So Nigeria is going broke?

on   /   in Stomach Democracy 12:20 am   /   Comments

By Kassim Afegbua
During the subsidy debate in December 2011, the question was asked very pointedly whether Nigeria was broke or not and whether that was the rationale for the agitation for subsidy removal.

I remember that the Minister of Finance and Coordinating Minister of the economic team, Dr. Ngozi Okonjo-Iweala told a befuddled nation that the country was not broke.

Her latest disclosure that the country is going broke as a result of several factors, is to me a contradiction of her earlier stance barely five months after that statement. And this is where sincerity and transparency become essential attributes of accountability in government.

I feel very strongly that her latest position coming at a time when her nomination for the World Bank job is gaining fever pitch, calls to question her real intentions and what must have fired her adrenaline to make her new position known.

Nigerians were straight to the point when they asked government to disclose the state of health of our economy with specific reference to our financial status against the background that the desperation of government on the subsidy issue was obviously indicative of something unsavoury.

Government representatives including the Finance Minister were very categorical that the country was not broke, and that it was just a matter of policy that the subsidy issue be treated once and for all to checkmate all the leakages in the system.Now we know better.

The damning data presented by the Minister as the true position of Nigeria,s economic status is really frightening and quite disturbing. With a total debt profile of USD40billion as at September 2011, out of which USD5.63billion represents our external debt and USD34.4billion representing our domestic debt, one is at sea to explain why Okonjo-Iweala did not envisage that Nigeria has been broke before now.

Soon after the election of late President Yar,Adua and Dr.Jonathan in 2007, Nigerians have been raising alarm about the burgeoning impact of our domestic debt which has left many employers of labour captive of their own investment and crippled their productivity. Some scholars did also express concern about the sustainability of such huge domestic debt without any clear-cut policy initiative by government on how to move away from such economic problematic.

If we now cast our minds back in the days of Okonjo-Iweala and the declared vision behind the debt buy back deal of the Obasanjo era, what we have on our hands is misplaced vision and insincerity on the part of those who are managing our economy. In one of my interviews with former Finance Minister Dr. Kalu Idika Kalu, he did express concern about the rationale for going to pay off our so-called debts when we still require money to invest in the areas of infrastructural development and the economy generally.

According to him, there was actually no problem with borrowing insofar that you apply the borrowed funds to the item it is meant for. In other words, do not divert borrowed fund for item A and apply it for item C. And most of the histories behind our borrowing has been one of misapplication andiversion.

Some of us are still at pains to explain away the philosophy behind this increasing domestic debt which has truly affected production in all spheres of our economic life. Those who are seasoned economists also argued that an economy that is laden with such huge debt cannot survive the test of time and that it was better to owe foreign nations who are economically strong and viable, than owing the local entrepreneurs who are dependent on loans obtained from banks to drive their businesses.

Until the banking revolution embarked upon by the Sanusi-led Central Bank of Nigeria, Nigerians were not aware of the debts that hung on the neck of our so-called big men and women who plundered the incentives in the banking sector to further their own nests. With heavy interest rates imposed on customers as a consequence of loans, local investors are often made to suffer double jeopardy as a result of their funds being tied down because government has refused to pay them for one service or the other that they have rendered. Such owed money cannot be re-invested and the accumulation of interests in the banks often make matters worse. That was the reason that made Mr. Jimoh Ibrahim, one of Nigeria,s entrepreneurs to declare sometime ago that all the big names we hear of are living on borrowed times; too much of unserviced bank loans hanging on their necks.

This is the story of Nigeria.

I still find it curious that Dr. Ngozi Okonjo-Iweala would make such a pronouncement at a time when the nation is consistently being assured that all is well. Of course, Okonjo-Iweala should have known our precarious economic situation before her assumption of office. And she also should have a deeper knowledge of our economic status now that she has been presiding over the affairs of our country,s finances.

With an ambitious growth rate of 7.9 percent which is a mere fluke anyway, I do not think the situation should be as gloomy as she has painted it. In all honesty, I still cannot see the impact of 7.9 percent growth rate in an economy that is heavily overburdened by such huge domestic debt which has badly affected productivity.

Those being owed domestically speaking, are gnashing their teeth everyday, lamenting their woes in the hands of government. I had stated before that if the Jonathan-led administration is desirous of adding value to the economic well-being of the people, addressing the domestic debt issue should be a priority. She should have known that we did not come to this pitiable situation just today or yesterday.

It has been a process of accumulation, part of which she has been a major player. Where is the incentive of the debt buy back that was globally mouthed as an achievement of the Obasanjo regime if what we have now barely five years after that feat, has toppled the earlier ones written off? Somebody is being economical with the truth here. With these damming reports, Nigerians will have to live with these realities for now because there seems to be no way out given the picture painted by this job seeker in the worldBank.

CORRUPTION, PROBESAND WASTAGES
The growing incidences of corruption in Nigeria present a greater responsibility on all of us to wake up and be more patriotic in our daily engagements. When you tell people outside the shores of Nigeria that Nigeria is broke, what you get as a response is usually laughable dismissal.

How do you mean a country as richly endowed as Nigeria is broke to the point that life is becoming increasingly unbearable for her citizens? With our vast arable land, rich soil, rich forest with economic trees, rich mineral deposits, there is no plausible explanation for why we are poor. People still keep lamenting about the past, blaming our past leaderships, and I will rather insist that since we already know where previous governments faltered, we should be able to move ahead from there. Lamenting about the past and not doing enough for the present, is  a threat to the future. It is also an indication that the government has ran out of ideas on how to wriggle itself out from the delicate balance that we now find ourselves. Corruption is increasing by the day, unemployment is rife, education is at its lowest ebb and the quality of life of majority is abysmally low.   From revelations we hear and see everyday from the probe panels, there is no reason why the country should be where it is. But when one raises concern about the situation we find ourselves, you hear some people invoking the ethnic and tribal dimension into a serious national discourse. This is where we are.

The idea of fiscal federalism is an incentive that should be encouraged. I do not support Okonjo-Iweala’s complains about constitutional requirement that necessitates the sharing of the excess crude savings to the constituent parts.

That sharing should be a support base for the States and the type of developmental initiatives that we intend to see. That way also, the Local Governments would be able to carry out their constitutional responsibilities. The big brother role of the Federal Government having its hand in every pile, is a miscarriage of the essential attributes of a true federation. There is the need for devolution of powers at the center.

Having such a powerful center conveys too much responsibility on the federal government at the expense of the States. The government should be able to remove itself from several responsibilities that should expectedly be the preserve of the States and the Local Governments. With such load shedding, so to speak, the Federal Government would be able to engage the economy more seriously and draw up more result-driven foreign policy strategy.

When we approximate all that has been revealed as the outcome of probes, Nigeria has no reason to be broke. What the Finance Minister should do is to devise methods and ways of plugging the loopholes to arrest the growing incidence of corruption. Her declaration that the Finance Ministry does not know what is spent on subsidy is an open admittance that the situation has become helpless.

Under a helpless situation, the citizens suffer collaterally and the country at large becomes captive in the hands of a few business buccaneers whose network supersedes that of the country.

If Okonjo-Iweala gets the World Bank job, she will be bequeathing a Finance Ministry that does know how much is spent on subsidy and cannot possibly understand the nexus between where we are coming from and where we are headed.

We are surely living in borrowed times. Proactive and thoughtful leadership might just be the right answer to bail us out. Who knows?

 

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