As it is so evident, some International Oil Companies (IOCs) have taken undue advantage of this obscene governance template to fleece the country.
Nigeria's debt stock is ominously mounting with the approval of a fresh $2.2 billion loan to fund the 2024 budget, with just about five weeks to the end of the year. The Federal Executive Council had endorsed the need for the loan at its meeting, and within two days, the National Assembly put a legislative seal.
The broad justification for the credit facility is simply not compelling, amid uncollected revenues, which require government's resolve, discipline and blocking of leakages to recover. The country was already in a debt-trap with President Muhammadu Buhari government's fiscal recklessness. Ironically, President Bola Tinubu has been steadily worsening the crisis in his 18 months in office. Aggravating the situation further is a time-bomb that the legislature should not allow to explode, going forward.
According to the Debt Management Office (DMO), Nigeria's total debt portfolio stood at $91.46 billion or N121.6 trillion as of 31 March. Out of this figure, $15.59 billion was secured from the World Bank. It is intriguing that Tinubu had borrowed $6.45 billion from the World Bank as of 10 October this year. The latest $2.2 billion, the earlier $350 million from Afrieximbank for the Marada (Niger Republic) railway linkage to Kano, N20.1 trillion domestic borrowing, and the $5.3 billion obtained by NNPCL from Afriexim bank in 2023, all aggregate to a staggering level of indebtedness.
Some experts are concerned that many of these loans are sourced from Euro Bonds, which make the cost of obtaining them very high. Besides, rather than being borrowed for productive activities which would enable them to liquidate themselves, these loans largely end up for consumption, misappropriation, and looting by public officials. To be clear, virtually every nation borrows to enhance its economy.
But getting this positive result from Nigeria's persistent loan procurements is the challenge. A former Minister of Women Affairs disclosed in July how she declined to endorse an allegedly dubious $500 million World Bank loan request, for which she claimed to being victimised by some cabals in government. "There was also a case of $100 million earlier as well. Found out what it was meant for." She added that she was entitled to 5 per cent of the funds if she had signed the two requests. As such, Nigerians need to open their eyes and interrogate these loan requests, as some of them are needless in the face of revenues waiting to be recovered.
The country has been enmeshed in a debt overhang before. Its debilitating effect on the economy forced President Olusegun Obasanjo to seek debt relief from the Paris Club of creditors in 2005. A deal yielded $18 billion in debt cancellation out of Nigeria's debt stock of $35.99 billion. Eventually, it paid $12.4billion as part of an exit strategy in 2006, and was left with about $5 billion in debt, which was manageable. This laudable solution to our fiscal conundrum was when the Minister of Finance and Coordinating Minister of the Economy was Dr Ngozi Okonjo-Iweala.
Sadly, in 20 years, successive governments plunged the country into a worse level of indebtedness, which could be attributed to maniacal governance, the absence of transparency and accountability in the oil sector, and mismanagement of the nation's oil revenues.
As it is so evident, some International Oil Companies (IOCs) have taken undue advantage of this obscene governance template to fleece the country. Annual reports of the Nigeria Extractive and Transparency Initiatives (NEITI) on the activities of the IOCs document huge unremitted revenues to Nigeria in the form of taxes, royalties, and its share of profit from the joint ventures. For instance, oil companies and agencies owed the government $9.85 billion in 2021, as stated in the NEITI report released in September 2023. This was two years after, meaning that 2022 to 2024 default payments likely exist.
The regulators in the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and the national oil company, NNPCL, have not been helping matters either. The NUPRC reportedly had an outstanding collectable revenue of $8.251 billion as of 31 December, 2022. Instructively, "0ver 80 per cent of these outstanding financial liabilities are owed by NNPCL," NEITI said.
Besides, the criminal element is the crude oil theft by some of the IOCs. Paper trails of this heist between 2011 and 2014, within the country and abroad, highlighted a $17 billion worth of crude stolen. The former Attorney-General of the Federation and Minister of Justice, Abubakar Malami, confirmed this to the House of Representatives during an investigative hearing on the matter and vowed to initiate its recovery. But he never did.
Repeatedly, PREMIUM TIMES has drawn President Tinubu's attention to these obvious anomalies, which a serious government genuinely fighting corruption should staunch and easily recover the funds to meet its fiscal challenges. Curiously, there is no desire to do so just yet. Even the Chief of Staff to the President, Femi Gbajabiamila, is not unaware of these shenanigans in the oil sector, in view of an ad hoc committee he set up in 2022 as Speaker of the House of Representatives, in a desperate search for money to fund that year's budget.
Incidentally, the current Minister of State for Labour, Nkeiruka Onyejeocha, chaired that committee, tasked with investigating N2.6 trillion owed to government by 77 oil companies, as revealed in the 2019 NEITI report on their operations. Gbajabiamila threatened to invoke the relevant section of the Constitution to arrest persons who might be summoned but fail to appear.
Onyejeocha, at the inauguration of the committee, lamented that, "Our concern is that such a huge debt is being overlooked. If this huge debt is recovered, it can be used to offset part of government's debt because the federal government is owing too." Our view is that a government with a renewed hope agenda should not reduce its policy mantra to a farce by overlooking these howlers, as previous regimes did.
Tinubu should not be unhinged in ballooning Nigeria's debt portfolio. The use of $2.78 billion for debt servicing in the first seven months of 2024, according to Central Bank of Nigeria (CBN) data, is an index of its evil or dire consequence. If it took much exertion in 2005 to get off $30 billion from our debt stock, what it will take to liberate Nigeria from the present shackles is better imagined.
In November 2023, the Minister of Finance, Wale Edun, told the Senate that, "Internationally and locally, we are not in a position to rely on borrowing." Instead, he advocated inward-looking measures. Tinubu should listen to him and stop mortgaging the country's future. Nigeria is among the frontier markets that the IMF Financial Counsellor and Director of Capital Markets, Tobias Adrian, said have been active this year, but stressed the surging financial cost of such borrowing.
This government must be checkmated on its debt garnering over-drive before it becomes too late. The National Assembly should stand up to be counted as more loan requests would come its way. If government could save over $20 billion from fuel subsidy removal, block leakages, squarely tackle corruption and initiate a forensic audit of the oil sector, as it did with the CBN, we believe that our revenue base will invariably shore up to quench this appetite for Bretton Wood credits.
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There should be a national focus on the deployment of these funds. Under Buhari's Presidency, the World Bank approved $6.3 billion in 2020, $3.2 billion in 2021; $1.26 billion for six projects in 2022; and, Nigeria received $2.7 billion for four projects, from multiple creditors that included Afrieximbank, in 2023. These funds must all be accounted for.
Some of them were for the education of girls, women empowerment, renewable energy, economic stabilisation reforms, human capital development through better healthcare delivery and building resilience to climate change (tackling flood and drought through dam safety and irrigation). What impacts of all this are on ground? Nigerians think!
If the $25 billion spent on the turnaround maintenance of the four public refineries in 25 years, which includes the $1.5 billion spent on Port Harcourt Refinery since 2021, and the $1.9 billion used to construct Marada railway to Niger Republic from Katsina, are indicators of how the loans were utilised, then there is a big cause for concern.
As the Lagos-Calabar coastal highway and a similar one from Sokoto to Badagry - which are two of the biggest road infrastructure projects in the country - are pursued with obsession, and likely with creditors' funds, while the more functional existing ones remain death traps, this signpost the very unfortunate state of affairs the country needs to breakaway from towards more responsible fiscal re-engineering.
