuja’s babysitting and would find its level as it would no longer be propped up as it has been over the last several weeks, a move I believe is mainly to find a favorable borrowing rate.

Ask a non-college graduate who’s interested in purchasing a new home in, say, the USA but with bad credit how he could get a better rate than what his present credit rating would enable him: delay the purchase for a short time while he works on “repairing” his credit. (In good old USA, believe it or not, there are so-called “credit repair doctors”; I guess they acquired their doctorates on the job cooking up wuruwuru figures.)

For a country like Nigeria with some cash reserves?

Massively withdraw from the reserves to prop up the currency; after the loan, your masses will no longer be able to afford gari – cassava – that already has found prices competing with imported rice because the noose will tighten as Nigeria goes towards Zimbabwe-sque exchange rate but that would not matter. Many in the ruling class – past and present – have uninhabited/inhabited homes that stock more cash than many African central banks.

For a short heady period during retired Gen. Obasanjo’s (rGO) second term as civilian head of state, the country was free from debt because things had actually started to get really bad from the return to civil rule in 1979 when state governors discover – so to say – borrowings, especially bonds. From the “federal” government to the state level, “CEOs” started accumulating borrowings, both internal and external.

The Minister of Finance, Dr. Ngozi Iweala led the effort that saw Nigeria free of external debts from big lending organizations, a.k.a. “donors” but it all proved part of the big lie Nigeria has been living since 1979 when the country returned to civil rule. The euphoria of millions of Nigerians, however, proved to be unjustified despite Iweala’s confidence-inducing words at the time: 

“ … it [debt relief] will be like a second independence … giving us the freedom to focus … something our children will appreciate …”

Iweala apparently did not believe what she said because hardly had she left rGO’s government after losing the Finance portfolio for a “lesser” one than she gave her opinion on Nigeria’s need for new loans in a speech in far-away South Africa.

Why would or should anyone be against borrowing for projects marked earmarked for resettling IDPs/“reconstruction” or infrastructural development like railroads?

While it is true that the present government is not the same one that took earlier loans,

  • The Buhari government has acquired quite a hefty portfolio of its own;
  • There has not been an accounting to bring the thieves to justice or show what has been recovered and how these could be allocated towards the areas for which the country has gone a-borrowing  – AGAIN. Citizens who are repeatedly told of belt-tightening would have an idea of when and where the end of the road of hard times would be;
  • Governance is a continuum, and with its own not-stellar performance on the economy, Buhari’s government has not shown that it differs much from others as far as borrowing is concerned. It’s hard to keep track of all these loans and bonds by lay persons but a story on the proposed Chinese loan for rail does mention the fact that the “China Exim bank has approved a $1.231 billion loan to modernise the rail network linking the commercial hub of Lagos in the south to the industrial city of Kano in the north … 
  • Is this part of the $5.85 billion being sought? [http://af.reuters.com/article/investingNews/idAFKBN17T0NX-OZABS?utm_content=buffer9]
  • Nigeria’s recent borrowings have gotten to the stage that one of the big flies that usually feast on her sores – commissioned agent known as The World Bank – warned early in 2013: Don’t Borrow To Finance Budget Deficit – [https://emotanafricana.com/2013/05/14/world-bank-to-fg-dont-borrow-to-finance-budget-deficit/ ] The warning by The Bank coincided with the central government’s Euro1 billion bond issue which made me wonder aloud: Should citizens on whose behalf governments at state and “federal” levels issue bonds not have says?

The various – at times, conflicting statements issued by the Finance Minister, Ms. Adeosun and other top handlers of the country’s economy, including the Central Bank’s governor when government FRANTICALLY started looking for loans to “end the recession” appeared often baffling but above all, very distressing.

On September 20, last year, In Nigeria’s Recession: discordant notes from Buhari’s key economic “managers”, in part, I wrote:

Since August, Kemi Adeosun, the Finance Minister has been spewing ill-digested and, apparently less-understood economic ideas concerning whatever stage Nigeria is supposed to be in as regards the president’s request for “special emergency powers” to tackle the economic situation. Once, after unmistakably calling the economic situation a “recession” at a press briefing, she would soon deny she ever mentioned the ‘r’ word until her quoted words proved too apparent for her to run away from.

