By Dele Sobowale
WE must, therefore, not shrink from accusing our friends or praising our enemies, nor need we be afraid of praising or blaming the same people at different times since it is impossible that men who are engaged in public affairs should always be right and unlikely that they should always be in the wrong. We must, therefore, detach ourselves from the actors in our story and apply to them only such statements and judgments as their conduct deserves – Polybius, 200-118 BC.
POLYBIUS one of the earliest of the great historian/philosophers, had contributed a great deal to my approach to commentary on public issues. I read one of his books in 1967 and extracted this gem which is helping me to write this column. Today, I have come to praise the Buhari administration and the Asset Management Company of Nigeria, AMCON – not to slam them for at least taking the first tentative step towards retrieving Nigeria’s money stuck in a few private pockets. The acts of these few had forced Nigeria to go more heavily into unsustainable debt.
Borrow and spend replaces tax-collect-spend as policy
Every government invariably exhibits its own tendencies with regard to funding budgets. Governments like Gowon’s or Muhammed’s which were swamped with petro-dollars in the 1970s could be forgiven for taking the attitude that “money is not our problem but how to spend it.”
It was foolish then, but the blunder was not so apparent and the consequences were faced by their successors — including Buhari in 1984-85.
The Buhari administration has borrowed more funds in four years than its two predecessors put together despite the nation’s glaring declining capacity to repay the loans taken with such seeming reckless abandon. Bankers know; and ministers or special advisers should realise and advice Presidents, who might not know, that capacity to service loans is the cardinal basis for acquiring loans and that no entity in the economic system – individual, corporate or government, can borrow indefinitely. If that is possible nobody who has a bank account should run out of money.
FG’s case was complicated by the fact that the nation went cap in hand at the same time that a few companies, controlled by just as few individuals, owed the nation more than we were forced to borrow in the last two years. No determined effort was made to retrieve what was outstanding in the nation’s favour mostly because it was more difficult to confront recalcitrant and deliberate deadbeats than to walk into Zenith or First or UBA or Unity Bank and borrow at high interest rate.
Government was taking the easy way out all the time to our collective detriment. It was never a sustainable strategy or policy for funding the economy. Government has to find other ways.
The wide and easy road, the narrow and difficult way
This government, like all the others before it, has been more myopic than wise in managing the funding of the economy. Like virtually all its predecessors, it panders to the whims of its often puerile “masses” led by selfish but comfortable individuals who make loud proclamations about voice of God, as if they hold conversations with the Almighty. They probably have never heard the admonition by Alcuin, 735-804 AD, that: “Nor should we listen to those who say ‘the voice of the people is the voice of God, for the turbulence of the mob is always close to insanity”.
In economics, the “voice” of the people is always certain to be absolute madness. No masses or union discovered the principle of comparative advantage and none of them have probably taken a course in public finance. Federal Government listening to the mob is abdicating its responsibilities. That is why they expect governments to borrow to pay salaries instead of raising VAT.
When the global banking crisis occurred, Nigeria’s Central Bank, CBN, at first, boasted that Nigeria was insulated from any contagion. No preventive measures were taken to ensure that indeed there would be no cross-border contamination until when Nigeria’s banks were infected. Like every country, Nigeria established the Assets Management Corporation of Nigeria to absorb the toxic loans which careless and fraudulent bank directors have accumulated. But, unlike Nigeria, every other country ensured that the laws establishing the rescue company protected it from lengthy litigation by debtors and no really bad debtor was ever allowed back into the financial system who had not demonstrated willingness to repay the toxic loans.
The first thing we do; let’s kill all the lawyers —William Shakespeare, 1564-1616.
Shakespeare might have a point, given the miseries 190 million fellow Nigerians suffer on account of the defective law establishing AMCON. Trust the Nigerian factor; the law establishing AMCON was drafted by typical selfish and unpatriotic Nigerian legal draftsmen who left a hole in the eye of the needle big enough for ten camels to race through. AMCON is tied down by learned people without integrity. To some extent, that partially exonerates AMCON and the Federal Government.
Certainly, the Buhari administration inherited a law which was obviously greatly influenced by the debtors who, ab initio, were determined not to repay a kobo of what they owed. By and large, they have succeeded brilliantly. Nigerian courts are inundated with cases involving AMCON — generally AMCON attempting to take over assets and incorrigible debtors resisting. The ubiquitous Nigerian SANs are smiling all the way to the bank; so are court officials who grant unending adjournments. Nigerians suffer on account of the collusion of a few.
Until recently, even the names of the individuals or companies holding us to ransom could not be released. That was how bad the conspiracy against the people was. Then, just last week, a few names inexplicably appeared in the papers. Was that an accident? Or are we now getting to unmask the individuals behind the masquerades? I sincerely hope the change is positive and permanent.
Two other reports give cause for expecting positive change. First, a Federal High Court finally gave order for AMCON to take over a firm for N3.6bn debt. That is small change out of N5tn; but, even a plane that will eventually cruise at 800kph starts at less than 10 kph. But, reading the story further revealed another one of Nigeria’s dark secrets.
The company reportedly is owned by a foreigner and a Nigerian. Most probably, the former holds the majority of the shares and the Nigerian just enough to serve as a front. Again, it is likely that the foreigner brought in very little capital but had borrowed from Nigerian banks and taken out several times his original investment.
AMCON is probably taking over a worthless set of assets which can never repay the loan if eventually sold. It is unlikely that the Chinese authorities will allow a Nigerian, using a Chinese (that is if our brother can find one) as front to get away with that. Most definitely, the Nigerian partner and Nigeria as a whole got very little out of it. Most likely it was a raid on our financial sector.
CBN orders banks to obtain customers’ credit history — News Report
Second, it is absolutely incredible that it has taken until August 2019 for Nigerian banks to be ordered to do something banks all over the world have been doing before World War II in the last century. Still, it is better late than never. Nigerian banks are in for a shock.
e, detach ourselves from the actors in our story and apply to them only such statements and judgments as their conduct deserves – Polybius, 200-118 BC.