October 30, 2019 0 Comments

By Emmanuel Onwubiko

Hassan Tunde Onwuegbu was just a little less than ten years when we all enrolled into a public secondary school in Kafanchan, deep in the south of Kaduna state just as his middle aged father was a junior staff of the then near -moribund Nigerian Railways.

Yours faithfully and Hassan had much more than just been school mates as our areas of similarities because Hassan’s family happened to be the longest staying tenant in my father’s modest housing asset in that diminutive and rusty Kafanchan town which then served as the regional headquarters of the Nigerian Railways.

Although Hassan and myself were best of friends, his dad’s penchant for not meeting up with the rent obligations to my dad became a source of intermittent dramas in the house.

Hassan’s dad found a perfect strategy of dodging any physical meeting with my dad so as to beat back any opportunity to remind him to do the needful in the area of paying his long overdue rents to my father.

 Aside my father, Hassan’s Dad became a chronic debtor to one other neighbor who sells food items because Hassan’s dad will always buy on credit promising to pay at the end of the month but predictably, he would be in no position to pay since the Nigerian government had become adept at owing public workers for as long as a year without payment of salaries.

His status as someone who practically owes everyone in the street nearly pushed Hassan’s dad into committing suicide but for the swift intervention of the kind hearted creditors such as my dad who decided to exercise immense patience with him just as Hassan was almost treated like my twin brother in such a way that we practically got fed together always by my mother- Mrs Gladys AdaUdensi.

Years after, Hassan is now a big man engineering expert in one of the federal universities but he constantly calls me to extend his appreciation for the generosity of my parents towards his family.

Such is the ordeal of a chronic debtor even at the level of an individual. How much worst will this be if a country is classified as such?

To be rated in the world as one of the most heavily indebted nations in addition to being a member of the less fancied third world categorization, is not the kind of status symbol that a sane person would like to see his own country being identified with.

This feeling was what gave a lot of public support to the then chief Olusegun Obasanjo’s led government when through the expertise of the then Finance minister – Mrs. Ngozi Okonjo-Iweala, Nigeria’s debt profile of over $25 billion USD to Paris Club and London Club of creditors was cleared on generous discounts and terms.

Sadly, just like sweet bad habit of yore, some few years down the line, the current federal government of Muhammadu Buhari has led Nigeria right back into the infamous club of heavily indebted nations and the bulk of the loans collected have always ended up in the pockets of politicians and corrupt bureaucrats in the federal government even as the state of federal or public infrastructure has continued to nose-dive and several parts of Nigeria currently looks like villages of the sixteenth century primitive era.

The costs of governance has also continued to balloon out of control just as the regimes of taxation by the current government on Nigerians coupled with lack of employment opportunities for youngsters have posed much more than grave existential threat.

Poverty, high crime rate, high taxation and public institutional corruption are some of the afflictions stifling the advancement of the living standards of millions of Nigerians to a dangerous extent that even the minister of humanitarian affairs Hajia Umar Farouk few hours back admitted that Nigeria now has 90 million absolutely poor citizens. However, even amidst these poverty indices, SENATORS who are less than 80 in number have appropriated N5 billion of the National wealth to buy up expensive SUVS for themselves even as the Central government keep borrowing from all sorts of places. 

The debt office reports on Nigeria’s debt every three months. Its website shows that at the end of March 2015 – two months before Buhari took office on 29 May – the country owed a total of N12 trillion, says a research based organization.

At the end of June 2015, this debt had risen slightly to N12.1 trillion. This was US$63.8 billion at the official exchange rate of the time, N196.95 to the dollar.

By the end of June 2018, total public debt had almost doubled to N22.4 trillion. The debt office said the latest increase comprised of a US$2.5 billion Eurobond issued by the government in February 2018. (Note: A Eurobond is a loan given out in a currency that is different to the currency of the country where it is issued.)

This took Nigeria’s total debt to US$73.2 billion, using the Central Bank of Nigeria’s 2018 exchange rate of N305 to the dollar.

What is the government borrowing for? The debt management office justified the borrowings in its 2017 report on Nigeria’s national debt.

“While Nigeria’s total public debt stock is relatively low vis-à-vis the country’s GDP, the increased funding requirements needed to sustain the economic recovery, address the huge infrastructural deficit, as well as meet budget financing requirements, would entail enormous funding resources, including borrowing,” it said.

Prof Olufemi Saibu interviewed by the researchers is of the economics department at the University of Lagos focuses on development macroeconomics and public finance. He told Africa Check the debt might be worrying, but would be justified if it were used for development projects and not just for regular spending on, for example, salaries and overheads.

“The debt profile is high but it’s not in the red lines yet,” Saibu said. “The problem is that the debt cannot continue to increase; there must be a check on it. And the question is, what are they using the debt for? The quality of projects, productivity and impact of the projects are what matters.”

Peter Obi, the People’s Democratic Party candidate for vice president in the recently held Presidential poll, accused President Muhammadu Buhari’s government of borrowing too much, with little to show for it.

“This present regime has plunged us into a deeper debt profile to the tune of $80 billion, an indication that the nation is collapsing,” Vanguard newspaper quoted him as saying on 24 October 2018.

