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In a cynical, almost contemptuous manner, the Senate on Tuesday threw out President Muhammadu Buhari’s letter
seeking approval for an external borrowing plan of $29.96 billion to execute
key infrastructural projects within the next two years. But it was done only
on technical grounds. And to the extent that this is just the end of the
introductory chapter rather than the close of the book, I will admonish the
National Assembly members to be circumspect in critically examining this
particular request that could, in the long run, put the nation in another
bind.
In 2005, Nigeria successfully negotiated a complicated debt
write-off deal of about $18 billion after a cash payment of approximately $12
billion to free the nation from the Paris Club debts of over $30 billion,
most of which were accumulated interests and charges. A huge chunk of the loans
was secured in the 1980s to fund what turned out to be white elephant
projects. And with about $3 billion dollars spent annually just on debt
servicing as at the time the write-off was concluded, the argument to exit
the Paris Club by the Olusegun Obasanjo presidency was indeed very sound.
As one of the people who supported the debt write-off deal
just 11 years ago, that we are engrossed in another national debate on the
appropriateness of treading the same path raises serious questions about
whether we ever learn any lessons from our national experience. It is even
more worrying that this idea to borrow is coming at a period our capacity to
meet repayment obligations is dwindling, given the crisis in the Niger Delta.
Before going further, it is important to underscore the fact
that in an economy in recession, there is need for some fiscal package to
help stimulate consumption and production, create jobs and generally engender
economic growth. But two critical questions beg for answers. One, assuming,
without conceding, that there are compelling needs for some external
borrowing, is it not important to first close all loopholes and drainpipes in
the system; drastically restructure and rationalise government agencies and
reduce the huge overhead cost that consumes a large chunk of annual budgets
at all levels? Two, does the Buhari administration have on its side skilled
officials who can negotiate the fine lines of the ‘conditionalities’ for the
borrowing plan, as being proposed?
If we ignore all these and borrow, such funds may never be
channeled into those projects highlighted by the administration and the
nation would be left with nothing but huge debts to service, at very high
costs. Yes, we have been told by IMF that it is possible to get interest free
loans from the international debt market but we all know that there is no
free lunch anywhere, not even in Freetown.
So, it makes more sense to see the
fine prints of these deals before our nation is committed, especially now
that some of our lawmakers would also want a piece of the action for their
“constituency projects”—another euphemism for sharing public money.
meeting with the leadership of the senate who visited her
office last week, Finance Minister, Mrs Kemi Adeosun painted a pathetic
picture of our national economy.
“By the time we pay salaries, pay debt,
nothing is left. So, for these next few years, I think we have to take a
gamble as a nation. We must take a gamble that ‘look, if we fix our roads,
fix our power, can we generate more than that additional cost?’ I think we
can, from what I see of a country, I think we can”, she said.
However, while I have no problem with such ‘gambling’ in
national economic management, I still believe the administration is not
without options. For instance, the Minister of State for Petroleum Resources,
Dr. Ibe Kachikwu also said recently that the federal government was set to
sign a cash-raising oil deal with India for $15 billion. “Nigeria has a bit
of a cash flow problem right now. Our reserves are not as strong as we want
them” said Kachikwu who argued that because the value of the national
currency is on a freefall, “what we are trying to do is to leverage on the
assets we have to receive immediate cash.”
This option is particularly plausible because, even if we borrow,
our only way of paying back is with our oil assets. President Buhari himself
admitted as much last week. “The petroleum industry remains critical to the
Nigerian economy of today and the future, despite our current challenges. The
golden era of high oil prices may not be here now, but oil and gas resources
still remain the most immediate and practical keys out of our present
economic crisis”, said the president at the public presentation of a roadmap
on short and medium term priorities to grow Nigeria’s oil and gas industry
from 2015 to 2019.
Unfortunately, the United States Energy Information
Administration, (EIA) recently projected a negative downturn for the
country’s crude oil production because of the militancy in the Niger Delta.
