Nigeria now owes local and international creditors a whopping N24.38 trillion (almost $80 billion). The figures released by the Debt Management Office (DMO) recently show that every state in the country is heavily indebted too: the states owe a total of N5.5 trillion.
Once more, Nigeria is back in a debt trap. The nation that achieved “debt forgiveness” after paying $18 billion to the Paris Club of creditors in 2005 now owes much more than it has ever owed in history.
The federal government led by Muhammadu Buhari should be ready to take the blame for this return to “a beggar and debtor nation”, to borrow the phrase used by Gen. Sani Abacha in the coup broadcast of December 31, 1983. It is ironical that it was that coup that brought Buhari to power as head of state of Nigeria after the overthrow of a democratic regime led by Shehu Shagari.
When Buhari took over in 2015, the country’s debt profile was not as bad as it has become. It has now doubled! In just three years, Buhari has moved Nigeria’s debt from barely N12 trillion to N24.38 trillion.
And everyone asks: what has the money borrowed been used for? Is it to build monorails when the world is talking about speed trains? Is it for payment of a phantom “fuel subsidy”, which Buhari promised to end four years ago? Or is it to fund “medical tourism”? Or is it for payment of salaries and allowances to ghost workers? No, payment of the N30, 000 minimum wage has not even begun.
We cannot have a huge fiscal deficit and yet nobody is producing anything for export. This administration is doing nothing to encourage local production and exportation. Oil price is rising again, but how much can Nigeria get from this cash cow to pay its big debts and still get by? Many states owe more than N100 billion in domestic and foreign debts; a state that owes N100 billion, even if it is an oil-producing state that gets a relatively huge allocation, is on the road to bankruptcy already.
Domestic debts should be paid before foreign ones. Only when contractors and banks are paid would they be able to pump money into the economy. When they are not paid, they retrench workers. And everyone loses. Without purchasing power, Nigerians won’t buy goods sold in markets and can’t pay school fees. Stock prices will continue to fall.
He who goes a-borrowing goes a-sorrowing, as the saying goes. But is anybody worried about this prognosis? Or are the politicians still arguing over elections and how to share the “national cake” among people who do nothing and contribute nothing? There is every indication that the naira is set to get devalued again. And the misery of Nigerians would worsen. The number of Nigerians living below the poverty line now is said to be 90 million, but we believe the actual figure is much higher.
The creditors will, sooner than later, come for their pound of flesh. As the 2019 budget shows, we will need to service our debts with about two-thirds of our revenue this year. Already, the big projects for which the Buhari administration said it borrowed from China, are contracted to Chinese firms. Going by current trends, Nigeria’s total revenue won’t be enough to service its debts by 2021! This is bankruptcy starring us in the face.
Life in the country now mimics the Hobbesian state: laborious, miserable, nasty and short. From Borno to Zamfara and from Kaduna to Lagos and Benue, killings are reported daily. It has become normal to hear that scores of fellow Nigerians are murdered in one night or that armed troops are felled by terrorists. All this is the outcome of an economic crisis. It is a symptom of a failing state. What would the security situation be when there is no more money to fund defence budgets and security votes?
Whoever is bankrupting Nigeria should be ready to answer questions later. The younger generation is getting restless – and frustrated. It is uncharitable to mortgage their future once more with humongous debts.
With: The Oracle Today
