Outrage over Senate approval of Buhari’s $16bn, €1bn loan request
…Reduce costs of governance — Muda Yusuf
…Nigeria needs equity, not unsustainable debts — Adi Bongo
By Ariemu Ogaga, Denis Matthew and Uthman Salami
The Senate and the Buhari-led Federal Government have come under scathing assessment by Nigerians in the financial sector over the approval of the sum of $16,230,077,718, €1,020,000,000 and a grant of $125,000,000 as foreign loans to fund projects in the country.
Earlier, the Senate had given a green light for the Federal government to collect the loan following the consideration of the report of its Committee on Local and Foreign Debts, chaired by Senator Clifford Ordia.
The highest lawmaking body in the country particularly gave the nod to the issuance of €500,000,000 from the Bank of Industries and €750,000,000 Eurobond in the International Capital Market, urging the executive to submit the terms and conditions of the loan from the funding agencies to the Red Chamber.
Federal Government needs to cut cost of governance – Muda Yusuf
Meanwhile, Nigerians in the financial sector, Economist, CEO Centre for Promotion of Private Enterprise, Dr Muda Yusuf and Senior Lecturer, Lagos Business School, Dr Adi Bongo in seperate interviews with Nigerian NewsDirect yesterday unanimously averred that the country’s rising debt profile raises serious sustainability concerns.
Dr. Muda Yusuf disclosed that part of the borrowing plan is targeted to finance the deficit in the 2021 Budget.
Yusuf, who was the former Director General, Lagos Chamber of Commerce and Industry (LCCI), noted that government should concentrate on improving investment environment as catalyst to boosting the nation’s revenue base and debt substanibility.
He explained further that “the request is part of the borrowing plan to finance the deficit in the 2021 budget. The plan has possibly been approved by the National Assembly, both in the Medium Term Expenditure Framework (MTEF) and the 2021 Appropriation Act.
“However, this does not diminish the worry about debt sustainability. The rising debt profile of government raises serious sustainability concerns. Although government tends to argue that Nigeria does not have a debt problem, but a revenue challenge.
“But the truth is that debt becomes a problem if the revenue base is not strong enough to service the debt sustainably. It invariably becomes a debt problem.”
He asserted that, “It is a case of living in denial. What is needed is the political will to cut expenditure and undertake reforms that could scale down the size of government, reduce governance cost and ease the fiscal burden on government.
Dr. Yusuf advised that, “Improving the investment environment would also boost revenue and enhance fiscal sustainability. There is a strong correlation between investment growth and government revenue performance. With more investment, revenues from company income tax. VAT. PAYE, PROPERTY tax, education tax will correspondingly increase.
“Meanwhile, it is important to ensure that the debt is used strictly to fund infrastructure projects that would strengthen the productive capacity of the economy.This is the position of the Fiscal Responsibility Act.
“Additionally, emphasis should be on concessionary financing, as opposed to commercial debts which are typically very costly. The should scale down further commitment to commercial debts like the Euro bond. The costs are relatively high,” he said.
Nigeria needs equity, not unsustainable debts – Adi Bongo
On his part Adi Bongo said the FG lacks capacity to sustain the massive borrowing.
He explained that Federal Government should provide enabling environment for private sector investors to improve the Nation’s infrastructural deficit and revenue base.
“What we need as a Country is equity not unsustainable debts,” he said.
He lamented that the government’s borrrowing has not been put into appropriate and efficient use in the past.
Adi advised that the government should ensure the loans are properly utilized.