In confirming the prediction, Kachikwu noted that between January and June
2016, over 1,600 incidents of vandalism were recorded. He explained that
compared to the 2.2mbpd targeted in the 2016 budget, the country currently
produces 1.56mbpd showing a shortfall of about 640,000 bpd, which translates
to 29.1 per cent loss.
To underscore the gravity of the situation, the NNPC Group
Managing Director, Dr Maikanti Baru, also said last Friday: “Over 7000kpd of
crude oil has been lost due to vandalism this year. A bulk of the loss is
from JV assets. This implies that 60 per cent of oil production lost is
NNPC-FGN equity. At an estimated price of 45 dollars per barrel, the total
2016 revenue loss to the Federation Account translates to about 7 billion
dollars. This loss is equivalent to a new 7,000mw power plant; new 350kpd
refinery; over 30 per cent of National budget; and a new 1,700 kilometre
pipeline.”
Therefore, it is difficult to fault the president that the
only way forward is to grow the oil economy. But for that to happen, he has
to resolve the Niger Delta problem which remains a low-hanging fruit his
administration has been unwilling, until now, to pluck. Yet, as it has become
very evident, force cannot resolve the issue. It would take deft political
management, as was demonstrated by the late President Umaru Musa Yar’Adua. It
may be coming late in the day but it is good that the president has finally
realised that constructive engagement still remains the most practical and
cost-effective method of dealing with the Niger Delta problem. But then there
are immediate challenges and that brings us back to the issue of the proposed
loans.
I have been told by those who should know that embedded in the
N6.08 trillion 2016 budget is a deficit financing of N2.2trillion out of
which N900billion was to come from the international debt market while
N984billion would be raised from the domestic market, totaling N1.84trillion.
Strictly speaking, therefore, the approval the President is seeking for about
$30billion may actually be academic, though transparency requires that the
terms of the borrowing be spelt out so that Nigerians can understand the full
implications of what the administration is doing.
That is where the problem begins. It beggars belief that an
administration that plans to borrow and spend $30 billion within a period of
two years is now just going to put some documents together. “One of the
technical things missing is that, the letter (from President Buhari) says.
‘attached is a draft’ but there was no attachment…there was no detail of the
borrowing plan,” said Senate Leader, Ali Ndume.
Yet, if there was any notion that the lack of attaching the
draft could be an oversight, it was immediately dispelled by the Presidential
Liaison Officer to the National Assembly, Senator Ita Enang. “There are
certain information and details which will enable them to consider in detail,
and appropriately the request of Mr. President. So we are collating that
information. The Budget Office of the Federation, the Debt Management Office,
the Minister of Budget and National Planning, Minister of Finance and the
economic team are collating the information so that it can be submitted to
the Senate to enable them take the appropriate decision.”
The implication of that statement is that it is just now that
the information on loans deals worth a whopping $29.96 billion expected to be
spent within the next two years would be collated! Yet, the Debt Management
Office (DMO) Director General, Dr. Abraham Nwankwo is all over the place,
defending what he probably has little or no idea about. Besides, how can the
DMO approbate and reprobate at the same time?
According to the 2016 Report of the annual Debt Sustainability
Analysis (DSA) of the same DMO published last week on its website, “the debt
portfolio (of Nigeria) still remains highly vulnerable to persistent shocks
in revenue, indicating a potential challenge in maintaining debt
sustainability”. The report puts Nigeria’s outstanding debt portfolio as at
December, 2015 at about US$65.43 billion compared to US$67.73 in 2014, thus
representing an increase of 12 percent. And these did not include the figures
for the 36 states that were not ready as at the time of compiling the report.
From my reading of the situation, this money, if secured, may
buy the nation two to three years of some feel-good situation but then, what
follows will be the problem of how to pay back. This becomes even more
challenging against the background that most of the projects listed for
funding under the proposal are neither regenerative nor capable of bringing
enough returns on the investments.
