President Goodluck Jonathan has hinted of plans to borrown $7,905,690,000 or N1.89trillion, being the cumulative facilities offered by the World Bank, African Development Bank, Islamic Development Bank, Exim Bank of China and Indian lines of credit to fund pipeline projects. But opinions are divided as to the propriety or otherwise of the decision, with many Nigerians asking, are these loans in the public interest? Reports Ibrahim Apekhade Yusuf -
TO borrow or not to borrow? That is the psychological question of the hour being hotly debated by Nigerians.
President Goodluck Jonathan recently sent separate letters to the Senate and House of Representatives requesting the approval of both chambers to borrow the sum of $7.9billion (about N1.89trillion), from the World Bank, African Development Bank, Islamic Development Bank, Exim Bank of China and Indian lines of credit, for the funding of pipeline projects in the country. The loans are to be used to cover pipeline projects captured in the 2012 to 2014 External Borrowing Plan.
In one of the letters read by the Senate President, David Mark, President Goodluck Jonathan said, “The pipeline projects are at various stages of finalisation. Therefore, I present herewith a total external pipeline borrowing in the amount of $7,905,690,000 or $2.64billion a year, being the cumulative facilities offered by the World Bank, African Development Bank, Islamic Development Bank, Exim Bank of China and Indian lines of credit.”
“In that regard, a number of projects have been designed to create employment opportunities with a view to growing the economy. We also urge the National Assembly to note that the objectives of the projects conform to the transformation agenda of our administration and cut across various sectors of the economy. The initiatives are meant to put the economy on track through growth and employment.”
Justifying the need for the loans, the President also informed the National Assembly that the initiative is geared towards the implementation of the transformation agenda of his administration and also aimed at driving growth, employment, which would ultimately put the economy back on track.
Implication
If the National Assembly approves the requests for the loans, Nigeria’s foreign debt will increase to $11.5billion. The Federal Government currently owes $3.5billion ($2.9billion from multilateral loans and $597.65million from other commercial sources).
Opposing views against borrowing
In the view of a social scientist, Mr. Gbenga Oyebanji, the pplan to borrow is an unwise decision considering the nation’s antecedence.
Going down memory lane, Oyebanji recalled that: “It was the crude oil price decline of late 70’s that made the then Shehu Shagari regime to apply to the International Monetary Fund for a three years extended facility loan of $2.3billion.”
The IMF, he recalled: “Gave over 17 conditions for such a loan and negotiations dragged on through the Buhari regime to Babangida’s regime, which started the hunger for debt in Nigeria. Debt spent on capital project makes economic sense but Nigeria’s case is cutting the nose to spite the face.”
Speaking further, he said: “In November 2005, Abuja won Paris club approval for debt relief that eliminated $18billion of debt in exchange for $12billion in payments, a total package worth $30billion of Nigeria’s total $37billion external debt by the then Finance Minister, Dr. Ngozi Okonjo-Iweala.”
Citing statistics from the Debt Management Office, the Lagos State University graduate said: “Between 2007-2012, Nigeria’s debt has grown to $40billion”, adding: “It took us 22 years to owe $37billion. It’s unbelievable that in five years, we are indebted to the tune of $40billion.
Echoing similar sentiments, Taofik Buraimoh, a public affairs analyst, holds the view and very strongly too that the nation’s economic leaders are inadvertently living above their means, hence the craze for loans.
According to him, “When the 2011 budget was presented, projected revenue stood at about N3.2trn but projected expenditure was over N1.1trn. How can one live above his means without being a thief?
“Our current external debt is $5.6billion and serviced with N0.51billion. When $7.9billion debt is added, we shall owe $13.4billion. Proportionately, we shall service with N1.22trillion or 38.14% of our total revenue at current earnings. Whosoever consents to the passage of the request will be doing Nigerians of this generation and those yet unborn a lot of harm than good”, Buraimoh stressed.
Buraimoh, who fell short of calling the Jonatahn-led administration a spendthrift, recalled that: “In his speech at the PDP presidential election primary, Mr. Atiku Abubarka accused Mr. Goodluck Ebele Jonathan of drawing down the external reserves from $20billion to $3billion within eight months of his reign as president of Nigeria. No one has refuted it.”
