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Govts’ Worst Debtors

GOVERNOR of Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi, after he sacked the chiefs of five banks, published the names of those he described as debtors of “non-performing” loans in these banks.

Most of those whose names were published have contested the position of their debts. The Economic and Financial Crimes Commission, EFCC, also issued orders for debtors to pay up and complain later. Barely two weeks after, EFCC proudly announced it recovered N60 billion.

Commentators have questioned the legality or even wisdom in getting the EFCC and security agents involved in the debt recovery when our laws provide for relations between banks and their clients.

Supporters of the current CBN and EFCC activities in the banks say only this “military action” could have achieved results in such a short time.

Nigerians, however, wonder who will go after the biggest debtors in town, governments – especially the Federal Government. It is estimated that the Federal Government alone owes banks and contractors nearly N3 trillion. Should CBN and EFCC not publish names of the ministries, departments and agencies of governments that have owed banks and contractors for years?

Government is the biggest spender in Nigeria. A situation where the biggest spender has formed the habit of refusing to pay its debts does more damage to the economy than all bank debtors put together. Government contractors finance their businesses with bank loans.

Whenever government fails to pay those who work for it, this translates to non-performing bank loans since such government contractors cannot meet their obligations that were built on government’s prompt payment. Refusal of government and its agencies to pay debts has bankrupt many businesses.

Reasons for government’s failure to pay contractors go beyond lack of funds. It has been proven that civil servants and top public officials resort to this dirty trick to corruptly benefit from it, not minding that the contractor whose money is being held up has obligations to employees who are waiting to be paid their wages, and almost in all cases to the banks.

Now that government has decided to crack down on banks debtors, it has to lead by example by paying debts its agencies owe contractors and by extension most of the banks it is demonising for non-performing loans.

The Independent Corrupt Practices Commission, ICPC, should apply itself towards bringing to book the offenders in this instance, in the same manner that the EFCC has been hounding bank debtors.

It is absurd that in a country with collapsing public infrastructure, civil servants are reluctant to release funds for the execution of capital projects. The funds are returned to the federal till as “unspent funds”, while contractors remain unpaid.

Yet the authorities cannot establish a link between these civil servants, failed budgets and the bad loans in the banks.

The Federal Government, which refuses to pay its debts that are dislocating the economy, is being hypocritical in chasing bank  debtors.


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.