The new debt trap courtesy Okonjo-Iweala ?1

By Dele Sobowale

?History is, indeed, little more than the register of the crimes, follies and misfortunes of mankind?, Edward Gibbon, 1734-1794. (VANGUARD BOOK OF QUOTATIONS p. 92).

The Nigerian most dreaded might not even be the leader of Boko Haram. He and his colleagues might soon disappear like the Maitasene ? the dreaded Islamic group of the I980s. Religious uprisings never last in Nigeria and have invariably been regional in scope. The worst threat to our present and future might well be Dr Ngozi Okonjo-Iweala ? the Federal Minister of Finance who has embarked on raising the nation?s debt ceiling.

Two weeks ago, the Federal government announced plans to borrow $9.3billion for various unspecified projects. The nation?s debt had risen by about $II billion since the Finance Minister?s return to her old office last year. All are long-term obligations meaning twenty years or more.

Even if Jonathan contests for the second term and is re-elected, the borrowing spree would still amount to mortgaging the future of Nigeria in exchange for providing trillions of naira more for current holders of transient power to embezzle. Her claims that the funds are needed for development, and that Nigeria can easily repay, represent the triumph of faith and greed over historical experience; as brief recollection of Nigeria?s history will soon demonstrate.

Minister of Finance, Dr Ngozi Okonjo-Iweala

The year 1978 marked a watershed in Nigeria?s economic history. In that year, Nigeria migrated from a debt-free country to a debtor nation. Not even during the civil war did this country borrow to prosecute the war. But, in peace time we went cap in hand. Later in this series, the reader will discover what happened to the first set of loans the nation took on the advice of people like Okonjo-Iweala ? the technocrats.

In 1978, as now, technocrats, led by Chief Ernest Shonekan, the acclaimed leader of the Organised Private Sector, OPS, had persuaded General Obasanjo, then Head Of State, that Nigeria was ?under-borrowed?. That meant the nation was almost totally debt-free ? except for some short-term obligations.

Apparently, that was a crime and unacceptable. Government was urged, then as now, to take advantage of the low interest loans that were on offer by the International Monetary Fund, IMF, fronting for Western financial institutions in search of foolish third world countries to enslave economically.

Of course, the loan was meant to finance infrastructural development ?roads, bridges, water, power supply etc. To sweeten the argument they pointed to the price of crude oil, which since 1973 had risen from $3 per barrel to $28 per barrel and projections were made that it would top $100 in a year or two. Nigeria?s ability to repay was thus guaranteed.

Unlike the technocrats,critics, including this writer opposed the loan on the following grounds. First, corruption in government, at the time, had risen to unprecedented levels and borrowing would only provide more funds for public servants to steal. Second, many of the projects, for which the funds were raised, were white elephant projects from which Nigerians would derive no benefit.

Third, with a change of government scheduled for 1979, the loan would tie the hands of the incoming civilian administration, which we believed deserved a free hand in order to make a clean break with the military administrations of the past.

Well, the technocrats, who were poised to be the only group of Nigerian beneficiaries, apart from government officials, won the debate. At any rate, no government can resist the additional pool of funds, which loans represent, into which they can dip their hands for filthy lucre. Soon $2.8 billion was sourced and Nigeria joined the global club of debtor nations in 1978 courtesy of the Obasanjo administration.

But, history does not often run in straight lines; sometimes it hits like a boomerang. By the time Obasanjo providentially returned as civilian President on May 1999, the $2.8 billion, ?easily repayable debt?, had risen to nearly $36 billion and choking development ? with very little to show for it.

Incidentally, it was the same technocrats who were then warning the government that the debt trap was not in the national interest. How did Nigeria migrated from debtor-free to become one of the most indebted nations on earth? The answer to that uestion will shed light on the perils associated with the current opaue plans by the Federal government to borrow $9.3 billion; in addition to the over $4 billion already owed.

A good place to start is to ask the Finance Minister what specifically had been done with the foreign and domestic debts already incurred. She was responsible for creating the Excess Crude Account from which $13-16 billion was taken for the Independent Power Projects, IPP, during Obasanjo?s second term.

Till today, Nigerians have not derived any benefits from the illegal transactions. Now that she, like Obasanjo, had returned to her old office, she owes Nigerian an obligation to tell us what happened to the $13-16 billion first, before she can ask us to endorse another scheme she has cooked up.

The truth is, the sum total of her intervention in Nigeria?s economy had been more negative than positive. Even the debt ?relief? she was acclaimed to have secured was a normal financial settlement; it was worse than what other third world countries got from the creditor nations and some people earned huge commissions from the transactions. Who were they?

Our transition, to use the current lingo, from debt-free to bad debtor, was linked to the change from lean to fat government structures. Military governments, at the time, were very lean. Apart from Ministers, the President had few advisers. Governors also appointed few Commissioners and even fewer advisers. There was no legislature at any level.

The return to civil rule and the fatal change from parliamentary to presidential system of government constituted the first step in our slide into debt. And, it also accounts for our inability to raise domestic capital for development; resulting in what could become our perpetual resort to debt.

Nobody counted the costs of operating a presidential system of government with two legislative houses at the centre as well as one in every state. The costs started showing from the conduct of the 1979 elections. Other unplanned financial consequences soon followed.

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Source: http://www.vanguardngr.com/2012/11/the-new-debt-trap-courtesy-okonjo-iweala-1/

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