Proponents of loan
There are few discerning Nigerians who feel strongly that the groundswell of opposition over the Federal Government’s decision is missplaced.
One of the proponents of borrowing is renowned economist, Dr. Kalu Idika Kalu. Speaking with The Nation recently, he described as “scandalous” remarks by Nigerians rallying against loans from multilateral organisations as uncalled for and largely based on ignorance.
“Loans from such organisations as IMF, World Bank and others are cheap funds for anybody’s asking.”
The loans, he stressed, are at ridiculously cheaper rates compared to conventional loans from banks.
Dr. Chris Onalo, Registrar/Chief Executive Officer, Institute of Credit Administration is also on the same page with Kalu.
Speaking in a telephone interview with The Nation, Onalo, said, there is nothing wrong about borrowing at all.
“I think in the first instance, there is actually nothing wrong in government borrowing as long as the borrowing is development-driven. If they need to deliver development and raise the standard of the economy to a solid level there is nothing wrong in borrowing”, he said.
“Nigeria as a country is a member of many multilateral and development agencies and therefore must take advantage of its membership of these bodies to access funds that it has the basis to borrow because if we don’t take it, other nation may take it.”
He was however quick to add that: “The reason why Nigerians are skeptical of the borrowing is because of lack of transparency in borrowing.”
Canvassing support for borrowing, he said: “The truth is, we have a lot of development projects in Nigeria begging for funds. The internally generated funds may not be enough. Therefore government must go out to look for additional funds. To be a credit-worthy economy is not when you don’t borrow. An economy that is not borrwoing is a redundant and lazy economy. So, Nigeria must borrow because we have need for infrastructural development.
“If you have to build good road networks, rail system, waterway transportation system, borrowing becomes necessary because with the level of infrastructural limitations we have, it shows that Nigeria is not in existence in the real sense of the word.”
“But like I said, we have got the problem of resource management. So far, although government is trying its best, their best is not good enough because of the problem of corruption which is endemic in the system. As much as these fears are not unfounded, we cannot sustain it. Even if we say people will decide to pocket about 40 per cent of monies borrowed, it is still better than not borrowing at all because local funds will be stressed.
“My advise therefore as a credit analyst, is that our leaders should show dividends of transparency. Our government should be ready to tackle this monster of corruption without fear or favour.”
Pray, are the authorities listening?
TO borrow or not to borrow? That is the psychological question of the hour being hotly debated by Nigerians.
President Goodluck Jonathan recently sent separate letters to the Senate and House of Representatives requesting the approval of both chambers to borrow the sum of $7.9billion (about N1.89trillion), from the World Bank, African Development Bank, Islamic Development Bank, Exim Bank of China and Indian lines of credit, for the funding of pipeline projects in the country. The loans are to be used to cover pipeline projects captured in the 2012 to 2014 External Borrowing Plan.In one of the letters read by the Senate President, David Mark, President Goodluck Jonathan said, “The pipeline projects are at various stages of finalisation. Therefore, I present herewith a total external pipeline borrowing in the amount of $7,905,690,000 or $2.64billion a year, being the cumulative facilities offered by the World Bank, African Development Bank, Islamic Development Bank, Exim Bank of China and Indian lines of credit.”
“In that regard, a number of projects have been designed to create employment opportunities with a view to growing the economy. We also urge the National Assembly to note that the objectives of the projects conform to the transformation agenda of our administration and cut across various sectors of the economy. The initiatives are meant to put the economy on track through growth and employment.”
Justifying the need for the loans, the President also informed the National Assembly that the initiative is geared towards the implementation of the transformation agenda of his administration and also aimed at driving growth, employment, which would ultimately put the economy back on track.
Implication
If the National Assembly approves the requests for the loans, Nigeria’s foreign debt will increase to $11.5billion. The Federal Government currently owes $3.5billion ($2.9billion from multilateral loans and $597.65million from other commercial sources).
Opposing views against borrowing
In the view of a social scientist, Mr. Gbenga Oyebanji, the pplan to borrow is an unwise decision considering the nation’s antecedence.
Going down memory lane, Oyebanji recalled that: “It was the crude oil price decline of late 70’s that made the then Shehu Shagari regime to apply to the International Monetary Fund for a three years extended facility loan of $2.3billion.”
