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Buhari Has Taken 3 Times Combined Amount Of Foreign Loans Incurred By Obasanjo, Yar’Adua, Jonathan. These Are The Numbers

Buhari has taken 3 times combined amount of foreign loans incurred by Obasanjo, Yar’Adua, Jonathan. These are the numbers

Nigeria’s public debt has risen the most under the Buhari administration when compared to previous governments since 1999, and foreign debt has grown three times more than the combined figure recorded by the past three administrations, a PREMIUM TIMES analysis of the government’s domestic and foreign debts has shown.

While the Obasanjo government met $28 billion as foreign debt in 1999, it left $2.11 billion in 2007 after successfully securing a write-off by the London and Paris clubs of foreign creditors.

The Yar’adua/Jonathan government added $1.39 billion to what they met, and the Jonathan government incurred additional $3.8 billion, taking the country’s total foreign debt to $7.3 billion when that administration came to an end in 2015.

Nigeria’s external loan reached $28.57 billion by December 2020, meaning an extra $21.27 billion had been accumulated under the Buhari administration — three times the combined amount by past governments since 1999.

For domestic debt, considered relatively less harmful to the value of Naira than foreign debt, the figure rose from N795 billion in 1999 when the Obasanjo government came to power, to N8.8 trillion in 2015 when the Buhari administration assumed office. By December 2020, Nigeria’s domestic debt had risen to N16.02 trillion — twice as much the combined amount taken by the past three governments.

The domestic and foreign debt figures are higher now as the government has borrowed more in 2021.

”More than Three-Quarter”

The figures contradict a claim by chairman of the Senate Committee on Finance, Solomon Adeola, that “three-quarter” of Nigeria’s total debt profile estimated at N33 trillion naira was incurred by past administrations dating back to the military era.

Speaking at a Senate hearing on September 22, Adeola in a response to a request by the Senate president, Ahmad Lawan, to clarify concerns over the nation’s piling debt, said, “The borrowing you are saying is accumulated borrowing. It is not a borrowing of this administration alone, it is a borrowing that stems from the days of the military to the days when the Democratic dispensation started.

“It is an accumulated loan, it is not a loan that says that it is the current administration of President Buhari that has borrowed.

“It is a loan that has been borrowed by the previous administration – the Obasanjo, the Jonathan, the Yar’Adua of this world.

“[And] since the business of government is a continuum, the president of the day has no choice but to continue to pay back all these loans that have been borrowed by the previous administrations.

“More than three-quarter of these loans you’re seeing were borrowed from the previous administrations, and we are paying back – we are doing what is supposed to be done, the way it is supposed to be done.

“So, when my colleague said that for every sixty-seven naira of any loan that was borrowed, we are using to pay, he should know that more than sixty naira of it are loans borrowed by previous administration. And that is where we are.”

Government figures obtained and analysed by PREMIUM TIMES do not support Adeola’s “three-quarter” claim. While previous administrations borrowed as shown above, it is the present government that has taken the bulk of the domestic and foreign loans.

Debt Forgiveness

In 2006, Nigeria became the first African country to settle its public debt under a scheme devised to help the world’s poorest and indebted states. The country under former President Olusegun Obasanjo paid off $18 billion to secure forgiveness of the balance of its nearly $30 billion debts to the London and Paris clubs of foreign creditors.

But 15 years later in 2021, Nigeria’s public debt is high again, putting pressure on the government’s revenue and performance.

A report by the World Bank placed Nigeria among the top 10 countries with the highest debt risk exposure. Nigeria is fifth with $11.7 billion debt exposure, behind India ($22 billion), Bangladesh ($18.1 billion), Pakistan ($16.4 billion), and Vietnam ($14.1 billion).

In recent periods, there has been a furore over Nigeria’s borrowing plans and debt profile. Debt Management Office (DMO) said as of March 31, Nigeria’s total public debt was N33.1 trillion ($87.24 billion) — accumulated between 1999 and 2021.

The overall public debt, DMO said, is the total public debt stock which includes the external and domestic debts of the federal and state governments and the Federal Capital Territory.

The federal government’s share of the public debt jumped from N3.55 trillion in 1999 to N26.91 trillion in March 2021. This means the nation’s debt stock has risen by over 650 per cent in 21 years.“Bad Times Ahead”

Economic analyst, Tope Fasua, said Nigeria’s loan is already unsustainable because it is taking 95 to 97 per cent of revenue generated. “That ratio is not sustainable,” he said.

The huge amount the Nigerian government is borrowing mostly is “to cater for a lot of failures and they just borrow to keep some activities going,” the economist said. “How the loans are going to be paid is not in question for them and that’s very unfortunate.

“The loan is unsustainable from the perspective of revenue, from the perspective of corruption and value for money and from the perspective of project implementation.”

“Only 30 per cent value for money is what we get especially on these loans, some of what we are taking are for very frivolous issues,” he said.

“In my opinion, we should take loans only for projects that have the ability to pay themselves back. If a project is not generating cash flow, it shouldn’t be taken.

“If we are taking loans for local roads and schools, who is going to pay? These are projects that should be funded from internally generated revenue.”

He also attributed the currency challenges to Nigeria’s debt portfolio.

“We have a challenge with the naira presently, and one of the key things that throws your currency off is debt unsustainability.

“And mind you, most of the loans we are taking in recent times have not fallen due for payment, what we are doing is only paying the interest. Many of them have moratoriums on interest payments.

“These guys have actually booked for us a bad time and a lot of trouble upfront,” he said.

Samuel Bamidele, Head of Research and Intelligence at Phillips Consulting Limited said although Nigeria’s debt remained within the IMF recommended range with respect to GDP, the country faces a challenge when its debt stock is compared to its revenue. He also worried about how the government was using the borrowed funds.

“Nigeria’s debt stock at 33% of GDP is sustainable at that level, but the issue is more around servicing the debt,” he said. “When your debt stock is above 40 per cent, according to the IMF Debt Sustainability Framework (DSF), it means that it’s no longer sustainable,” Bamidele said.

“So you can say that Nigeria’s debt profile is sustainable at the current level but the problem is the revenue. Because when your revenue is low you will need more money in terms of borrowing to finance both capital and recurrent projects.

“At a point in time in 2020, our debt service was 99 per cent. What this means is that for every N1 earned, we are using 99 kobo to service debt.

“Conversation around our debt should be more geared towards how we are channeling the debt we are borrowing in terms of efficiency and proper allocation. The danger here is we are not sufficiently channeling what we are borrowing on productive capacity and infrastructure, instead we borrow to finance more of recurrent spending.”

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