Till debt tears Nigeria apart
From all indications, management of debt rather than wealth has taken the front burner in all tiers of government in Nigeria. This is indeed a sad development for a one-time prosperous country.
Many of us recall with nostalgia, during the oil boom of the 1970s how the then Head of State and Commander-In-Chief of Nigerian Armed Forces, General Yakubu Gowon said that the problem with Nigeria was not money but how to spend it. He then agreed to host the Festival of African Culture which cost Nigeria a yet to be determined amount of money but which eventually took place in 1977 during the tenure of General Olusegun Obasanjo. Nigeria has never been the same since hosting FESTAC ’77.
In the recent past, the Special Adviser to the President on Media and Publicity unveiled the grand plan of government to impose new and stringent requirement for states accessing a N90 billion loan package. Indeed it is worrisome that the Director General of Debt Management Office, Dr. Abraham Nwankwo keeps telling us that Nigeria’s debt exposure is sustainable. As a country, we keep plunging into debt and more debt which has the effect of raising our sovereign risk.
Consequently, the World Bank , International Monetary Fund and other multilateral agencies keep insisting after their credit rating that Nigeria should devalue the Naira which has become of little value in international rating due to rising debt profile.
The Minister of Finance, Mrs. Kemi Adeosun, who by the way oversees the Debt Management Office, gave some conditions to states for accessing the loan. These are: publishing annual financial statements within nine months of financial year end, publishing state budget online annually, introduction and compliance with International Public Sector Accounting Standards ( IPSAS) , quarterly online realistic and achievable targets to improve internally generated revenue (IGR) and the implementation of Treasury Single Account (TSA).
There are other conditions. These include quarterly reconciliation meetings between the Federal and State Governments on Value Added Tax (VAT), Pay As You Earn (PAYE) taxes and other accounts as well as sharing of the data bases among them and companies in their domains, setting limits on personnel expenditure vis- a-vis capital spending , biometric capture of employees on payroll, introduction of continuous internal audit. However, the hardest of all is that the Federal Government wants states to attain credit rating.
Indeed, it is this last condition that motivated this writer to choose the above title for this write-up Till Debt Tears Nigeria Apart. But Why? The Federal Government is laying the foundation for state governments to be perpetual borrowers and to make it easy for Federal Government to lend to them based on their credit rating.
This is another wild goose chase by the APC-led Federal Government to fix the economy because they are creating the same scenario as we read in William Shakespeare’s classic play, The Merchant Of Venice. Recall that a pound of flesh (human flesh) was demanded in re-payment of debt. The debtor agreed to give the pound of flesh but on the condition that the creditor cut exactly a pound of flesh without spilling a drop of blood. Needless to say that the debt was not paid at the end of the transaction.
Very soon, sooner than you think, debt owed by states to Federal Government and vice versa will lead to parting of ways between them. Should state default in repaying the debt, what would the Federal Government do? Wind up the states, cancel the debt or roll it over? It is thus clear that debt has become another instrument the Federal Government is using to trap the states, or give Nigerians the impression that they are governing well. In reality, what the Federal Government is doing is to weaken the states, and further continue with unitary system of government. Yet they tell anybody who cares to listen that they are diversifying the economy.
The truth of the matter is that while the Federal Government has cheap means of staying afloat with proceeds of sale of crude oil and constant wicked and senseless devaluation of the Naira to create fiduciary money to service domestic debts or finance deficit budget, states are asked to increase internally generated revenue (IGR) through taxes and levies on hapless citizens.
The scenario goes this way, the Federal Government asks states for a pound of flesh, the states ask citizens for a pound of flesh, landlords ask tenants for a pound of flesh, workers ask their employers for increase in salary, another pound of flesh, school proprietors ask parents to pay more in school fees . The debt cycle goes on and on. The consequences of mounting debt is indeed unimaginable.
The big question is : Are state governors ZOMBIE ( fools, apology to Fela Anikulapo-Kuti of blessed memory)? Why are they obeying the last order and marching into the lagoon? They are victims of conflicting federal laws and they are doing nothing pragmatic to correct it and free themselves from being slaves to Federal Government through debt!
The 1978 Land Use Act says land belongs to states. We all know that land includes whatever is in its bowel. Another Federal Law says all mineral resources in the land belong exclusively to the Federal Government. If mineral resources belong to states, even at 50 per cent, state governors will not be going to Abuja monthly with cap in hand to receive allocation from the Federal Government! They will not be bailed out with loans. It is state governors, in a sane society, who are wearing the shoes and know where they pinch and who should be pushing for resource control. Not MASSOB, IPOB, Niger Delta Avengers and so on.
A few months ago, President Muhammadu Buhari was quoted as saying that it is a disgrace that 27 states cannot pay salaries. When put in the context of his refusal to consider the 2014 Conference Report that recommended devolution of powers and fiscal federalism, one cannot but say he is being hypocritical. The problem with Nigeria is that her leaders in all tiers of government pursue their own parochial agenda rather than the agenda to build the Nigerian nation.
President Buhari has an opportunity to write his name in gold, nay in the sands of time. But if he refuses to think and re-think his present unworkable plan, then mounting debt will compel him to do the right thing or else debt will tear Nigeria apart under his very nose. Will President Buhari wait until Nigerian entrepreneurs who cannot borrow from banks to run their business while banks are lending to government via treasury bills, treasury certificates, development bonds, etc, walk up to him and say : “Enough is enough?”Only time will tell.
• Enyinnaya, Fellow Chartered Institute of Bankers, wrote from Lagos.