Opinion
Nigerian Government’s Proclivity with Loans, Finds Wings with COVID-19
By Vivian Bellonwu
Nigeria’s hitherto precarious economic state appear to be in for an unmitigated meltdown as the present Coronavirus pandemic has exposed and is bringing to the fore, both the weak nature of the nation’s economic fundamentals as well as the deficient capacity of its managers and management. googlesyndication.com/pagead/js/adsbygoogle.js">
Following the COVID-19 pandemic outbreak and the hit it is giving to the economy, government’s first and seemingly singular response, has been simply to borrow. From an eight hundred and fifty billion naira credit approved by the country’s senate to a staggering $3.4billion loan from the International Monetary Fund, IMF, both the Central bank of Nigeria and the ministry of finance has talked of plans to embark on a borrowing spree, from local and foreign sources to according to them, fund the nation’s budget.
The Minister for finance only last week, hinted that the World Bank would be borrowing Nigeria (and some other African countries), $510bn between 2021 to 2023.
The Nigerian government’s rapacious appetite for loans and borrowing is well known, and the COVIS-19 pandemic appears to present it with a plausible pedestal to ventilate this proclivity. It is on records that even with a weighty debt overhang of $84billion as at December, 2019, government earlier this year, sent a request to the national assembly to borrow a cocktail of loans amounting to a stunning $22.7bn mainly from China, and the World bank. Nigeria currently struggles with its national budget and this is largely because debt servicing consumes a huge percentage of the resources earmarked for national development.
Part of the worry stems from the fact that Nigeria’s history with loans, both with its judicious use as well as conditionalities have been appalling; while endemic corruption has rendered all loans borrowed for infrastructure and development purposes ineffectual, the country has had to both live with and bear the brunt of the many harsh conditionalities that come with the loans. Already, with the latest loan of $3.4bn advanced to the country by IMF, the body has hinted at the devaluation of the Naira. This is tragic, even as it is very much in the nature and manner of IMF loans (and its conditionalities), which largely strangulate, wane and in some cases kill economies of developing countries, while overseeing the hoisting of neo-liberal policies that go to promote unmitigated inflation, job losses, mass poverty and unbridled dependency. some African countries with smart governments such as Tanzania rightly recognizes the booby trap these loans represent and only recently its president roundly rejected a $10bn Chinese loan offer outrightly calling the conditions attached to it “madness”.
Nigerian government must refrain from this proclivity with quick-money, in the forms of loans, credits, etc, for beneath it is carefully tucked away tragic conditions, and usually, effectively hidden from the citizens cum public.
The Speaker of the House of Representatives, Hon. Femi Gbajabiamila, has rightly pointed out during his speech on March 2020, at the resumption of House plenary, from the COVID-19 break, that this is the time for the country to re-invent itself by doing things differently, and taking those steps and actions that will re-set the country onto the trajectory of real development. This call is germane.
The Nigerian government has received robust support systems since the outbreak of the pandemic to warrant recluse to such sleaze of borrowings; Nigeria has been granted debt relief by the G-20 nations and the world bank, it has also received huge sums of money from abroad at home running into trillions of Naira, to support the country mitigate the impact of the pandemic, that if properly planned, channeled and utilized, would meet the country’s needs. Anything to the contrary can inarguably be seen to be propelled by corruption, greed and appetite to embezzle. The debt relief should free up funds/resources to fund the budget and invest in developmental projects and programs, while the donated funds provide resources to further address the COVID-19 impacts.
The present administration must do all it can to refrain from leaving behind a legacy of debt and plunging Nigerians into generational debt-enslavement and repayment, enslavement to foreign elements, poverty and unmitigated hardship.
Vivian Bellnwu (Mrs), writes from Social Action, Nigeria, FCT, Abuja.
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A note on the proposed August 1st protest
By Abdulrahman Obaje
Before we embark on the proposed August 1st protest, let us take some lessons from past protests in the country and around the world.
In Sudan, the anti-austerity protest that started in December 19th, 2018 over the price of bread and fuel were initially focused on living costs – but soon demonstrators also started demanding that Mr Bashir step down.
