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Nigeria’s debt sustainability question: Addressing systemic leakages against sliding into trap zone 

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That Nigeria may be running into debt trap has been one concern which has continued to attract outcries. Although, the government has maintained Nigeria’s borrowings is within the limit of Debt-to-GDP (Gross Domestic Product) ratio, it is apparent that there are justifiable grounds which antagonists of the addictive borrowing disposition of the present government have put forth to substantiate their arguments are not outrightly false. The facts themselves have their firm reflections.

Such issues as the cost of  borrowings with high interest rate of loans; unsustainable revenue-to-debt servicing ratio; misapplication of loans; borrowing for recurrents; among others; have their grips of justification on the sustainability question of Nigeria’s debt, which is feared to be headed for a trap. The International Monetary Fund (IMF) in its April 2022, Fiscal Monitor, had projected that Nigeria’s total public debt will rise steadily to 44.2 per cent GDP, by 2027, adding that the total fiscal spending of the General Government (Federal and State governments) will widen to 6.4 per cent of GDP this year, 2022, from 6.0 per cent at the end of 2021.

The IMF had disagreed with the Debt Management Office’s (DMO) position that “with the Total Public Debt Stock to Gross Domestic Product (GDP) as at December 31, 2021, of 22.47 per cent, the Debt-to-GDP ratio still remains within Nigeria’s self-imposed limit of 40 per cent.” On IMF’s part, Nigeria’s Debt-to-GDP ratio stood at 37.0 per cent at the end of 2021, and will rise to 37.4 per cent in 2022, 38.8 per cent in 2023, 40.2 per cent in 2024, 41.6 per cent in 2025, 42.9 per cent in 2026 and to 44.2 per cent in 2027. The IMF had also projected that the general government fiscal deficit would slightly improve from 6.4 per cent to 5.9 in 2023 and 2024, before deteriorating, once again, to 6.1 in 2025, 6.3 per cent in 2026 and 6.4 per cent in 2027.

The outcries and warnings, nonetheless, have not constrained the government to adjust its borrowing disposition with caution. Recent documents have shown the country’s debt stock have risen by about N4 trillion in the past five months accumulating to N45.25trillion. This is a rise from DMO’s earlier report that the national debt stocks had risen to N41.6 trillion by the end of the first quarter ended March 31, 2022.

Monthly issuance reports by the Debt Management Office (DMO), the Central Bank of Nigeria (CBN), key investment and finance organisations have revealed that the Federal Government raised about N3.34 trillion through its regular issuance of domestic debt instruments between April and August.

The reports specified that the government raised N1.116 trillion through bond issuance within the five-month period. It also raised N1.999 trillion through the Nigerian Treasury Bills (NTBs) and mopped up N220.01 billion through the Open Market Operation (OMO).

The DMO indicated that it used the CBN’s official exchange rate of N415.75 per dollar as of March 31, 2022, as the conversion rate for the country’s external debts for the first quarter. The Apex bank’s official rate remained at N423.48 per dollar as of August 31, 2022. A breakdown of the total debt stocks took reflection based on the increase in external debts to currency depreciation from N16.62 trillion in the first quarter to N16.93 trillion as of the end of last month.

The domestic debts, because of new issuances, rose from N24.987 trillion in the first quarter to N28.322 trillion by the end of August. The debt stock, which stood at N32.92 trillion by December 2020, rose to N39.556 trillion by December 2021 and rose further to N41.6 trillion by the end of the first quarter of 2022.

The Federal Government keep accounting for more than 88 per cent of the debt stock. The astronomic rise in debt stock from about N12.6trillion in 2015 to over N45trillion in 2022 calls for alarm, particularly when all economic indices do not reflect positive impacts of the loans.

That the country is unfavourably predisposed towards debt trap is more perceivable than otherwise, as the prevailing conditions apparently are clustering the economy with circumstances which may entangle it with strains that may push forth closer to trap zone than pulling it out from same.  It is apparent the country is gliding towards the danger zone.  Depreciation of the Naira appears to be amounting to increased external debt stocks, as the local currency falls in value before the large chunk of loans acquired in dollars, the payment of which would be effected in Naira value. That the borrowings so far have not reflected positivity in the productivity of the economy calls for worry. Key economic indices keep trailing the negative trend.

