Lagos — TheYar'Adua administration's disposition to fresh debt accumulation may have been loosely articulated in separate statements from some key members of the cast.

The Honourable Minister for Finance recently returned from meetings with international experts and proclaimed government's enthusiasm for fresh foreign loans to finance some key infrastructural projects. Shortly after, Mr. President's Special Adviser on Communications, in a media brief (Punch 30/10/2007 - pg 10) confirmed that "... technically, we don't have the money to fund the power project.

We are looking at different modes to fund these (power and other) projects", Segun Adeniyi's sentiment is probably a clear echo of his master's voice

Not to be left out in the foray of ground preparation, the CBN Governor also decried the poor state of our economy and blamed decrepit infrastructure as the prime villain of our underdevelopment! In our 'expert' banker's projection, it would take us up to 2065 to catch up with South Africa, if we continue to grow at current rates.

This may be cold comfort for those Nigerians currently above ten years!

The truth, however, is, we may never catch up with our Southern brothers who will certainly not stand still and wait for us! In this event, the solution is obvious:

massive foreign borrowing is needed to speed up infrastructural development; and where else to get such funds, but from our "generous and sympathetic debt forgivers", who are already standing by to lend back to us the $12bn that they scammed out of the pockets of 140 million of the world's happiest people, most of whom live on less than $1 a day!

It is commercially prudent to borrow at reasonable cost to finance projects with potential good returns that would steadily repay such loans and provide enduring benefit for the business promoters. As it is for business concerns, so also it is for a nation.

Regrettably, our national history post 1979 does not parade any distinction in project loan utilization.

With over $50b loan repayments since 1985, and nothing to show for it, maybe we should ask ourselves this question; namely, do we have in place a structure that would prevent abuse of fresh loans?

Unfortunately, evidence of persistent corruption in government does not inspire much confidence on the success of the much touted enthronement of due process in public spending.

The gradually pervading sentiment that treasury looters can get away with just a slap on the wrist once they agree to return some of their loot is rather regrettable and will not improve the prospect of efficient management of new loans, whether foreign or domestic. In fact, our record on the domestic front is equally dismal.

In the last five years, our domestic debt has more than doubled to exceed N2000bn. Indeed, the motivation of rapid domestic debt accumulation has not been project-driven or infrastructure related.

Over N1000bn of this debt is for the purpose of deepening the market for government securities and payment of interest and capital for moneys which had earlier been borrowed for the same intangible and unproductive purposes.

It beats my imagination, why any one would want to borrow and incur annual interest payments of almost N300bn just to make their debt instruments increasingly available in the capital market. (That's what deepening the market means!).

The government's Debt Management Office in fact appears totally oblivious of the cost and the damage their enthusiasm for market depth has caused the economy.

In fact Nigeria's bond market is touted to be one of the most lucrative in the world, (that means our government pays more interest for borrowed funds than any one else) and the Central Bank often gleefully reports the apparent inflow of foreign money into our buoyant bond market as a measure of the success of economic reforms!

So long as the bond rate hovers around 10% (it was over 16% only last year) it does not take a business expert to deduce that you can borrow abroad competitively at 5 - 6% and head straight to Nigeria where the government will pay you 10% for money that they literally keep idle!

In the book, "The Confessions of an Economic Hit Man", John Perkins, a born-again former agent of International Corporate Finance revealed that developing countries were often encouraged to take unworkable loans from the West, so that the financiers can exert control over the resources and policies of the debtor nations when they eventually predictably default!

I do not know if this is true for the Nigerian predicament, but the failed results of past foreign loans and the crushing yoke of prolonged repayments may have stunted our growth and dented our self belief!

Any rational person endowed with a heavy credit balance of very low interest yielding idle funds will be unlikely to overlook this and proceed to borrow funds for whatever purpose at a cost that is higher than the level of interest earned by his savings!

If anyone is simple enough to do this, he would be borrowing his own money back from his bank! Why government persists in this sort of frivolity is anyone's guess.

Our foreign reserves which currently approach $50bn are domiciled in low interest yielding deposits abroad; meanwhile, our monetary experts are happy to borrow funds which are subsequently left idle at almost 10% rates of interest!

The same irrationality rules in the area of domestic debts instruments as the CBN also borrows back from the capital market, billions of Naira that it had earlier unleashed in the system in the name of Naira statutory allocations every month.

So, what is the sense in the current build-up of favourable public opinion towards a new round of fresh foreign loans, and the increasing accumulation of domestic debt? Inspite of an unsolicited, uncollateralized $7bn loan to 14 Nigerian banks, the Media Adviser maintains that we do not have enough funds for infrastructural accumulation, especially in the light of Mr. President's "decision to uphold the rule of law" with regard to "...the legal challenges concerning the excess crude account.

Because the money belongs to the three-tiers of government and the Federal Government cannot take money out of that account. So the source of funding will have to be explored," (Punch 30/10/07, pg 10).

This is obviously a veiled indictment of Obasanjo's constitutional violation in dipping into the "excess crude account" to finance the over $2bn yet to be completed Niger Delta power stations without prior legislative authority!

But this appears a rather lame excuse for embarking on a fresh loan spree inspite of huge idle reserves, and Yar'Adua maybe carrying adherence to the rule of law a little bit too far!

The "excess crude account" is also a clear violation of constitutional provisions regarding revenue in the federation account. In place of fresh foreign loans with a high interest burden and attendant usually unfriendly conditions, it makes sense to identify our critical infrastructural needs and consult with other arms of government on the wisdom of consolidation of our current balances in the 'excess crude' account (estimated at about $10bn) and a portion of the balance reserves of about $40bn into specific project financing that would provide more railway and road networks and well-equipped hospitals and schools.

SAVE THE NAIRA, SAVE NIGERIANS!