Indeed, to the extent that the entire loan
package is more than the total external reserve of Nigeria, it looks as if
the federal government is just desperate to buy itself some reprieve from an
increasingly hungry (and angry) populace. Yet, the reality remains that a
government that will enter a lame duck stage in another year or so has no
business contracting a debt of such magnitude.
But then, as one respected banker is wont to surmise on such
perplexing issues, what do I know?
Politics in the Age of Trump
I arrived here in Cambridge, Massachusetts on
Tuesday for the second “Fellows Alumni Reunion Conference” of the
Harvard University Weatherhead Centre for International Affairs with the
theme, “Confronting New Realities in an Uncertain World”. With experts drawn
from within Harvard and around the world, we will spend the next three days
engaging such issues as Europe After Brexit; The Middle East in the Aftermath
of the Arab Spring; Is Globalization at Risk?; Africa in 2016: Challenges and
Opportunities; China in the World; Religion and Politics; Latin America at a
Crossroads; Trade in the Current Election; Human Rights and International
Politics; Putin’s Russia; The ‘War on Terror’: Responding to ISIS and Other
Global Threats as well as Broadening Social Inclusion and Resilience in
Successful Societies. However, as interesting as those issues are, I am
almost certain that the dominant topic would be the United States
presidential election coming up next Tuesday.
It is interesting that when the first reunion conference was
held in April 2013, it was dominated by discussions over the terror attack at
the Boston Marathon which prompted a lockdown of several towns within
Massachusetts on the second day of the event, as we were all marooned at our
hotels and places of abode. With our session this year coming less than a
week to the American presidential election, the dominant issue will most
likely be Mr. Donald Trump and what he brings to both the American and
international politics.
Whatever happens on Tuesday night, as
far as this election cycle is concerned, the Republican contender is already
the star of the show and the impact of what he has done in this year-long
campaigns will reverberate across the world for many years to come. Trump has
practically legitimised so many things that were hitherto considered anathema
for those seeking political office. He has advertised nothing but vulgarity
about women and his wealth. He has promoted hate speech, bigotry and name
calling, not only of his opponents but even of the physically challenged. He
has offered empty platitudes in place of programmes. And he has publicly
boasted that he could even commit murder in broad daylight and such egregious
act would not affect his rating at the polls. The sad reality is that, in a
way, it is true!
Following his victory at the Republican Nomination earlier in
the year, Jonathan Freeland wrote a brilliant piece for ‘The Guardian’ of UK
titled, “Welcome to the age of Trump” where he argued, and I agree completely
with him, that whether he wins or loses, the rise of Trump reveals a growing
attraction to political demagogues across the world and points to a wider
crisis of democracy. “…this fury is not confined to the US. There are
versions of it surging across the world, hot with wrath at the status quo. In
almost every case, those voicing it claim to be speaking for the people and
for true democracy. But in their most extreme forms they threaten to shade
into something darker: a revolt against the norms, the agreed boundaries that
make democracy possible”, wrote Freeland.
Even if Mrs Hillary Clinton—another unpopular contender whose
main support base is being driven more by opposition to Trump than enthusiasm
for her—eventually wins, the damage done to the image of America in this
election cycle will take many years to repair. Now, the world knows elections
can be “rigged” in the United States not only by the media and vested
external interests but also by such institutions as the Federal Bureau of
Investigation (FBI). The greater damage is that Trump has given ammunitions
to autocrats across the world whose creed has always been that in seeking and
retaining power, only the end should justify the means. It should also worry
us in Nigeria.
On one of those online political forums that I belong, a
respected former senator wrote last weekend: “With what the American EFCC
(aka FBI) has done to Mrs Clinton, it is now clear that politics is the same
everywhere and we are not doing anything wrong in Nigeria.” If we want to
stretch that further, the argument would be that “with what Trump is doing in
America, it is clear that politicians are the same all over the world so
Nigeria is no exception to excesses.” In aspiring for leadership, Trump is
now the new normal!