It is inarguably that prevailing conditions apparently reflect that certain leakages have formed factors assuming variables of defecting strings against the optimisation of the impacts of loans which have so far been acquired. The variables are apparently stronger in force than the advantages that the loans would have yielded, thus defying the vitalising  force of these borrowings. It is only rational that the government identify and address the systemic leakages for a change in narrative. More importantly, the  prevailing conditions have placed before the government the necessity to tread cautiously.

Editorial

Nigeria’s National Identity Card initiative: A misguided venture

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The recent announcement by the National Identity Management Commission (NIMC) regarding the launch of a new national identity card with payment functionality epitomises folly.

While touted as a solution to streamline identification and financial services, the collaboration between NIMC, the Central Bank of Nigeria, and the Nigeria Inter-bank Settlement System appears to be a misaligned endeavour.

In a nation burdened by limited resources and an array of urgent challenges, Nigeria’s pursuit of grandiose projects with questionable benefits is a luxury it cannot afford.

Despite its surface appeal, closer scrutiny reveals a troubling trend of duplication, bureaucratic inefficiency, and a glaring gap between governmental aspirations and citizens’ realities.

This venture echoes previous attempts to overhaul the national identification system, notably the ill-fated 2006 concession awarded to Chams.

That endeavour, marred by allegations of collusion and technical sabotage, squandered over $100 million, leaving a bitter legacy of failure. In light of this history, skepticism abounds regarding the prospects of the current initiative.

As Nigeria grapples with pressing socio-economic issues, including poverty, insecurity, and inadequate infrastructure, it is imperative that resources be directed towards initiatives with tangible benefits for the populace.

The proposed national identity card, with its payment functionality, appears to be a misplaced priority in this context.

Rather than embarking on ventures with dubious returns, Nigerian authorities must prioritise accountability, transparency, and citizen-centric policies. The nation cannot afford to repeat past mistakes at the expense of its long-suffering populace.

Furthermore, the purported justification for the new card – facilitating access to “multiple government intervention programs” for the financially marginalised – falls short when juxtaposed with the formidable hurdles Nigerians encounter in simply linking their National Identification Number (NIN) to vital services like mobile phone accounts or bank facilities.

The pandemonium and exasperation prevalent in these endeavours, resulting in citizens squandering valuable time and resources, should stand as a stark warning regarding the government’s competence in executing such extensive identity management schemes.

Moreover, if the concern is the proliferation of identification documents in Nigeria – from international passports and driver’s licenses to voter cards and the existing national ID card – this newspaper holds that this mosaic of identification systems not only spawns unnecessary confusion and bureaucratic headaches for citizens but also casts doubt on the government’s capacity to efficiently orchestrate and amalgamate these diverse platforms.

Instead of tackling these persistent issues head-on, the introduction of yet another identity card appears to be an ill-conceived effort to reinvent the wheel, with scant consideration for the practical challenges confronting Nigerians in their daily lives.

In a nation grappling with limited resources and a plethora of pressing needs, the decision to allocate billions of naira to this new card project is both confounding and deeply concerning. Many would argue that the government’s time and financial resources could be more effectively directed towards enhancing existing infrastructure, fortifying public services, and confronting the numerous socioeconomic challenges plaguing the country.

From the dire state of the healthcare system to the ongoing insecurity that has resulted in significant loss of life, there exist far more urgent issues warranting the government’s attention and, critically, its constrained financial resources.

Moreover, the assertion that the new card will facilitate access to “government intervention programs” for the financially marginalised raises concerns about introducing yet another bureaucratic barrier for vulnerable Nigerians.

Instead of introducing a new identification system, the government’s focus should be on refining and strengthening existing social welfare programs, ensuring they are accessible, efficient, and tailored to meet the needs of the populace.

The government’s ambition to distribute the new card to approximately 104 million citizens is cause for concern. Undertaking such a monumental task without a clear and comprehensive plan is likely to result in further delays, logistical complexities, and a considerable squandering of public funds – resources that could have been channeled towards making tangible improvements in the lives of Nigerians.

In essence, the rollout of the new national identity card with payment functionality reflects a recurring pattern in Nigerian governance: the inclination towards grand, top-down initiatives that often fall short of addressing the underlying issues fueling the country’s challenges.

Instead of pursuing this dubious venture, the government’s focus should shift towards strengthening existing identification systems, fostering better coordination among government agencies, and prioritising investments in areas directly impacting the lives of Nigerians.

As a nation, we must resist the temptation of embracing flashy new projects that promise quick fixes to complex problems.

Achieving genuine progress demands a nuanced, collaborative, and evidence-based approach that acknowledges the distinct needs and challenges of diverse communities.