Bashir that came to power in a military coup in 1989 and ruled Sudan for almost 30 years under different titles with an iron fist had remained defiant. Eventually, within four months of the protest, on April 11th, 2019, the military announced that Mr Bashir had been ousted and arrested. The government was replaced with a transitional government.
At that time, many Sudanese believed there is going to be significant change in their country. But in 2021, tens of thousands of Sudanese returned to the streets again, angry over soaring prices for the same necessities.
Sahar Al Jazouli, a member of a grassroots group Al Kalakla Abu Adam Resistance Committee that helped organize one of the protests, said people are fed up with skyrocketing inflation.
Saying that, “The demands that we have been making since the time of President Bashir are still the same, and the high cost of living is at the top of them, and these demonstrations going on right now are a right that we earned through our civilian revolution,” Al Jazouli told VOA’s South Sudan in Focus then.
The transitional government recently removed subsidies for fuel and other items, as part of economic reforms demanded by the International Monetary Fund.
Days after the fuel subsidies were eliminated in October, 2020 the price of diesel doubled. In the two months that followed, prices for a loaf of bread and a kilowatt of electricity more than tripled.
Mohamed Ali Fazari, editor-in-chief of the online newspaper Khartoum Today, said some protesters are demanding that the entire transitional government be removed if conditions do not improve quickly.
He said different people have different agendas in the latest protests, including the Sudanese Professional Association, a group that mobilized many protesters in 2019.
“The other group is the communist parties and others that are against the economic policies of the government, and the other group which has another agenda like the Islamists and followers of the ousted regime,” said Fazari.
Both Fazari and Al Jazouli said the remaining pro-Bashir officials in office were looking to exploit the protests to undermine the transitional government and create chaos but the overwhelming majority of protesters were on the streets to demand better living conditions, not to remove the government.
Down the line economic situation and hardship in Sudan has not abate. Bread and other food commodities prices are soaring. As reported by reliefweb located at https://reliefweb.int/report/sudan/sudanese-dying-hunger-omdurman-food-prices-rise-daily on July 21st, 2024, People are reportedly dying of hunger in the old Omdurman neighbourhoods of El Mulazemin and Abrof. Prices of basic consumer goods in the markets of Omdurman witnessed a large increase week before, ranging from 33 to 50 per cent.
Sheikh El Amin Omar, leader of the Sudanese El Gadiriya El Mukashfi Sufi order, explained in a phone call from his compound, in the Wad Nubawi neighbourhood in old Omdurman that people in El Mulazemin and Abrof are suffering from famine amidst a deteriorating security situation.
All the soup kitchens (takaya in Arabic) in old Omdurman have stopped working. The area of old Omdurman, regained by the Sudanese Armed Forces (SAF) from the Rapid Support Forces (RSF) in February, is not very secure. “He who does not die by the fire of weapons, dies of famine”, he told Radio Dabanga.
Partly, the economic problem in Sudan and other places may not be unconnected with the global economic situation which is on a downward trajectory.
According to Numbeo located at https://www.numbeo.com/cost-of-living/, as at July 2024, though Rent in Ghana is, on average, 51.9% lower than in Nigeria, A family of four estimated monthly costs are 2,047.7$ without rent. A single person estimated monthly costs are 570.3$ without rent. Cost of living in Ghana is, on average, 27.5% higher than in Nigeria.
The average cost of a loaf of bread in the US is around $2.50. In South Africa, it is approximately $0.981. However, if you buy from local shops or tuck shops, the price may be higher, around R14.50 for white bread and R17.00 for brown bread.
The economic situation in the country is dire. From fuel to every other commodities, things are no more affordable. The National Bureau of Statistics (NBS), said Nigeria’s food inflation rate hit a record high of 40.66 percent in May 2024, surpassing the previous month’s 40.53 increase. Cadre Harmonisé analysis, in its March 2024 release approximated that 4.8 million people in Borno, Adamawa, and Yobe states are experiencing severe food insecurity, the highest level in seven years.
However, violent protest and unrest has not help bring succour to Sudan. Violent protest will not bring the immediate changes we desire. A selfish protest organiser will not tell you this.
And let us observe those calling for the protest. Let us scrutinise their background and be sure it is not in their selfish interest. Let us be sure that their family members, even abroad would come down to join the protest. Do not let anybody cajole us to embark on a selfish and disastrous protest that will spell doom for our future. Let us use our head!
