…Says Oil revenues not enough
By Omeiza Ajayi
ELDER statesman and former Governor of Akwa Ibom State, Obong Victor Attah, has faulted the decision of the President Muhammadu Buhari administration to borrow $29.9 billion to develop infrastructure, saying the president should have embarked on restructuring the economy and the nation’s governance structure before seeking more loans.
Consequently, the former governor advised the National Assembly to shut down the loan request if its repayment plan is solely based on revenue from oil earnings.
This came as the Senior Special Assistant to the President on Media and Publicity, Malam Garba Shehu dismissed criticisms trailing government’s bid to access the loan, saying in percentage terms, Nigeria’s debt-GDP ratio is one of the lowest in the African continent.
Shehu spoke at a media interface in Abuja over the weekend.
According to Shehu, “experts have said repeatedly that when you use what is commonly used to adjudge a country whether they have under borrowed or over borrowed, you talk about the debt-GDP ratio. Nigeria’s debt-GDP ratio is low even among African countries. At about 20 percent, it is not a threat. Countries that are advanced, go and google Japan’s GDP-Debt ratio it is more than 100 percent. So, it is not a scandal to borrow.
The bad thing about borrowing is when you deploy money to your pocket. This has happened in the past in this country. President Buhari is borrowing to do railways, East-West Expressway, second Niger Bridge, Mambilla Power, Abuja-Kano Expressway, and Ajaokuta-Abuja-Kaduna-Kano Gas pipeline. These are projects that are beneficial to the economy. These are projects that without them, this country cannot achieve development.
“So, if you ask me, I will say from my understanding, the problem we have in the country is a revenue issue. We have a revenue problem because we are unable to generate as much as is needed to do more capital infrastructure and also service debts.
Because of the low revenue earning, people look at the size of our debts and scream but Government is doing something about this. Look at what happened at the FIRS. Give them a chance and let us see how they will perform. Government is optimistic that things will look upwards and revenue will improve. And once there is an inflow that is sufficient to do a lot of these things, we may not even need to borrow”, he added.
However, in an interview with Vanguard, Obong Attah who has written extensively on the subject of true federalism, said if the repayment plan of the federal government is to use crude oil earnings to offset the loan, then the country might never come out of the debt trap.
While urging the government to take concrete steps to diversify the economy, the former governor reiterated the position of the Buhari administration that oil is not enough to develop the country.
He said: “On this loan issue, there are two things. First of all, on December 18, you heard the president saying that the revenue from oil can no longer develop Nigeria and then that the Senate was considering whether or not to approve the loan request. How can anybody just be realizing that oil can no longer develop Nigeria? Was oil alone ever able to develop Nigeria? This mono-product economy cannot encourage development. You depend on one product to develop the country? It is not possible. We are just burying our heads in the sands.
Everybody is talking about diversification but nobody is taking any positive action on diversification. So, how can we possibly grow when we do not diversify? The only way to diversify is to change the structure of governance, which is what we are talking about, restructuring. Change the nature of the government; don’t do this unitary thing where you collect all the money. So long as you are collecting all these money and distributing, every month everyone goes to collect what they feel is due to his state. For the states to survive, they must diversify and develop other minerals that have never been touched, take to agriculture, revamp manufacturing, tourism and so many areas that we can make money.
I cannot see the logic of anybody saying, ‘what I have now is not enough for development, so let me go and borrow more money to develop myself’. With what will you pay back the loan? Is it the same oil money that is not adequate to develop that you will use in paying back without creating a base for increasing and going beyond that oil money?
We should start with what we should start with, that is complete diversification which can only come with proper restructuring of the economy and the governance structure of the country. Unless we start with that, if you go and borrow this money and think that it is with oil money alone that we will repay the loan, then we are finished, we can never recover. So, we really have to look at this whole thing about diversification which can only come with restructuring which the president himself called a new birth.
And I cannot understand why a party which has restructuring in its manifesto and set up a committee under Nasir el-Rufai that recommended a new system cannot begin to implement same. Take the first step towards this thing before you go and take a loan. If I take a loan to expand my business and my source of income is from various sources, it can make sense. But to say we are depending on one source, oil money, it is not enough to go and take a loan. It is complete madness in my opinion except we create a wider base for the economy of this country before we can talk about that kind of thing.
“And then, the infrastructure, what move are we making to develop infrastructure? It has happened in this country before. Look at the Lekki Highway, Public-Private-Partnership PPP. Somebody built it and collected his money from government. So, we just have to sit down and think creatively. But you see, you have to be credible. Nobody will come and do business with Nigeria if they know that tomorrow the policy will change.
We have so many policy flip-flops and change of direction all the time. If we can just concentrate on something, people will come here and build infrastructure for us. Then, even in a small village you have federal roads. You shouldn’t have centralized roads. Because a minister comes from a certain place, then every road there must be federal? There must be a rationalization, and I have written a paper on this. Rationalize and let us see what truly should be a federal road. You can build major highways with six lanes through out the country and then let the states connect to that. Rationalization and then PPP, many examples of which we have in this country, those are the only things we need to do, not to go and borrow when we do not have any other source of income than this oil which really you have admitted is not sufficient to develop us.
“The National Assembly should work with the President and the manifesto of the party in power today and work to diversify the economy first. As long as there are other sources of income in Nigeria. And that can only come by taking the honest, bold decision to restructure this country (let me use that word because people pretend not to know the meaning). Let us go back to true federalism. It is good that we have found oil in the North, but that is not the issue. Since everybody now has oil, no one will say calling for restructuring is a plot to starve the North. Oil is not the solution to our problems. The solution is to allow this country to develop along the lines of federalism, which is what we always were from the beginning.
“I am saying the National Assembly should not approve the request, if the intention is that it is this oil money alone, which is not considered sufficient to develop us now, is what they intend to use to pay back the loan. You will never be able to pay back”, he added.