For sure, a serious interrogation of the leaders on our
continent will reveal that many of them have sought and retained power using
the Trump template. It requires no rigour since in any political arrangement,
there are always constituencies that feel alienated by “others” which they
usually blame for their woes. The difference between “Them” and that “Others”
could be in the colour of skin, the religion they practice, cultural
affiliations or social status. Politicians like Trump, who populate Africa,
have no qualms verbalizing the anger, hate and resentment of those groups to
advance their own careers while dividing the people along dangerous
fault-lines.
In rallying such base, people like Trump know the buzz words.
He will send the immigrants away. He will take America from “Third World”
back to First World. When he becomes president, shop workers will go back to
saying “Merry Christmas” rather than “Happy Holidays”. Here, I must state
that as a Christian, I also feel irritated when I hear Happy Holiday rather
than Merry Christmas but does that now make Trump the champion of the faith
in our Lord Jesus Christ? Does he even understand the essence of that faith?
I am not to judge but if his comportments are anything to go
by, Trump cannot be a Christian—at least not by his works. Or for that
matter, his words!
In his new book, “What is Populism?”, Jan-Werner Müller, a professor of politics at Princeton University and a Fellow at the Institute of Human Sciences in Vienna, interrogated the rise of Trump and others like him who use “We versus Them” rhetoric to mobilize support. And it is worrying that such extremists are moving from the fringes to becoming the dominant force in many countries.
Earlier in the year, the far-right Alternative für Deutschland
posted a shocking result at the German regional election. In France, the
Front National has in recent years been steadily gaining grounds. In Austria,
the far-right Freedom Party (FPO) is on the ascendancy, securing 18 seats,
second only to the ruling regional conservatives at the last election. Last
year also, the far-right Danish People’s Party (DF) finished second at the
general election after winning 37 seats in the country’s 179-seat parliament.
In the course of the campaigns, its leader, Pia Kjærsgaard said most
remarkably that she did “not want Denmark as a multiethnic, multicultural
society”.
Following the Brexit vote in May, I had written about how the
British referendum could embolden right wing politicians who are spreading
hate and intolerance around the world. “Indeed, the result may echo
significantly in the United States where Mr. Donald Trump, the erratic
Republican candidate for the November presidential election, was one of the
first to congratulate Britain for ‘taking back their country’, in apparent
reference to the anti-immigration sentiment that fuelled the Leave campaign
and is driving his own aspiration for the Oval Office,” I wrote then.
Now, the world has only six days to find out. But perhaps
because so much seems to be at stake in the election, not only has the
American media taken sides, political partisanship has been taken to an
unprecedented level. It’s almost like the Trump virus has infected several
newsrooms in the country. Yesterday, the New York ‘Daily News’, for a second
time in 12 days, splashed across its front page this
bold caption: “Damn Right, We’re With Her! News double down on endorsement of
Clinton for president—it’s that important”.
In the four-page editorial that follows inside, the newspaper
repeated its earlier words that Trump is a “liar, thief, bully, hypocrite,
sexual victimizer, and unhinged, self-adoring demagogue.” All those big words
to describe just one man! Yet, notwithstanding such resentment that Trump has
attracted to himself from the American establishment, he still commands a
huge following that could be a disruptive force after the election even if
he, as it looks increasingly likely, loses on Tuesday.
All said, the real challenge with the new populist movements
spreading across the world is that their leaders simply prey on the
weaknesses of the establishment to rise to power only to showcase their
essential emptiness. But it is very troubling that we are witnessing the
ascendancy of divisive demagoguery of the sort that can plunge the world into
an unintended global conflagration. It is likely to begin with divided
national societies, torn apart by the negative forces of racism, xenophobia,
bigotry and intolerance.
That then explains why the thought of a Donald Trump at the
apex of global power with access to the most awesome arsenal that humanity
has assembled dramatises this fear even further. Therefore, even as a
non-American, it is my hope and prayer that Trump loses come Tuesday.
The Verdict
By Olusegun Adeniyi, Email: olusegun.adeniyi@thisdaylive.com
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