Instead, the Civil Society Organisations, professional bodies and individuals should engage more with the federal government and make their findings and activities public.
We know that the Federal Government is trying but it should do more by engaging the Civil Society Organisations, professional bodies, opposition parties and individuals to alleviate the immediate and long term suffering of the masses, as this type of suffering is strange to our people
Prince Abdulrahman Obaje writes from Ordu Kingdom.
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Tinubu’s Subsidy Removal And The Albatross Hunting Nigerians, by Rayyan Alhassan
Fuel subsidy removal by the present administration of President Bola Tinubu has come with a thunderous alarm. Although the intention may be good, pure and sincere, and in fact it is even noble but the reality now is that it is severely haunting everyone. adsbygoogle || []).push({}); googlesyndication.com/pagead/js/adsbygoogle.js"> Both the haves and haves-not are wailing. It is dealing a fatal knockout punch on teeming citizens, whose lives have since been made miserable and wretched. The Nigerian economy had almost strangulated them.
But it appears that the ‘ill-conceived’ idea to abruptly end the payment of subsidy by the Federal Government will finish the ‘job’. Less than two months after the ‘Petrol Subsidy is Gone’ proclamation by the President, on the occasion of his May 29 inauguration as Nigeria’s 16th leader, life has become unbearable and hopeless for many Nigerians.
Survival is now only for the fittest. The hope that their ugly fortunes will turn around under a Jagaban Presidency may just be fading away, or so it seems. The hue and cry over the subsidy removal may have since simmered. But the painful groaning by citizens will not just end. Nigerians are already battling to cope with the new normal of soaring transportation costs, and food prices’ inflation, among other negative impacts of the subsidy policy review.
With the harsh economic reality now starring everyone on the face – except the political class, possibly – the few men and women of good conscience left among us, who additionally have Tinubu’s ears must not remain docile. If it is possible, they should impress Mr. President to totally backtrack his decision on fuel subsidy. It will be patriotic, if not exemplary.
Tinubu has no choice but to wade in. He must arrest the socio-economic bedlam, triggered by not only the subsidy removal he singularly orchestrated. But the recent hike in the price of Premium Motor Spirit, PMS. On Tuesday, 18th July 2023, the Nigerian National Petroleum Company Limited, NNPCL, offered Nigerians a ‘sumptuous desserts’.
But the desserts were not the ones that will be nutritious to the body. That is just how we should describe the hike of fuel price to N617 from N537, by the NNPCL. The NNPCL and its apologists have attributed the latest increment to market forces at play.
But the organized Labour and other workers’ unions, together with some prominent Nigerians won’t stomach it. The Nigerian Labour Congress, NLC, described the recent increase in pump price as a threat to the socio-economic well-being of the citizens. It feared that the price of fuel would hit N1,000 per litre soon.
As for the Nigerian Union of Journalists, NUJ, the new price regime of PMS is an “over kill”. “We are saddened by the fact that today, most people can hardly commute to work or other places of business without too much stress, because the embarrassing sudden surge in petrol prices has made it so,” the NUJ said, in a statement issued by Shuaibu Usman Liman, its National Secretary.
The arbitrary hike of fuel cost to N617 will absolutely hurt Nigerians, and in many diverse ways too. For instance, it will make a large section of the country’s population fall deeper below the poverty net, while consumer spending’, and purchasing power will depreciate.
On one hand, the petrol hike has the potential to prevent manufacturers from producing below their targeted capacities, even as so many firms operating as private sector organisations will be forced to downsize their workforce. As things stand now, the cost of most goods and services have already hit the rooftop. And if care is not taken, Nigeria should be preparing to battle looming food insecurity, together with other life-tormenting emergencies.
With Boko Haram fighters, the Islamic State of West African Province (ISWAP) terrorists, armed bandits, oil thieves, kidnappers and a host of other criminals already holding the country to ransom, this hike will blow only an ill wind. It is verily going to escalate all sorts of criminalities in the land, as many youths and citizens get impoverished. This should not be what is heralding the Tinubu era, in Nigeria’s modern evolution.
