Money, Money Everywhere & Yet More Debt! By Henry Boyo

Money, Money Everywhere & Yet More Debt! By Henry Boyo
  • PublishedNovember 12, 2018

The International Monetary Fund Country Chief, Amine Mati, who spoke on Thursday, November 8, in Abuja, at the presentation of the Regional Outlook for sub-Saharan Africa, was clearly concerned that despite Nigeria’s very precarious 1.9 per cent projected growth rate for 2018, and a debt to GDP ratio between 20 and 25 per cent, the country, however, is unfortunately already also allocating more than 50 per cent of its revenue to service debt annually.

Consequently, according to the IMF, Nigeria’s public debt is, oppressively, diverting more resources towards debt servicing. Furthermore, Mati observed that interest rates have, regrettably, also “gone up to where they used to be” before the celebrated debt relief to several African countries, including Nigeria, just over 10 years ago.

Conversely, the Director General of the Debt Management Office, Patience Oniha, however, countered at the above event in Abuja, that without sufficient revenue and the impact of the “recession that the country found itself in between 2016 and 17, the government had no option than to borrow to increase forex availability” and also “spend our way out of recession.” Oniha also disclosed that despite the allegedly poisonous present debt burden, decried by the IMF, government would still borrow N1.5tn in 2019, even when the considerable sums of N2.5tn and N1.64tn that government borrowed in 2016 and 2017, respectively, had failed to make meaningful impact on our huge infrastructural deficit.

Conversely, the Chairperson of The National Advocacy Centre, Vivian Bellonwu Okafor, however, noted in a statement published in The PUNCH, November 9, 2018, that the Federal Government’s zeal to borrow was not only unfortunate but also a glaring admission of cluelessness.

It is arguable, nonetheless, that with due diligence in procurement contracts for infrastructure and other expenditure estimates, government’s annual budgets would be spared the “excessive” level of borrowing that does not translate to meaningful social impact. Indeed, 10 civil society organisations, for example, have lately, jointly signed a petition in pursuit of accountability in public procurement, for the Economic and Financial Crimes Commission to probe why GE, the US giant corporation, supplied 18XGE Frame 126MW turbines for $404m, while the same company also supplied 9XGE Frame of the same 126MW turbines, through Nigeria’s Rockson Engineering at “a whopping sum of $1.55bn”. In this event, GE and Rockson may have defrauded Nigeria of about $1.348bn.

Incidentally, according to another report in The PUNCH edition of November 7, 2018, the National Assembly is also investigating the allegation against GE/Rockson Engineering, “because of the fear that should Nigeria do nothing, the United States Government may invoke the “Foreign Corrupt Practices Act” (which forbids the US companies from acts of corruption anywhere in the world) to prosecute GE if found wanting.” “If this happens, according to the lawmakers, Nigeria will again suffer great embarrassment, similar to the notorious ‘Halliburton case’.”

Similarly, earlier this month, the Senate, also began an investigation of the diversion of “$1.05bn from the Nigerian Liquefied Natural Gas ‘Dividend Account’ by the Nigerian National Petroleum Corporation.” The NNPC Group Managing Director, Maikanti Baru, has readily admitted that the organisation utilised the $1.05bn to augment “under-recoveries from petrol importation,” at the height of the December 2017-January 2018 nationwide fuel scarcity. Baru insisted that the “NNPC acted in line with a National Assembly directive to do everything necessary to end that fuel scarcity.” Besides, according to Baru, the NNPC’s action “was also in line with Section 7(4) (b) of the NNPC Act which mandates it to fund its operations from its revenue.”

However, the Senate President, Bukola Saraki, has declared that “it was illegal for the NNPC to unilaterally draw from the NLNG dividend funds, without prior appropriation by National Assembly.” Saraki insisted that “dividends paid to the Federal Government from LNG business were supposed to be kept in the Federation Account and shared among the three tiers of government.” Furthermore, Chairman of the Senate Committee on Gas, Senator Bassey Akpan, also noted that “utilising the funds without appropriation, and without the knowledge of state and local governments was an illegal act that should not be overlooked.”

