December 15, 2019

$30BN LOAN CONTROVERSY: ‘Those encouraging more borrowing are parasitic consultants’

Buhari, NYSC, soldier couple

President Muhammadu Buhari

…Controversy persists over $30 billion loan three years after

By Henry Umoru, Assistant Political Editor

THREE years after, President Muhammadu Buhari, wrote to the Senate, again, requesting for the approval of 2016- 2018 External Borrowing to the tune of $30 billion to be spent by the Federal Government to execute key infrastructural projects across the country.

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The letter, dated November 26, 2019, was read on the floor of the Red Chamber by the President of the Senate, Senator Ahmad Lawan, during plenary.

In the letter, Buhari explained that it became imperative to re-present the request because the Eighth Senate approved only a part of the External Borrowing request forwarded to it in September 2016.

The letter read: “Pursuant to Section 21 and 27 of the Debt Management Office (Establishment) Act, I hereby request for Resolutions of the Senate to approve the Federal Government’s 2016 – 2018 External Borrowing plan, as well as relevant projects under this plan.

“Specifically, the Senate is invited to note that: While I had transmitted the 2016-2018 External Borrowing Plan to the Eighth National Assembly in September, 2016, this plan was not approved in its entirety by the Legislature. Only the Federal Government’s Emergency projects for the North-East, (Four (4) States’ projects and one (1) China Exam Bank Assisted Railway Modernisation Projects for Lagos – Ibadan Segment) were approved out of a total of thirty-nine (39) projects.

“The outstanding projects in the plan that were not approved by the Legislature are, nevertheless, critical to the delivery of the Government’s policies and programmes relating to power, mining, roads, agriculture, health, water and educational sectors.

“These outstanding projects are well advanced in terms of their preparation, consistent with the 2016 Debt Sustainability Analysis undertaken by the Debt Management Office and were approved by the Federal Executive Council in August 2016 under the 2016 – 2018 External Borrowing Plan.

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“Accordingly, I have attached, for your kind consideration, relevant information from the Honourable Minister of Finance, Budget and National Planning the specific outstanding projects under the 2016 – 2018 External Borrowing plan for which legislative approval is currently sought.

“I have also directed the Minister to make herself available to provide any additional information or clarification which you may require to facilitate prompt approval of the outstanding projects under this plan”.

If the $30 billion request is approved, Nigeria’s debt stock will move to about $97 billion (N30 trillion).

Figures from the Debt Management Office, DMO, show that the country recorded a government debt equivalent of 17.50 percent of the Nigeria’s Gross Domestic Product, GDP, in 2018. Government debt to GDP averaged 32.40percent from 1990 until 2018, 75percent in 1991 and a record low of 7.30percent in 2008.

The Eighth Senate under the leadership of Senator Bukola Saraki had, on November 1, 2016, unanimously threw out then-plan by Buhari to borrow the nearly $30 billion loan.

Then-Senate did not even discuss it as it died immediately it was mentioned as an Executive Communication by then-Senate Leader, Senator Ali Ndume.

Ndume had moved a motion that the request be considered and the motion was seconded by then-Deputy Minority Leader of the Senate, Senator Emmanuel Bwacha.

Saraki put the question forward whether or not the request should be debated.

Saraki was interrupted by Senator Dino Melaye who raised a Point of Order but Saraki insisted that the question be put forward before Melaye’s position will be accommodated.

Saraki put it to vote and the nays had it.

Then-Senate President, who was surprised and apparently out to give Buhari a soft landing on the borrowing request, decided to put it into vote the second time and senators again thundered nay.

Saraki then ruled in favour of those who voted against the loan.

Sunday Vanguard gathered that the request died on arrival on technical grounds and for two key reasons.

According to a source, the Senate decided to throw it away because, in his letter, the President wrote that he was attaching a breakdown of the $29.9 billion which he never did.

In the letter to the Senate, Buhari had said in the first paragraph, “I wish to refer to the above subject and to submit the attached draft of Federal Government 2016-2018 External Borrowing (Rolling) Plan for consideration and early approval by the National Assembly to ensure prompt implementation of the projects…”

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It was learnt that senators rejected the request because they believed that what Buhari wanted was anticipatory approval.

The last paragraph of Buhari’s letter which led to the rejection read: “…it has become inevitable to request for the National Assembly leadership approval pending the consideration and approval of the 2016-2118 Borrowing Plan by the National Assembly to enable us disburse these funds immediately.”

A source said, “The President in the letter said there was an attachment containing the breakdown of the external loan request.

“But there was no attachment. President Buhari did not attach the breakdown. There is no way we could consider such a request.

“Secondly, the President had not sent Federal Government’s 2016-2018 Borrowing Plan to the Senate. That ought to have been sent first for consideration and passage before this request.

“If we had to consider this request, how do we do that? These are the obvious reasons. There was no political undertone.”

But answering questions from journalists after plenary, then-Senate Leader, Ndume, who explained that the loan request failed due to technical fault, stressed that he was however shocked over what happened at the chamber.

He added that the Senate should have acted on the merit of the loan.

Ndume stated that loan would be re-presented and ‘vigorous marketing’ carried out.

“We must not throw the baby away with bath water. It ought to have been referred to the relevant committee”, he said.

Last week, a former Chairman, Senate Committee on Local and Foreign Debts, Senator Shehu Sani, gave insight into why the Eighth Senate rejected the loan request.

Sani said that it became imperative for the immediate past Senate to jettison the borrowing in order to save Nigeria from sinking into what he described as dark gully or perpetual debt trap.

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Nigerian Senate

The senator, who is now the Director of African Centre for Peace and Development, warned Nigeria to be cautious in the area of external borrowing, against the backdrop that loans are not charities, adding that most of those encouraging more borrowing are parasitic consultants, commission agents, rent seeking fronts and contractors.

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He said, “We turned down the FG loan request for $30 billion to save Nigeria from sinking into the dark gully of a perpetual debt trap.

“We don’t want our country to be re-colonized by creditor banks.

“Our external debt in 2015 was $10.32 billion and it escalated to $22.08 billion in the second quarter this year, which is 114 per cent.

“If we had approved that loan request, our external debt could have catapulted to over $52 billion and that is not sustainable.

“With the current escalation of borrowing, we will be walking into debt slavery and move from landlords to tenants in our country.

“They will always tell you that even America is borrowing and I don’t know how rational is it to keep on borrowing because another country is borrowing.

“If we keep listening to bankers and contractors, we will keep borrowing and burying ourselves and leave behind for our children a legacy of debt burden.

“Loans are not charities. Most of those encouraging more borrowing are parasitic consultants, commission agents, rent seeking fronts and contractors. We must be cautious.”

On the latest letter, when asked if the Senate had been given a breakdown considering the fact that the Eighth Senate rejected the same request because of the lack of detailed information, Acting Chairman of Senate Committee on Media and Public Affairs, Senator Godiya Akwashiki, simply pleaded for patience, saying the Senate will get it.

The Senate had not listed the loan request in the Order Paper as an Executive Communication apparently because of the right schedule in the passage of 2020 Appropriation   Bill which was finally passed penultimate Thursday.

The question resonates: Will the Ninth Senate dominated by the ruling APC approve the Buhari loan request especially against the backdrop of the robust relationship between the Executive and the Legislature, and will PDP senators kick?

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Or will national interest override partisan interests? We watch as events unfold.