Only this past week, she was still explaining and pleading the case for an approval of the “special emergency powers” only for Nigerians to be told this week that “the worst is over …” according to one of the president’s “economic team” members, the governor of the Central Bank who, in a bizarre and incredibly-flippant statement to the Newspaper Proprietors Association of Nigeria, shows why Nigeria is in dire straits: perhaps qualified on paper but lacking in needed depth of knowledge, and composure to tackle the problem at hand.

Here are words credited to Nigeria’s Central Bank Governor; they are, at best, flippant:

“The worst situation of the recession that hit the economy is over, by December, the economy would be fully out of recession and be on the part of growth … I repeat, the worst is over, the Nigerian economy is on the path of recovery and growth. “Trust me, if you are standing as a bystander, you are losing by being a bystander. Join the train now before the bus leaves the bus station. “Let me repeat myself, we are already in the valley, the only direction for us to go is up the hill …” – Godwin Emefiele

When there are people who appear to be way in over their heads in handling the economy, how could such an economy not flounder?

  • These loans and the idea that we can always borrow have been building up for far too long despite the short interregnum under President Obasanjo, and it is time the National Assembly stops saying yes to loans and squabbling on locations of where projects are sited. I’m one of those who believe Nigeria’s “federalism” is a hoax and a huge lie and that tiny Katsina has no right by population, contribution or whatever parameters to get higher allocations of appointments, et cetera than Ekiti or Osun, perhaps the SW’s least-populated states. For the state to be favored over and above Lagos State is unconscionable, unpardonable but most important, unconstitutional.

The reason a senator from the SE gave as a condition for Buhari’s loan letter for railroad passing through the Senate – that it must go through the SE – is valid in a situation like Nigeria’s, and I see nothing wrong in his speaking out for his own.

The following illustrates a few of how careless Nigeria’s political leaders at state levels have wasted borrowed funds since Obasanjo Presidency. It contains excerpts from Letters to All Governors regarding Deficit Accounting written for my column for The Comet on Sunday in July/August 2003 and reused on this blog 10 years later in September 2013:

“Dear Governors,

These aren’t the best of times although for most Nigerians, that is not saying a lot because the last two decades have been varying degrees of bad.  Beginning with Babangida, the ill-fated structural adjustment was supposed to usher in better times.  Just tighten your belts a little, the IMF ordered, and things would be fine.  Made sense but SAP made things worse … As most Nigerians had become wretched, they thought things could not be worse but along came the Abachas and their cronies, including top government officials. and the era of stealing measly millions was buried forever.  How does $3.5 billion sound to you?  Throw in billions of pounds AND some millions of deutch marks, all stolen by a government employee.  All got away with less than the proverbial slaps on the wrists.  So, it’s that easy, eh?

Enter the Fourth Republic and Nigerians’ hope of a new dawn was shattered by legislators and rulers at state and local government levels.   Stealing was elevated to an art and this month Wada Nas seized the anything-goes situation to take out a full color page in the Yoruba-bashing Abuja Weekly Trust extolling Abacha and “informing” him that Nigeria “which you left in prosperity … corruption could not be worse … When they remember you more, they lament how your departure brought calamity to their existence… how your absence brought injury to national life …”  What revisionism! What calamity that thieves of the collective wealth are not locked up for the rest of their lives!

Now, it seems we are in for even worse.  To start with, most of you are busy expending energies on how much debt you met.  Why?  When Dr. Saraki tells Kwarans that he met a debt of so much billions, or Brigadier Oyinlola says the same at Osun, are you already laying the groundwork for citizens to accept failures from you four years from now? Did you not claim to be in government to better the lot of the citizens by improving on your predecessors’ records?

What I believe discerning voters would like to know from Ondo, Osun, Kwara, etcetera, is simple:  In full-page ads in a couple of newspapers popular in your states, show how much, overdraft is being owed and to which banks, the dates taken; how much in foreign loans is being owed and the date(s) taken and who was the governor of the state at the time of the loan, military or civilian …

In the recent past, I’ve had cause to write about states’ profligacy when Chief Adebayo went to the capital market to borrow billions of naira supposedly to enable him carry out development projects a mere months before the election, and wondered how he was going to pay back.  Governors should be made to retire whatever loans they borrowed, I wrote.  I’ve also written about Osun where Chief Akande had cried out about deductions by Abuja from its quarterly allocations.  This is justifiable as there is no other way to make states pay their debts.  Chief Akande’s administration was saddled with what past military governor(s) had borrowed and there is nothing to show for the loans.