The IMF, he recalled: “Gave over 17 conditions for such a loan and negotiations dragged on through the Buhari regime to Babangida’s regime, which started the hunger for debt in Nigeria. Debt spent on capital project makes economic sense but Nigeria’s case is cutting the nose to spite the face.”
Speaking further, he said: “In November 2005, Abuja won Paris club approval for debt relief that eliminated $18billion of debt in exchange for $12billion in payments, a total package worth $30billion of Nigeria’s total $37billion external debt by the then Finance Minister, Dr. Ngozi Okonjo-Iweala.”
Citing statistics from the Debt Management Office, the Lagos State University graduate said: “Between 2007-2012, Nigeria’s debt has grown to $40billion”, adding: “It took us 22 years to owe $37billion. It’s unbelievable that in five years, we are indebted to the tune of $40billion.
Echoing similar sentiments, Taofik Buraimoh, a public affairs analyst, holds the view and very strongly too that the nation’s economic leaders are inadvertently living above their means, hence the craze for loans.
According to him, “When the 2011 budget was presented, projected revenue stood at about N3.2trn but projected expenditure was over N1.1trn. How can one live above his means without being a thief?
“Our current external debt is $5.6billion and serviced with N0.51billion. When $7.9billion debt is added, we shall owe $13.4billion. Proportionately, we shall service with N1.22trillion or 38.14% of our total revenue at current earnings. Whosoever consents to the passage of the request will be doing Nigerians of this generation and those yet unborn a lot of harm than good”, Buraimoh stressed.
Buraimoh, who fell short of calling the Jonatahn-led administration a spendthrift, recalled that: “In his speech at the PDP presidential election primary, Mr. Atiku Abubarka accused Mr. Goodluck Ebele Jonathan of drawing down the external reserves from $20billion to $3billion within eight months of his reign as president of Nigeria. No one has refuted it.”
Proponents of loan
There are few discerning Nigerians who feel strongly that the groundswell of opposition over the Federal Government’s decision is missplaced.
One of the proponents of borrowing is renowned economist, Dr. Kalu Idika Kalu. Speaking with The Nation recently, he described as “scandalous” remarks by Nigerians rallying against loans from multilateral organisations as uncalled for and largely based on ignorance.
“Loans from such organisations as IMF, World Bank and others are cheap funds for anybody’s asking.”
The loans, he stressed, are at ridiculously cheaper rates compared to conventional loans from banks.
Dr. Chris Onalo, Registrar/Chief Executive Officer, Institute of Credit Administration is also on the same page with Kalu.
Speaking in a telephone interview with The Nation, Onalo, said, there is nothing wrong about borrowing at all.
“I think in the first instance, there is actually nothing wrong in government borrowing as long as the borrowing is development-driven. If they need to deliver development and raise the standard of the economy to a solid level there is nothing wrong in borrowing”, he said.
“Nigeria as a country is a member of many multilateral and development agencies and therefore must take advantage of its membership of these bodies to access funds that it has the basis to borrow because if we don’t take it, other nation may take it.”
He was however quick to add that: “The reason why Nigerians are skeptical of the borrowing is because of lack of transparency in borrowing.”
Canvassing support for borrowing, he said: “The truth is, we have a lot of development projects in Nigeria begging for funds. The internally generated funds may not be enough. Therefore government must go out to look for additional funds. To be a credit-worthy economy is not when you don’t borrow. An economy that is not borrwoing is a redundant and lazy economy. So, Nigeria must borrow because we have need for infrastructural development.
“If you have to build good road networks, rail system, waterway transportation system, borrowing becomes necessary because with the level of infrastructural limitations we have, it shows that Nigeria is not in existence in the real sense of the word.”
“But like I said, we have got the problem of resource management. So far, although government is trying its best, their best is not good enough because of the problem of corruption which is endemic in the system. As much as these fears are not unfounded, we cannot sustain it. Even if we say people will decide to pocket about 40 per cent of monies borrowed, it is still better than not borrowing at all because local funds will be stressed.
“My advise therefore as a credit analyst, is that our leaders should show dividends of transparency. Our government should be ready to tackle this monster of corruption without fear or favour.”
Pray, are the authorities listening?
No comments:
Post a Comment