It’s high time for the government to abandon this latest identity card scheme and redirect its efforts towards more impactful and sustainable initiatives that truly serve the citizens it is sworn to uplift.

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Editorial

Articulated vehicles and the scourge of avoidable deaths

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Nigerians across the country continue to die utterly preventable deaths thanks to a lack of political will on the part of its leaders. It is an ugly fate thrust upon its citizens to live in a country whose economy is built upon the blood of the ordinary people, not out of sacrifice, but nonchalance. Articulated vehicles wipe out families, dreams, and human capital in one fell swoop. Press statements from the leaders are not enough. We need the May 2024 immediacy of the Tinubu administration in this sector too.

Last week, a falling container killed a woman in the Ogudu area of Lagos. The woman was inside a car when the fully loaded 40ft Mack articulated truck fell on it, leading to her instant death, according to the Lagos State Traffic Management Authority (LASTMA).

In October 2023, a businessman identified as Akuma Kalu, was crushed to death by a 40-feet container that fell on his car along the failed portion of Etche-Ngokpala road in Etche Local Government Area of Rivers state.

In September 2023, five women died in a fatal accident that occurred in the early hours of Friday at Odumodu Junction, Nteje, Oyi Local Government Area along Awka Road, Anambra State. As usual, the container of the truck fell upon the bus carrying these people, killing them. We could go on and on. The story remains the same: tragedy upon tragedy.

Every year, the Federal Road Safety Commission, FRSC, does sensitisation with little result to show for it because the arm of the law is too short to punish offenders at the root of the problem. The constant assault on the senses has led to a desensitisation on the part of the populace. Month after month, another story of a truck that erases a family, or multiple families because its brakes fail, or its container is overturned. The combination of the death of empathy on the part of leaders and the emotional exhaustion of the citizens will lead Nigeria down the path of a dystopia.

The governors of each state have a responsibility to institute laws to protect the indigenes. This, the Federal Government must also do nationwide. The FRSC has rules and regulations for trucks. The Government needs to only enforce these rules. Enough of blaming the trucks themselves because they are not the evil entities. The lack of accountability and a weak system perpetuates the dilemma.

The political class should not wait until Nigeria happens to one of their own before acting as is usually the case. Most cases bear the mark of immediate fatality. By the time a family member experiences it, it would have already been too late. We have hope that this administration will do what it takes to restore hope to the common man. Time to act is now.

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Editorial

Renewed Hope Initiative: Beating back inequality in all spheres

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Nigeria is full of inequalities that its leaders contend with administration after administration. With every President comes a partner who shares in the vision, and does her part to alleviate the pains of the citizens. Oluremi Tinubu has etched her name in the annals of history as one of such compassionate ones.

Recently, in Abeokuta she flagged off the Renewed Hope Initiative for women in agriculture and people living with disabilities nationwide in a bid to achieve this noble goal of equity in Nigeria.

“We are supporting 20 women farmers per state with the sum of N500,000 each. To this end, a draft of N10 million per state for the South West zone will be handed over to the first ladies of Ekiti, Lagos, Ogun, Ondo, Osun, and Oyo states who are the Renewed Hope Initiative (RHI) state coordinators for onward disbursement to all beneficiaries in their respective states,” she said.

“The Renewed Hope Initiative Social Investment Programme will be empowering 100 persons with disability, small business owners in Ogun State with a sum of N100,000 each to recapitalise their existing businesses.”

In Kebbi, represented by the Wife of the Speaker, House of Representatives, Fatima Tajuddeen Abbas, in Birnin Kebbi, she said, “Agriculture plays a pivotal role in achieving sustainable development and food security. Consequently, we are introducing ‘Every Home a Garden’ competition to encourage each Nigerian woman to cultivate a garden at home to feed the family and share with neighbours, we want to see food on every table.”

We commend the forward thinking and passion for national growth required for such a herculean task. If emulated in all quarters, it will stimulate the economy at the grassroots. It is well acknowledged that the government cannot do it alone. Private individuals who are capable must rise up to contribute to national growth.

It isn’t alien to the Nigerian condition, after all. The country was able to survive the assaults of the COVID-19 pandemic thanks to the joint efforts of private individuals under the umbrella of Coalition Against COVID-19, CACOVID, a Private Sector task force in partnership with the Federal Government, the Nigeria Centre for Disease Control (NCDC). The Renewed Hope Initiative joins the tradition of programmes committed to national improvement. History will look upon it kindly.

 

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