As Buhari’s $29.9bn loan request sparks public fears

President Muhammadu Buhari

Experts say the Federal Government’s plan to borrow $29.9bn from external sources will jeopardise the future of the country, writes JESUSEGUN ALAGBE

During his electioneering, President Muhammadu Buhari literally promised “heaven on earth” for Nigerians if voted into power.

From giving a monthly stipend of N5, 000 to 25 million poor Nigerians, to the creation of a Small Business Loan Guarantee Scheme to create at least one million new jobs every year, to the creation of an additional middle class of at least two million new homeowners in his first year in government and one million annually thereafter; the list of promises was endless.

It’s over a year since the President was elected as the chief executive officer of the country, yet many of the promises made to Nigerians have yet to materialise.

Expectedly, many Nigerians have since started expressing how disappointed they are regarding the President’s failure to fulfil his campaign promises.

However, President Buhari has on several occasions said he is still committed to delivering his campaign promises to Nigerians, and has, however, never stopped blaming the immediate past administration of President Goodluck Jonathan of the Peoples Democratic Party for the country’s problems, including the current economic recession.

He has accused the former President and his party of “extravagantly” spending public funds and leaving almost nothing for him to spend on development.

So, it is believed that Buhari has been seeking several means to get funds to, according to him, provide infrastructure and bail the country out of its current economic crisis.

In September 2016, the Federal Government approached the African Development Bank for a $4.1bn (N1.29tn) loan, which was approved by the bank.

The President of the bank, a former Minister of Agriculture, Dr. Akinwunmi Adesina, said the loan package includes $1bn in budget support, $300m to create jobs for 185,000 youths, $250m to provide infrastructure development in the North-East, $1m grant to deal with the challenges of Internally Displaced Persons, $300m for infrastructure development around Abuja, and $200m for the Transmission Company of Nigeria to improve its facilities, among others.

Saying that Nigeria was the largest shareholder in the bank, Adesina said the bank was in the country to offer its support in the face of the tough time in the country.

A month after this development, specifically on October 25, 2016, the Federal Government again disclosed that it was planning to borrow $29.9bn (N9.4tn) from the World Bank, the Japan International Cooperation Agency, the Islamic Development Bank and the China Exim Bank.

Asking the National Assembly to approve the external borrowing plan, the Federal Government said the $29.9bn loan would be used to execute key infrastructure across the country between 2016 and 2018.

Buhari said the borrowings would target projects across all sectors, with special emphasis on infrastructure, agriculture, health, education, water supply, employment generation, poverty reduction through social safety net programmes, governance and financial management reforms, among others.


If the loan request is ratified by the National Assembly, the Federal Government said it would take $25.8bn out of the money, while states would get $4.1bn.

However, several experts said borrowing a “whopping” $29.9bn by the Federal Government was tantamount to jeopardising the future of the country.

Some of them even pleaded with the Senate — which has already rejected the loan request due to “lack of technical details” — never to ratify the President’s request, saying it portends great danger for the country’s future.

For instance, a Senior Advocate of Nigeria, Mr. Femi Falana, said the President’s loan request was as good as mortgaging the future of the country’s unborn generation.

At a symposium recently organised by the Department of Political Science, University of Lagos, tagged, “X-raying 50 years of military intervention in Nigeria’s politics,” the human rights activist warned the President against chasing after the loan, but rather engage in an aggressive recovery of looted funds stored up in Western countries by past rulers and politicians in the country.

Citing how previous debts negatively affected development in the country, Falana said, “Between 1978 and 1986, this country incurred debts to the extent that we did not know how much we owed under the regime of General Ibrahim Babangida. They had to engage the services of a consultant in the West to tell us what we owed, and of course, the London Paris Club gave us a figure.

“By the time [former President Olusegun] Obasanjo was paying the debts, in one fell swoop in 2005, this country parted with $12.4bn for the West to forgive us our debts. Meanwhile, they were the real sinners. At that time, on both the principal and the interest, we had paid $42bn. That amount alone could have eradicated poverty in the entire Africa.

“Now again, President Buhari wants to get a loan of $30bn. You know what that means? For generations unborn, we will mortgage their future, except the money is genuinely meant for infrastructural development, which is usually not the case once the money comes in. So Buhari should forget about the $30bn loan when he can get more than that if he goes after our stolen money in the West. General Sani Abacha and one of his men alone stole over $17bn.”

