Abuja — No fewer than 42 civil society organisations (CSOs) have called on the National Assembly to hold public hearings on President Muhammadu Buhari's $29.96 billion loan request and reflect the opinion of majority of Nigerians in the approval or disapproval process.
The CSOs, in a joint press statement, also stated that as a preliminary measure before considering new loans, there should be set limits of consolidated debts for the federal, state and local governments in accordance with Section 42 (1) of the Fiscal Responsibility Act.
Among the CSOs that called for the public hearing were Centre for Social Justice (CSJ), Civil Society Legislative Advocacy Centre (CISLAC), Socio-Economic Right and Accountability Project (SERAP), Centre for Democratic Research and Training (CRDDERT), and Civil Society Network Against Corruption (CSNAC).
They also include Human and Environmental Development Agenda (HEDA Resource Centre), Centre for Democracy and Development (CDD), Partners for West Africa - Nigeria, Centre for Information Technology and Development (CITAD), International Refugee Rights Initiative (IRRI) and Zero-Corruption Coalition (ZCC), among others.
The CSOs recalled that President Muhammadu Buhari request for the approval of the 8th National Assembly to borrow the sum of $29.96 billion under the 2016-2018 External Borrowing Plan was turned down.
The statement said: "These organisations recognise that the Debt Management Office reported Nigeria's indebtedness at June 30, 2019, in the sum of $83.8billion, being an increase of 31.35 percent over the $63.8billion debt outstanding at June 30, 2015. In Naira terms, the sum of N12.118trillion was outstanding as at June 30, 2015 while the current debt now totals N25.7trillion.
"We the under listed organisations also recognised that the external component of current level of indebtedness is $27.1billion, being an increase of $16.8billion over the June 30, 2015 external debt component of $10.3billion.
"We further recognise that Nigeria deployed 54.3 percent of her earned revenue to debt service in 2018 and in the first half of 2019, the country deployed 54.2 percent of all her earned revenue to debt service."
They emphasised that if at a debt level of $83.8 billion, Nigeria is deploying over 54 per cent of her revenue to debt service, the country, after taking the new loan of $29.96 billion, will need not less than 65 per cent of her revenue to service a new debt level of $113.7 billion.
The CSOs also explained that foreign currency denominated loans come with exchange rate risks, considering the volatility of the price of crude oil which is Nigeria's major foreign exchange earner.
They observed that the country would be faced with extreme options after taking the new loan, which include a default in its debt repayment obligations or extreme cuts to basic social services, including education and health.
"Whilst we take note of efforts to increase government revenue through the Finance Bill pending in the National Assembly and the recently enacted amendment of the Deep Offshore and Inland Basins Production Sharing Contract Act, it is our position that the steps are tepid and will not in any way dramatically improve government's revenue.
"We, the under listed organisations note with concern that in 2018, the actual recurrent non-debt expenditure of the federal government was N3.1 trillion while debt service was N2.1 trillion bringing the two to N5.2 trillion. However, the earned revenue was N3.9 trillion.
"This meant that the federal government borrowed or got some unearned money in the sum of N1.3 trillion to settle recurrent expenditure and debt service. Thus, we borrowed to pay back outstanding debt obligations! We also note that there is very little evidence to show, in terms of investments in infrastructure, reflecting $83.8 billion of already borrowed money," the CSOs further observed.
The organisations pointed out that this ratio of debt service-to-revenue is not sustainable and not in accordance with the obligation of the Federal Government of Nigeria under Section 41 (1) (b) of the Fiscal Responsibility Act to ensure that the level of public debt as a proportion of national income is held at a sustainable level.
They expressed concern that there has been no transparency in the management of Nigeria's debts as the actual and individual debt agreements, including the tenor, interest rates, terms of repayment and what happens in the event of default, among others, were not in the public domain.
The federal government, according to the CSOs, has failed to perform its obligations under section 42 of the Fiscal Responsibility Act to set the limits on consolidated debts of the federal, state and local governments.
They lamented that Nigerians are suffering the huge effect of the high level of borrowing which has necessitated government to churn out month after month of new multiple tax regimes through the banking institutions.
The non-governmental organisations stressed that there are various options, apart from sovereign debt, for the funding of capital and infrastructure projects, especially in the proper management and accountability of available resources from taxation and the oil and gas sector.
They also urged the federal government to plug all leakages in revenue especially from what they described as the opaque activities of the Nigerian National Petroleum Corporation, in order to have more revenue to fund projects.
The CSOs also advised the government to immediately start work on the enactment of the Petroleum Industry Bills, which would liberalise the petroleum and gas sector and garner more revenue to the Federation Account.
They also called for a reduction in the cost of governance by cutting down on the bloated expenditure of the bureaucracy especially in the executive and the legislature.