The Daily Times (Nigeria): Editorial
November 20, 2003

The Debt Management Office (DMO) recently reported that Nigeria owed about $28 billion from 1980 to date. Of this, about $4.8 billion was reportedly incurred by Nigerians during the import licensing days. Furthermore, up to year 2002, the Federal Government owed the Central Bank of Nigeria (CBN) about N596 billion (about 60 per cent of the domestic debt), the financial system, about N386 billion and the non-banking sector, additional N61 billion. These sums represent about 10 per cent of the Gross Domestic Product (GDP), 10 times larger than the budget allocation for health and education.

Although, public financing uses public debt as one of the instruments of financing government expenditure, its misuse involves huge social and human costs. It could also lead to decline in the country’s external assets, decline in the productive capacity of the national economy with all its attendant effects on macro-economic environment, etc. For instance, United Nations Children’s Emergency Fund (UNICEF) noted in 1990 that about a thousand people die every day in Africa due to debt burden carried by the continent.

The Nigerian debt profile (both domestic and external debt stock) which reached crisis level in the late 1980s has evidently become a national yoke. DAILY TIMES notes with serious concern the negligence and self inflicted complexities surrounding the origins and management of these debts. In the first instance, the treatment of debt management as a purely technical/economic problem to be handled only by government bureaucrats (and on patronage) outside of political implications is a dishonest negligence.

To the extent that public financing and economic management affects the institutional framework for contending social forces within the society makes it is essentially political. Involvement of knowledgeable and patriotic professional bodies such as Institute of Chartered Accountants of Nigeria (ICAN), in Nigeria’s debt management could be helpful.

In the second instance, the debt crisis that originated from the poor management of loans was further compounded by sheer mismanagement of resources, widespread and unregulated cases of official corruption, etc. We should immediately put a stop to non-productive expenditures such as the just concluded 8th All African Games and hosting of unproductive jamborees, among many others.

Huge funds have been wasted and still being wasted this way at a time that our educational system is dying, thousands of lives are being lost from our decaying health system while our manufacturing sector is giving the fight to survive. Extravagant and wasteful lifestyles of our disconnected political leaders should equally be addressed if we expect our creditors to take our re-negotiation efforts seriously.

Furthermore, how can a debtor nation whose nationals were reported to have siphoned about $170 billion in money laundering, bulk of which is suspected to be proceeds of official corruption, be taken seriously for debt renegotiation? Pervasive cases of official corruption have become a deregulated concept now firmly rooted as our political leadership and their instruments of anti-graft, in fact, tacitly encourage the malaise.

The participation of Bretton Wood technocrats has not fared any better. The integrity of our representatives sent in the past for debt negotiations is suspect. There were allegations that these representatives hurriedly granted concessions that our creditors did not ask us of just to make out enough time for personal shopping! May be some concessions were even negotiated for private accounts!

The entire process of debt renegotiation and rescheduling may be fraught with shady dealings. Nigerians need to know exactly the status of both the domestic and external debt profile and strategy for tackling it. The Honourable Minister of Finance may want to look into this for proper guidance. Furthermore, how can Nigeria benefit from her long years of service in, and her good relations with, the Bretton Wood Institutions in resolving this intransigent crisis of questionable debt profile (both domestic and external) and other puzzles?

She should bring her exposure to bear on properly managing our debt burden. This has become imperative in the light of a budget deficit of about N147 billion, and the provision of about N407 billion for repayment of local and foreign debts in the 2004 Appropriation Bill if approved as presented. How the deficit is financed is equally important. Therefore, we commend the intention of Federal Government to finance its deficit through the issuance of N150 billion bonds in phases in the capital market rather than the customary CBN’s ways and means. This should provide direction on addressing the issue of maturity mismatch.

Persistent budget deficit impacts negatively on interest rates, investment and the general economic growth. Therefore, Daily Times calls on the National Assembly to devote more resources to evaluating and ensuring the faithful implementation of approved budgets by the executive. It should, also, carry out an objective and conscientious appraisal of its debt management process and subject its integrity to verification by the National Assembly and the public.