… The Tribune  reported Dr. Agagu as blackmailing (my take of the bizarre idea) banks that “his administration would only do business with banks that are ready to finance developmental projects in the state.”  We all know that banks in Nigeria cannot survive without government deposits and Agagu, who promised a week earlier to rebuild the burnt market at Akure, “identified projects which the banks could help finance to include markets in Akure, Owo, Ikare, Ondo and Ore.”

To Lagos I go where Alhaji Tinubu is highly recommending capital market borrowing to you all.  In a Tribune piece titled “Take advantage of capital market, Tinubu advises governors”, he is quoted as saying “… our belief in the capital market as a variable and viable medium for raising long-term funds for development.  All over the world, it is the capital market that is generally used to finance infrastructure and other capital assets for developments …”  … I wondered in “Governors discover another mine” how Adebayo could feel good riding in convoys that cost more than his internally-generated revenues … My advice to other governors, please don’t.  Or, if you must go to the capital markets to borrow, why not do what is done “all over the world” as claimed by my dear Asiwaju and go back to the citizens of your state … hold a referendum that is free and transparent and let your citizens decide whether they want to borrow.

Sorry, Asiwaju, there won’t be counseling for the non-shareholders of Nigeria, Inc. twenty years from now … Thousands and thousands will work for food in Ghana that has learnt to live within its means and may be as many would languish in jails abroad for fraud.

“Borrowing to finance market or road construction or ‘other capital assets for developments’ is “voodoo economics” as George Bush I once described what later became the fancy “Reaganomics”, the architect of today’s corporate greed/scam in the USA.  If we cannot afford new roads or markets, we must content ourselves with what we have …”

 

NOTE

The essay from which above excerpts appeared was dated June 18, 2003;  it must have been used between July and August 2003.   I’m sure the original should still be in the archives at The Nation on Sunday, the successor publication to The Comet on Sunday. TOLA, May 20, 2017.

Pointers to a couple of loans may indicate what happens AFTER loans are taken

Years ago, Nigeria took a $120 million MINING loan from the World Bank.  Here is from an essay I wrote on the subject in The Nation on Sunday after I read of the displeasure of the Nigerian Miners’ Association: Electricity loan for 6000 MW promised for December 2009 was never achieved:

As Nigerian Govt. exults over 4000 MW electricity, I wonder whatever happened to the 6000 MW promised by 2009 December through $300m IDA loan – Tola Adenle]

“Interestingly, The Bank is the one PLEADING for understanding that the loan has not been mismanaged even as the Chairman, Nigerian Miners Association, Mr. Ekozi is expressing doubt … 

Abracadabra accounting: Nigeria settles N51 billion London Club loan but none can tell who took it? – Tola Adenle

By October 2009, a little over two years since those lofty and comforting words from Obasanjo and his Finance Minister, Nigeria’s borrowings had started to build up, again.

If a country with Nigeria’s resources takes grants and loans to fight malaria, HIV, et cetera – sometimes grants as small as less-than-a-million dollars, what happens to all the money it makes from oil production, and where, as earlier asked, are the proceeds from looting so far recovered?

There was a recent story in newspapers of N552 billion reported as London/Paris loan refund that was purportedly paid to the 36 states & the FCT, later reportedly looted with the sum of N3.5 billion of the amount alleged to have been traced to the Senate …

I once made an audacious statement back in my weekly newspaper essay days that the loans that continue to weigh Osun State down that supposedly date back to the take off of the State at inception over a quarter century ago perhaps “DID NOT CROSS ASEJIRE, the boundary river town between Oyo and Osun States.”

LAST WORD

Nigerian government has now borrowed perhaps as high as around $5 billion but not less than $3 billion-Plus – calculation is not easy the way these figures are given – all JUST “to rebuild the NE”. Other loans are also there.

Once the Senate inevitabl gives the go-ahead, it would be a matter of weeks, months at the most, when Nigerians would be saddled with an economy in coma as a dollar would command over N500.

SATURDAY, MAY 20, 2017. 11:20 p.m. [GMT]

RELATED

https://emotanafricana.com/2017/05/02/nigerias-national-assembly-must-say-no-to-1-billion-plus-chinese-loan-to-rehab-boko-haram-damaged-ne-tola-adenle/

Nigerians are weary of borrowings that have yielded next to nothing – Tola Adenle

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