Meanwhile, contrary to what many of us are forced to believe, Nigeria is not the only country in the world that subsidizes energy products like petrol or even some basic public services that its citizens enjoy. In fact, developed or advanced nations like the United States, France, Germany and the United Kingdom, UK, also do.
About $50 billion is what the United States is estimated to be spending annually to subsidize fossil fuel energy derivatives, including petrol and diesel for its citizens. Last year alone, two world superpowers – China and Russia – expended a mind-boggling $130 billion and $30 billion to subsidize energy, respectively for their citizens. And this is because they prioritize energy security as a matter of national security.
How about the UK? It has a $100 billion rolling subsidy scheme [energy price cap] for energy consumers in the country. Germany, on the other hand, is proposing to spend €5 billion this year alone, in subsidizing energy for manufacturers. Norway, another European nation, has already extended subsidy on electricity for its citizens into 2024.
It is ironic that Nigerian government officials, some ignorant citizens and arm-chair economists are hailing Tinubu for ending the subsidy regime. How they fail to realize that abrogating subsidy is the surest way of impoverishing teeming Nigerians. But they need to be enlightened.
Unlike Nigeria, oil-producing countries like Saudi Arabia, Kuwait, Angola, Venezuela and Iran are not contemplating doing away with it (subsidy), at least for now. On the contrary, they are providing generous subsidies for a range of fossil fuel energy derivatives like petrol, diesel and cooking gas for their citizens, as benefits of their natural endowments with hydrocarbons.
Let everyone who cares to listen, especially our leaders, know that corruption, low productivity, insecurity and mismanagement of Nigeria’s oil and gas assets and resources, are chief reasons the country is finding it difficult to meet its obligation of energy security to its citizens, unlike the aforementioned countries.
The idea of dishing out palliative items and provisions to distraught citizens will be welcomed, at any time. But only an insensitive government would have gone ahead with the disbursement of the proposed N8,000 handout as palliative to a phantom 12 million low-income Nigerians.
That President Tinubu eventually made a volte-face on the ‘sharing’ of the worthless N8,000 to some ‘poor citizens’ is one informed decision that has saved his government’s face. But it won’t be erasing the scar of bruises or heal the injury of the subsidy removal, many Nigerians suffered.
That is why Mr. President must think out-of-the-box in engineering a practical solution to the hardship citizens have been experiencing, since the Day One of his administration, following a pronouncement made without careful thought for the masses and their plights. To yearn for the days of the fuel subsidy will be wishing Nigeria doom.
But of what use is a policy directive that inflicts only pain, rather than ameliorate the collective hardship citizens are facing? I will leave that to you, the reader, and then of course, those who are presently saddled with the responsibility of sailing the Nigerian ship to the Promise Land, to ponder over.
As for our dear President Bola Ahmed Tinubu, an ample opportunity is still waiting for you to correct one perceived wrong against Nigerians. I am talking about ending fuel subsidy payments, without putting in place necessary measures to cushion the prevailing socio-economic turmoil in our polity.
Mr Alhassan, a social critic, wrote from Abuja
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Post COVID-19 era: 7 reasons why N’Assembly must pass local content Bill
By Yemi Itodo
As the world prepares for measures in boosting economies after the ease of global lockdown, the Nigerian National Assembly, is once again, saddled with the responsibility of coming up with legislative piece and actions that could help rejuvenate the nation’s economy and help Nigerians overcome post-Corona virus hardship. googlesyndication.com/pagead/js/adsbygoogle.js">
One swift step that must be taken by both Houses of the National Assembly, is to give serious attention to, and speedily pass the local content enforcement Bill.
The Bill which is known as, the Nigerian Local Content Development and Enforcement Bill 2020, passed second reading on the floor of the House of Representatives, on Tuesday, 19th May, 2020.
The Bill is being sponsored by the Speaker, House of Representatives, Rt. Hon. Femi Gbajabiamila; Chairman, House Committee on Nigerian Content Development and Monitoring, Rep. Legor Idagbo and 7 others.
Amongst other things, the Bill seeks to expand the scope of local content in the extant NOGICD Act, thereby putting the Nigerian economy in the hands of Nigerians, creating jobs and enhancing the value of indigenous businesses in the post Covid-19 era.