Does Nigeria’s government owe even more? While Obi’s claim is largely true, the real picture of Nigeria’s debt is larger than what’s reported by the debt office, according to Atiku Samuel. He is the head of research at BudgiT, a civil society organization that works to make public spending transparent and accountable.

“What you see at the Debt Management Office is just a fraction of Nigeria’s debt,” he said. “There are special accounts that are dedicated by law, but unfortunately the federal government has been taking funds from [them] to meet its budgetary obligations.”

Samuel said the government had been drawing from “funds like the ecological fund, even borrowing from the excess crude account. Another big component is debt to contractors and the overdrafts it takes from the Central Bank – which is now about N4 trillion – and there are also judgment debts.” Government has drawn a lot of cash from the Pensions savings.

These would add to the debt “if you look at debt from the globally accepted definition, as these are still obligations to the government”, says the researchers.

In conclusion experts said thus: Nigeria’s debt rose from N12.1 trillion ($63.8 billion) in 2015 to N22.4 trillion ($73.2 billion) in 2018

Pathetically this government continues to borrow under the guise that it is part of efforts to grow Nigeria’s Information and Communication Technology sector, in which case the Export-Import Bank of China will provide a loan of $328 million to support the country.

A statement by Garba Shehu, Senior Special Assistant on Media and Publicity to the President, revealed.

According to the statement, President Muhammadu Buhari and Chinese President Xi Jinping will sign the agreement during the former’s current visit to the country.

The agreement will be between Galaxy Backbone Ltd., a Nigerian company and Huawei Technologies of China.

The statement read in part: “During the 6-day official visit of the Nigerian President, he is expected to join his Chinese counterpart, Xi Jinping to witness the signing of an agreement on the National Information and Communication Technology Infrastructure Backbone Phase 11 (NICTIB 11) between Galaxy Backbone Limited and Huawei Technologies Limited (HUAWEI) at the cost of US $328 million facility provided by the Chinese EXIM Bank.

“The bank facility is for the development of NICTIB 11 project which is consistent with the current administration’s commitment to incorporating the development of ICT into national strategic planning under the National Economic Recovery and Growth Plan (ERGP). The borrowing has become unlimited of recent with the World Bank adding to the profile of Nigeria as a heavily indebted nation with a whopping $3 billion loan.

Finance officials of President Muhammadu Buhari argues that the $3 billion that we are trying to raise from the World Bank is for financing the power sector.

This financing they stated will include right now, the gap between what is provided for in the current tariff and the cost of the businesses themselves so there is a tariff shortfall but it would also enhance our ability to pay the previous obligations that have crystalized that we have not yet been able to pay.

Some portion of it says government will be for the transmission network and if we are able to expand the facility to $4 billion, the additional $1 billion is for the distribution network.

“It will help us to exit the subsidy that is now inherent in the power sector. It is supposed to be to reform the sector, to restore the distribution business side of the sector especially on a stronger footing so that they are freed up enough to go out and raise financing to invest in expanding the distribution network.”

Therein lies the beginning of more poverty inducing problems for millions of Nigerians with the expected hike in tariffs for electricity. Already there are all kinds of tax regimes in the telecommunications and in the value added tax system hobbling Nigerians. This spiraling inequality in Nigeria perfectly makes the Country a broken ladder similar to what the current version of The Economist wrote on inequality in the USA.

The Economist says: “Part of the problem is that American policy has exacerbated the effect of economic pressures. In their new book, “The Triumph of Injustice”, Emmanuel Saez and Gabriel Zucman pin the blame for rising inequality squarely on the American tax system.”

The authors – both economists at the University of California, Berkeley – argue that taxation in America has become less progressive over the past four decades.

In the 1970s they observed that the rich paid twice as much in tax, as a share of their income, as the working poor (taking into account all taxes, including those at the state and local level).

After President Donald Trump’s tax reform in 2018, by contrast, the very rich paid a smaller share than many Americans in the bottom half of the income distribution.

The 400 richest Americans paid an average tax rate of about 23% of income in 2018, according to the authors’ estimates. Low income Americans paid roughly 25%, the authors say, although this excludes transfer payments made to the very poorest households: a misleading omission, some critics reckon. Personal taxation is only part of the story, as authors curiosity allow. Even so, the decline in the tax burden on the very rich, at a time of extraordinary growth in their incomes, is startling.”

 This analysis poses a question: why has American tax reform been so heedless of inequality? Messrs Saez and Zucman suggest a rationale. Economic injustice (as they see it) is a result of a simple cycle. The rich try to avoid tax, then win concessions from politicians who argue that attempts to get more from the wealthy are doomed…”

Nigeria needs to redress the high levels of income inequality and the high unemployment rate to check the declining standards of living and bridge the gap between the haves and the haves-not. Time is running out and from empirical evidence it doesn’t show that President Muhammadu Buhari has the political will and the will power to dismantle this harsh regime of inequality and disparity. The Nation is increasingly deteriorating into anarchy and doom.  Who bails the cat? The billion dollar question.

*Emmanuel Onwubiko heads HUMAN RIGHTS WRITERS ASSOCIATION OF NIGERIA (HURIWA) and blogs @www.emmanuelonwubiko.comwww.huriwa.blogspot.com,www.thenigerianinsidernews.com.

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