Tasking President Buhari on other ways of seeking funds to work with, Falana added, “Don’t go and borrow. Engage in an aggressive recovery of our looted funds. If this government is genuinely committed to the development of our country and wants to fight corruption, we can raise up to $200bn. Go after the Western countries, especially Switzerland that warehouses stolen funds all around the world.”

Already, the country’s external debt profile stands at $68bn and ranks 57th on the World Bank’s list of countries by external debt.

Furthermore, recent figures from the Debt Management Office show that in the past one year alone, the country has accumulated over $13.2bn (N4.17tn) in external debt.

An economist, Henry Boyo, said with the current fiscal landscape in which about 40 per cent of the country’s annual revenue is already applied to debt servicing alone, getting a $29.9bn loan would worsen the economic situation.

Describing it as what would be “the largest borrowing in Nigeria’s fiscal history,” Boyo asked lawmakers to ignore “predatory” suggestions that the country’s economy is relatively under-borrowed.

In an article titled, “To concession is more responsible than to borrow,” the economist expressed worry that a $29.9bn loan would shoot the country’s debt profile to above $90bn.


He said, “Additionally, if the foreign loan package excludes the widely reported offer of billions of dollars’ China loans and the trillions of naira which will also be borrowed from the domestic market to fund future budget deficits, then of course, well over 50 per cent of our actual annual revenue will be required just to service our debts, while the balance income will be predominantly, as usual, consumed by recurrent expenditure, with little left over for infrastructure remediation.

“Unfortunately, serial defaults in payment of service charges, as was the case before the 2006 debt exit, will invariably instigate overbearing foreign creditors to exercise their rights and insist on more socially oppressive economic reforms to guarantee their investments.

“Besides, when completed, projects funded with the $29.96bn loans would invariably become public utilities. These prospects should be worrisome to us all, as our track record in the management of public utilities has always been riddled with corruption and deliberate negligence while some projects have become moribund, even before completion, while other sporadically sustainable operations have ultimately ended in dismal failure.”

In a similar manner, a development consultant and public affairs analyst, Mr. Jide Ojo, also said more loans would further plunge the country into crisis.

He said, “Previous loans have not been used judiciously. Rather, the bulk of the loans were diverted to private pockets with little or nothing to show for the projects for which the loans were obtained in the first place. Two, the government should account for additional revenues received from the increase in the pump price of petrol from N87 to N145 per litre, N50 stamp duty collection by banks on every banking transaction, looted funds recovered and the Treasury Single Account savings.

“Three, the government stands to rake in huge revenue from the sale of white elephants embarked on that have become a drain on our resources. Over 11,886 uncompleted Federal Government projects were discovered by the Alhaji Bunu Sheriff-led Presidential Assessment Committee in 2012. I have earlier canvassed the audit of these projects to be done. While those that are liabilities should be auctioned off, those that will add value to our economy should be funded to completion from the sale of proceeds from the white elephants auctioned.

“Four, with the current attempts by the Federal Government to reduce the cost of governance, bring more people into the tax net, and block revenue leakages in the bureaucratic system; there should be more money at government’s disposal to be used for infrastructural development. Public-Private-Partnership infrastructural finance model is also a viable option and is better than taking more foreign loans.”

Some analysts believe that former President Olusegun Obasanjo encouraged President Buhari to borrow the money when he [Obasanjo] recently said the country should borrow, spend less and earn more to get out of the current economic recession.

However, speaking on the effects of government borrowing, a Lagos-based economist, Dr. Babatunde Abraham, also said the $29.9bn loan could further worsen the economy rather than improve it.

He said, “Oftentimes, the government imposes taxes to finance its loan repayment programme. High rate of taxes discourages people to work more. Although public borrowing involves transfer of resources (from taxpayers to the lenders), the negative effect of taxes (that is, the desire to work less when taxes are increased) produce an unfavourable effect on income.

“Because of debt, present generation obtains less capital. Thus public borrowing is not necessarily expansionary. A lower volume of capital reduces production and productivity of an economy. Also, getting loan leads to an increase in money supply, which will put a great pressure on the prices of goods and services.