By Dele Sobowale
BUT the truth is that we are generally having the wrong discussion. I personally don’t think we have a debt problem, but we have a serious revenue problem, which, if we do not address, will snowball into a debt problem.” Ben Akabueze, Director of Budget in the Ministry of Budget and National Planning. October 24. 2018.
Horace, 65-8 BC, had lamented over 2000 years ago about corrupting time. “What does corrupting time not corrupt…? was the question posed by the sage. Poor Horace lived before a nation called Nigeria was created or something called Aso Rock was built. From one of the former occupants of the place, it would appear that demons have seized control in there. Individuals on who you could bet your life in the past get close or work inside the Rock and they change so much that you end up wondering if you ever knew them. The law has always been an ass. But, it is only when they enter the Rock that SAN becomes Senior Ass of Nigeria. Their utterances, which defy all logic, leave no doubt that the place is haunted. Bankers are now coming under the spell of the evil spirits resident in the place.
Mr Akabueze, a former Managing Director of a bank, which is now closed due to no fault of his own, was a Commissioner in Lagos State for years after his banking days were done. He was credited with bringing financial sanity to a state where more public funds would have been spent by governors on “good party men” than was actually diverted. As an experienced banker, he helped to structure the loans taken by the state, by far the highest among the states, in such a manner that the state could always repay with little disruption to services. The performance was excellent. His appointment as the Budget Director under the Minister for Budget was one of the few which was to me most deserving – provided he was consulted often before important decisions were made. That was not to be.
In Lagos, Nwabueze worked with chief executives who were economics-literate and who were willing to learn and be corrected. In Abuja, he landed under economic-illiterates, unable to understand the basic principles of economics and totally unwilling to learn. His glory was dimmed. He had two clear choices. He could quit or he could join them. Resigning calls for faith more than would move mountains and courage stronger than that of Daniel in the lions’ den. His decision apparently was “if you can’t change them, join them”. It is a safe choice for now, but, some of the consequences are already evident. The statement credited to Nwabueze above and a few others to be brought into this article demonstrates lack of courage and the adoption of falsehood by the former banker.
“I am beginning to wonder how many fools it takes to make the term My Fellow citizens.” Honore de Balzac, 1799-1850, in LOST ILLUSIONS.
Before going forward to discuss the reasons Akabueze’s utterances, like those of his “Fellow citizens” in government is utter hogwash, let me bring in a truth he revealed which is tucked into the half truth presented above. According to him, “The real issue is that in 2017, for instance, our debt service to revenue ration crossed 60 per cent.” Permit me to interpret for those who might not understand what the Director has just told us. What he said means that out of every 100 naira the Federal Government, FG, collected in 2017, N60 Naira was used to service debt.
Given the fact that our debt stock has foreign and domestic components, it is obvious that a high percentage of our revenue is going to foreigners. There is very little left for “My Fellow Citizens” – for roads, education, water provisions, security etc – after paying salaries to public servants. Akabueze did not state it, but let us help him out. Out of capital expenditure budget of over N2trn in 2016, the FG had released only N770bn or about 34 per cent by the last quarter of that year.
The performance for 2017 was not better. The performance for 2018 is destined to be the worst in the history of Nigeria since budgets were published. Early in October the Minister of Finance announced that only N469bn for capital appropriation was made available to all Ministries and government agencies. That is about 19 per cent of budgeted capital funds made available with two months left to go. Meanwhile, revenue collection for 2018 is again well below the budget as it was in 2016 and 2017. Despite that, the FG wants to borrow more money. That is where the falsehood of Akabueze’s assertions becomes apparent.
As a banker Akabueze knows that ability or inability of a borrower to repay loans is a function of two major factors – the quantum of loan and the borrower’s ability to repay based on revenue generated. They are two sides of the same coin. Under Buhari Nigeria has devoted an increasing percentage of its revenue to debt servicing.
This has been so because, as he admitted, our revenue collection is low. How on earth does he expect ability to repay to improve when we take on more debt than income likely to be generated? It is simply absurd to say we don’t have a debt problem but we don’t have money to pay the loans and provide social services. As things stand, the Buhari administration has turned My Fellow citizens into 198 million slaves of the lenders. They get paid; we get nothing. Simple.
“Those who do not remember the past are condemned to repeat it.”George Santayana, 1863-1952.
Akabueze, like others in this government, might want to continue to quibble with semantics all they want, but there is a critical point at which the mismatch between debt service and revenue generation will create a major debt crisis. We reached that point in the middle 1980s and the Babangida regime had to appoint a Minister, Alhaji Abubakar Alhaji (triple A) to negotiate for our loans to be rescheduled. Capital repayment was moved forward and interest was capitalised again. That was how we entered the debt trap of the 1980s from which Okonjo-Iweala delivered us at great price. Akabueze and co should not lead us to another one with their balderdash issued as official statement.