by Oluseun Onigbinde
“The present situation whereby 44 per cent of our revenue earning is utilised to service debts is not realistic”.
That opening quote is part of the coup speech of General Ibrahim Babangida on August 27, 1985. 22 days later, I had my first breath in Nigeria.
As a teenage independent nation, Nigeria enjoyed unprecedented oil revenue due to the Oil embargo by the Arab nations which lasted from October 1973 to March 1974. Oil prices struck an upward movement till 1981 and like the poor/middle kids who stepped into the sudden wealth might behave, we wined and dined. As the oil prices began its descent in 1982, Nigeria was neck deep in debt.
Our economy began to crumble, aided by high level importation, consumptive subsidy, weak finances, bloated civil service and lots more. That season of oil boom did little good, added to the fact that we took the gains of agriculture earned by the sweat of our brow for granted.
They call it the resource curse, the paradox of plenty or the Dutch disease described on Wikipedia as the paradox that countries and regions with an abundance of natural resources, specifically point-source non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources.
Nigeria continues to be an ongoing example and this is the missed point in Obiageli Ezekwesili’s UNN speech on the cycle of wealth that came in the 70s, 80s and 90s that not only left us worse but lured us in accumulated debt. Her words: Sadly, each cycle ended up sliding us farther down the productivity ladder. The present cycle of boom of the 2010s is however much more vexing than the other four that happened in the 70s, 80s, 90s and 2000s.
Our debts cycles were largely at the external angle when we got into democracy in 1999. External debts were climbing high and with a budget less than $700bn, Nigeria had to reschedule a foreign debt to arrive at $21.2bn. These huge payments to the Paris and London Club of Creditors were finally settled in 2006.
As we secured this debt relief, from $20.48bn in 2005, Nigeria’s foreign debt fell to $3.54bn in 2006. However, as we stopped to borrow offshore, a sudden patronage hit the Nigeria domestic debt market. From $13.81bn as domestic debt in 2006, we tripled that figure to $39.17bn as at December 2012. Between 2007 when Obasanjo exited national leadership, the Federal Government had raised its bond portfolio from N925bn to N3.71tn as at December 2012. In five and half years, the Federal Government has added N2.78tn to Nigeria’s domestic debt. Do we have a transparent and accountable system that showed what the debts were used for in the Nigerian budget or properly said what the tax on the unborn was spent on?
Rather than revelling in the false analysis that debt is bad, we can take a quick peer into other nations? This link shows that in terms of global perspective of matching debt to GDP, Nigeria is among the light-colored. US has a debt-to-GDP of 85%, Brazil (66.2%), India (68.05%), Spain (69.3%), South Africa (38.8%) and the likes of Greece went overboard with 170% of GDP. Nigeria debt -to-GDP stands at a low figure of 17% and if we revalue our GDP as planned, this might sink to 12%. So international creditors will be knocking for us to borrow again, and our debt statistics will suddenly be looking proper again.
With the gross deficit in terms of our infrastructure and relative low oil receipts, why are we against borrowing? It’s a puzzle easily solved. Our greatest deficit looms again. That of leadership whose judgment can’t be trusted with borrowed funds. Rather than spend on quality capital infrastructure, we might toss this into recurrent component of governance finances.
Former Osun governor Olagunsoye Oyinlola was a clear case, he took an N18bn bond and rather than spend it on self-liquidating projects (projects whose revenue can pay back the loan) he went ahead to build zonal stadia. The successive state government had to heavily wind down the UBA loan.
Our debts has continued to rise without transparent appropriation of funds for development and we are stuck with the question again. If you want to borrow again, either local or foreign, can get some accountability of the past? Can we take stock of the previous ones and let it serve as a rationale for future debt or not? I guess like the unanswered posers to this government which continues to produce rebuttal upon rebuttal, I too also request for a debate at this point.
Oluseun Onigbinde is an electrical/electronics engineering graduate who's had experiences working in two of Nigeria's premier banks; co-leading Green Acts, a hibernating non-profit organization dedicated towards climate change and sustainability awareness; and now serves as the Team Lead of BudgIT (yourbudgit.com), a civic startup he founded in 2011 during a technology bootcamp, which uses technologies of any form to make government budgets more accessible, transparent and understandable to Nigerians. Onigbinde believes in the right of all citizens to have equal access to information. He contributes to Data Journalism Handbook, is a member of the Open Spending Wiki Group, a 2012 Ashoka fellow, and winner of The Future Awards as well as the Nigeria Internet Group Prize for social entrepreneurship. He has dreams of leading a thriving public policy think-tank with a social mission of a better and informed society, driving open data across the entire Nigerian literacy chain and also publish a collection of short stories. He loves God, family, rap music, Chelsea and Juventus football clubs.