Barely four years after Nigeria exited from the global debtors club,  the country walking right back into the same trap in circumstances that shows that it learnt nothing from its previous experience. It is like the case of the Bourbons who learnt nothing or forgot nothing from history. Hugo ODIOGOR reports.
THE Presidency and the National Assembly are at each other’s jugular over President Goodluck Jonathan’s presentation of a request for legislative approval to take an external loan of $4.9 billion, which the President said will be used to jump start the economy, create jobs, tackle HIV scourge and development of the infrastructure nationwide.

The House of Representatives rejected the president’s request just as millions of Nigerians were sceptical about the intentions of the president to drag the country back to international servitude by endorsing the request for the foreign loan.

The rising profile of Nigeria’s indebtedness is a sour point in the public finance management and speaks volumes of the fiscal discipline of political actors attitude to the sovereignty of the Nigerian . According to the Director General of the Debt Management Office (DMO) Mr. Abraham Nwankwo, Nigeria’s debt profile was $32.5billion as at September 2010.

The DMO Boss said this represents 16.8 percent of the Gross Domestic Product. The breakdown of this shows that $4.5billion was for external debt while $28billion was for internal debt. In 2009, the figure was $ 9 billion for external debt and $21.9billion for domestic debt.

According to Nwankwo, no fewer than 13 states have accumulated $200billion, a figure which Hon. Ned Nwoko is not comfortable with given the past experience with calculation and management of debt issue by the Federal Government.

Hon Nwoko is of the view that there are fundamental and substantial issues concerning the Federal Government and the other tiers of government, the state and local government.

Olusegun Aganga

The Federal Ministry of Finance, the National Planning Commission and the Debt Management Office had advised that even “under esteem financial stress”, contracting external debt now “is unhealthy and unsustainable in the medium and in the long term”.

It is therefore curious how the president came by the reason to expose Nigeria to another round of external borrowing just four years after the country left the inglorious club.

With the benefit of the hindsight, Nigerians who were involved in the managing issues relating the last cycle of indebtedness and the past experience with huge public debt profile are uncomfortable with the government’s reasons for wanting to go back to debt with the negative  consequences  to the growth and development of the economy and the country.

Nigerians who knew what the country went through in the last  round of foreign loan saga are not amused that the country is back into the ignoble club that it left in controversial circumstances four years ago.

A former member of the Federal House of Representatives Hon. Prince Ned Nwoko, who undertook an independent oversight function of verification of the past foreign loan, as a legal consultant to Some African countries and State governments in Nigeria, shares the apprehension of millions of Nigerian that the country cannot afford another jamboree, wastefulness and scam associated with management of foreign loans.

He said as an international lawyer with a base in the United  Kingdom, it was possible for him to assemble a team of professionals that investigated the nature and scope of the foreign loans, the agents and individuals involved in contracting the loans, the  terms of repayment and duration of the process, etc;

“We were alarmed that some government officials colluded with foreigners and their institutions to defraud the country massively before Dr.(Mrs) Ngozi Okonjo – Iweala plotted an exit strategy for the country, but even at that she was not happy that I was carrying out an oversight function on these debt which as far as I am concerned, was a patriotic duty.

It is therefore surprising to me that  members of President  Jonathan’s economic team could recommend that Nigeria should take another poisoned chalice called external loan.”

He said “the National Assembly which failed to exercise its mandatory oversight functions in the past should not bow to pressure from the Executive arm of government and support the President’s move to return the country to the debt club.

According to him, “the lack of oversight on these foreign loans, the lack of transparency surrounding the management of the country’s external debt before 2006 and the burden on Nigerian people makes unpatriotic for anybody to contemplate our going back to the same ruinous path”.

There is a general sense of anger among Nigerians who believe that Dr. Jonathan’s request is coming at the time when the federal government is still battling to clear the issues of the excess deductions it made on the statutory allocations to states and local government most of which have engaged the services of Prince Ned Nwoko Associates to verify their claims and press for refund of the excess deduction.

So far, Adamawa and Taraba States have succeeded in getting $4444 million in this process and no fewer than 13 states are on the line.

Expectedly, some Nigerians who spoke to Vanguard Features, VF, on Nigeria’s return to another era of foreign debt saga said it is too early in the day for Nigeria to throw herself into another era of enslavement and odium in the comity of nations.

Origin of foreign debt saga

NIGERIA’S odyssey with foreign debt began in the 1960s when African governments on attainment of independence, had to approach Western financial institutions for loans for development assistance.

In Nigeria, both the federal and regional governments were known to have done that but on a modest scale. The appetite for foreign loans grew in the 1970s when the ambition for development projects grew astronomically.

Consequently, some of the states were lured into taking foreign loans by the creditors, ostensibly, to drive development in their domains. The borrowing spree went on unchecked until the neo-liberal reforms of the Thatcher-Reagan era of the 1980s arising from the collapse of the commodity market.

Nigeria also suffered from the collapse global prices of oil, which created crisis of Balance of payment for the country, owing to credit crunch.

The creditor nations created the London club which managed the Public sector debt and the Paris club, to manage private sector debt. According to Hon. Nwoko, this was a move to defend the interest of their citizens, institutions and their economy, in our own case nothing of that nature happened; instead we had situations where our own people colluded with foreigners and their institutions to defraud Nigeria and Nigerians”.

Having formed a collective interest group it was easier for the creditors to force their will on the borrower at the expense of their independent and sovereign actions. Said Hon. Nwoko: “during my private investigations it was discovered that in most cases the lending institution insist  on terms and conditions that are detrimental to the interest of the recipient country, a recent case was last May where the Federal government was forced to purchase mosquito treated nets from Western countries on the insistence of the World Bank .

In executing the selected project the recipient country are compelled to use consultants recommended or provided by the creditors, in the process more than 50 percent of the funds are used to finance the expenses of the consultants while the remaining part is shared between corrupt officials in the recipient country”.

Mismanaging the ECA

There have been concerns about the management of the country’s resources, particularly oil, and its revenues, has been on the operation of the Excess Crude Account by the government because it does not comply with relevant provisions of the 1999 Constitution, particularly Section 162 which specifically stated “that Internally Generated Revenues (IGR) of the Federal Government of Nigeria must be paid into the Federation Account”, the operation of the ECA by the Federal Government violates this provision.

Apart from concerns over the mismanagement of the Excess Crude Account, the there are also worries about revenues from the sale of gases.

The Excess Crude Account (ECA), of $20 billion left by the Obasanjo administration in May 2007 has dwindled to $460 billion by July 2010.

Mr. Femi Falana who said there is an urgent need for an investigation into the management of the economy especially “the several trillions of naira which ought to have been deposited in the Federation Account and are alleged to be missing”.
Falana said that facts have continued keep emerging daily on huge sums of money that have either been looted, misappropriated, shared, mismanaged or committed into white elephant projects. He said “it is worrisome to observe the highest level of profligacy and irregularities by all tiers of government in the management of the country’s resources and wealth and demand for accountability in the allocation and sharing of resources by the Federal Government of Nigeria.”


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