Spokesman of the House, Rep. Benjamin Kalu, while analysing the general principles of the Bill in a statement on Monday, said, the idea of local content Bill or policy was to encourage local participation, ownership and control of certain key sectors by indigenous businesses.
“This is vital to preserving Nigeria’s socioeconomic independence and enhancing the ability of indigenous businesses to exploit local opportunities, while staying globally competitive”, Kalu said.
Stressing further, the Spokesman said, “so far, the key local content legislation in Nigeria is the 10-year old Nigerian Oil and Gas Industry Content Development Act 2010 (NOGICDA), which established the Nigerian Content Development and Monitoring Board (NCDMB) but is limited to the oil sector.
“Also notable, are the President’s efforts to extend local content compliance to the public procurement practices of federal parastatals vide his Executive Orders 003 and 005.
“However, as we celebrate the Africa Day (May 25), a day commemorating Africa’s independence, liberation and socioeconomic freedom from foreign dominion and exploitation, and in the light of the current COVID-19 induced global economic position which has forced countries to look inwards for economic growth and sustainability, it has become imperative to extend local content policy beyond the Petroleum Industry to other critical sectors like, ICT, Manufacturing, Agriculture, Power, Solid Minerals, Construction, Health, etc, through comprehensive legislation”.
THE SOCIO-ECONOMIC BENEFITS OF THE BILL IN NIGERIA’S POST COVID-19 ERA:
- The Bill, when passed and assented to, will promote local manufacturing and economic diversification with focus on ICT, Agriculture, Solid Minerals, Hydrocarbon Refining and Power.
It provides for incentives to encourage local processing of hydrocarbon resources, export of processed minerals and agricultural commodities, local manufacturing of equipment, machinery, spares, chemicals, ICT hardwares, development of softwares and others.
The Local Content Bill also provides for standardisation of locally made goods and locally sourced raw materials to make them competitive in the international market.
- The Bill makes it mandatory for Nigerian made goods and services in all public procurements; Nigerian content philosophy as a key requirement in all public sector procurements; provides for creation of local content departments in MDAs and provides requirement for Nigerian Content Plan (NCP) on major projects (above N100m) outlining minimum Nigerian Content thresholds for materials, labour and services required on the project.
It also strengthens Nigerian content requirements in solicitation of bids and requires Nigerian content compliance certificate as a pre-condition for contract awards; while recommending the creation of Nigerian Content Committee (NCC), to develop economy-wide local content policy.
- Creation of a robust R&D ecosystem to drive home grown technology development; promoting collaborations between Research institutions, product developers and end users of Research; as well as provision to incentives funding of research by public and private sector entities, is another green side of the Bill that would help develop the Nigerian system.
- In job creation drive to address unemployment, the Bill seeks to give first consideration to Nigerians with requisite skills in all public funded projects.
The Bill also provides for creation of national database of available skills amongst the Nigerian locals and requirements for approval and utilisation of expatriates will only role where there is immediate skills shortage.
- Local Content Enforcement Bill will address capacity building to develop resilient local supply chain; Provision for targeted sector-specific capacity building programmes and requirement to close capacity gaps in education, infrastructure, facilities and vendor development on the back of projects.
- Sustainable funding for local content is another clause in the Bill that will help promote and grow the Nigerian economy in Post COVID-19 era.
To achieve this, the Bill provides for creation of a Nigerian Content Trust Fund (NCTF), dedicated to implementing projects and programmes connected to developing local content. Application of the Fund to develop SMEs through low interest project-based financing schemes is also provided for in the Bill.
- The enactment of the Nigerian Local Content Development and Enforcement Bill will strengthen executive-legislature synergy and oversight on local content administration in key sectors of the economy.
It will also provide necessary legislative backbone for implementation of key initiatives that will evolve from the Presidential Economic Sustainability Committee as well as other policy actions by the Executive aimed at repositioning the Nigerian economy in the post COVID-19 era.
As the House of Representatives resumes plenary on Tuesday, 2nd June, 2020, it is instructive to consider further legislative actions for the speedy passage of the all-important Nigerian Local Content Development and Enforcement Bill 2020.
The Nigerian Senate should also, as a matter of urgent national importance, consider the concurrence of the Bill when passed by the lower chamber, for the immediate assent of President Muhammad Buhari, for the good of our economy and the citizenry.
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