The related question, therefore, clearly relates to whether the diversion of $1.05bn from the LNG dividends account was a one-off event, or the usual practice. In which case, there would be a clear need for full disclosure of how much of the bountiful LNG dividends have been diverted by the NNPC for whatever purpose, since the commencement of the LNG trains. Incidentally, in addition to the unappropriated LNG dividend of $1.05bn, the Senate Majority Leader, Senator Ahmed Lawan, is reportedly, already leading an ad hoc committee, set up in October 16, 2018, to look into the “alleged secret spending of $3.5bn by the NNPC on fuel subsidy.”

Instructively, however, in April, this year, the Executive Secretary of Nigeria Extractive Industries Transparency Initiative, Dr. Waziri Adio, revealed at a meeting with civil society and media organisations, that the NNPC has confirmed that the “NLNG’s $16.8bn ‘accrued’ dividends between 2000 and 2015 were not remitted to the Federation Account.” However, in defence of the non-remittance, the NNPC reportedly alleged that it got a letter from the Presidency, “that it should hold the money in trust, and it should spend as directed.”

However, the NNPC has yet to furnish NEITI with a copy of the alleged letter of instruction from the Presidency. Alarmingly, also, according to NEITI Executive Secretary, “the Department of Petroleum Resources does not yet have metering infrastructure.” Consequently, “we cannot independently say this is how much oil we produce even though we may know how much we actually sell officially.” Furthermore, NEITI also questioned “the proprietary of the NNPC’s retention of 450,000 barrel/day allocation to domestic refineries, when in fact, they refine little or nothing!”

Incidentally, a distinguished civil rights and legal activist, Femi Falana, SAN, also noted at the NEITI briefing that a team of lawyers including himself discovered that “between January 2011n and December 2014, the export of 60.2 million barrels of oil valued at $12.7bn was not recorded here in Nigeria, but was captured, for the purpose of taxation, at the point of discharge in Philadelphia USA.” According to Falana, “If you take all the ports in the US alone, where our oil was discharged, at that period, I am sure Nigeria will make about $200bn, even when other destinations such as China, India, etc, were not captured. Regrettably, the EFCC and the finance minister have yet to respond to Falana’s petitions for investigation.

Similarly, a ThisDay publication of May 17, 2018, also reported that the Zamfara State Governor and the Chairman of the Nigeria Governors’ Forum, Abdulaziz Yari, dismissed the NNPC’s claims of petrol consumption of 60 million litres/day, since the commencement of the new regime of cost recovery (i.e. direct deduction of petrol subsidy from the NNPC sales revenue). According to Yari, “Many of our international partners are saying that even if we are ‘feeding’ Nigeria, Cameroon, Ghana and Niger, we cannot consume more than 35 million litres/day; so, we are wondering where the 60 million litres is coming from,” especially after the decision was taken that all filling stations/tank farms within 10km from Nigeria’s borders should be closed by the DPR.”

It is surprising, nonetheless, that rather than plug the huge serial leakages of unaccounted revenue, government, conversely, seems inexplicably more focused on gleefully increasing the national debt burden, despite the IMF’s warning that Nigeria is already applying over 50 per cent of aggregate revenue to service clearly oppressive sovereign debts which will invariably mortgage the future of millions of Nigerians yet unborn.

It is inexplicable nonetheless, and possibly also reckless to have almost doubled our debt burden in the last three years and, yet still seek foreign loans with up to seven per cent interest rate, while the CBN also, ironically, continues to freely auction its relatively bountiful foreign reserves for free, while government borrows unceasingly domestically, at double-digit interest rates, even when the CBN sits unperturbed on hundreds of billions of idle ‘sterilised naira’ loans which attract very high interest rates for sovereign loans!

Leave a Reply

Your email address will not be published. Required fields are marked *