An Open Letter to President Buhari and NASS on $4B, €710 loan

 My Opinion

An Open Letter to President Buhari and NASS on $4B, €710 loan

 President Buhari write NASS to request approval to borrow another $4B, €710m loan has created several uproar in the Nation,

According to the letter, the borrowing is an addendum to 2018-2020 borrowing plan and that his administration needs to borrow more funds to meet "emerging needs of some critical projects". The projects listed in the external borrowing plans are to be financed through the sovereign loans from the World Bank, French Development Agency, Exim Bank and IFAD.

This request comes barely two months after the National Assembly approved his earlier request to borrow $8.3B and £400M loans

Karl Marx made us to understand that "Class Conflict" is apparent in a society where ruling class keeps riding the less affluent.

Upon return to Democratic rule in 1999, at the tail end of President Obasanjo administration, He ensured he reached a deal to pay off the accumulated debts alongside 16 other countries in 2006.

As at now,

The debt profile is 33tr and the President seek another 2tr, which according to details accrued on Debt Management office website,

That means total debt under the Muhhamadu Buhari lead administration since 2015 excluding the recent request is #20.8tr and servicing gulps #10.26tr.

His administration keep justifying the request on using it to build infrastructure in the Nation.

However,

The more a Country borrows, the poorer the citizens become, A country keep downgrading in the economical sphere is she chooses loan borrowing as a way of remaining solvent. It is a stimulation of transfer payment that discourages the citizens from working.

An economy should rather face a natural decline to discover its own potentials. Singapore, China, Japan are a few examples of Countries that have gone through such and have risen from it.

Borrowing external loans admist decline in the Nation currency against the USD, GBP, EURO and other major currencies while inflation rate are in double digits, food prices have doubled, that's not good, and this ha more impact more than the exchange rates of the Naira to other foreign currencies.

Whereas the Government need to secure the nature , reduce the overbearing cost in doing business, the business environment can equally be hostile, over taxed and over regulated in some cases. 

In as much as we need to build infrastructure,

We also need to apply the conventional wisdom of WHEN YOU ARE IN A HOLE you stop digging.

We need to the economic team to come up with a well detailed plan other than borrowing at every point, we need to look inward and create enabling environment to attract investors and empower SMEs to start producing to sustain local consumption.

The President and NASS needs to be reminded that loans are not grants, hence they are repayable,

With dwindling prices of Oil and output cut options OPEC usually adopts alongside many countries reducing usage of oil, how solvent will the Nation be when we have accumulated so much loans in the name of building infrastructure ? Repaying loans should go beyond building road with borrowed funds with no alternative route and the only repayments plan is toll gates, As a Nation, we have perchant for allowing public edifice to rot away due to lack of proper maintenance or not putting it to proper use, the list is almost endless and almost all states of the federation have a fair share of such.

At a time like this, what the Nation should look into is Public Private Partnership ( PPP ) for several infrastructural development, create an enabling environment, invite investors to bid, regulate the process under law and ensure all agreements and standards expected are carried out. We won't just have companies jostling to bid, but we will get quality infrastructure that will be properly maintained.

DOLLARS TO NAIRA; A CALL FOR HOLISTIC APPROACH

 DOLLARS TO NAIRA RATE; MANY UNTOLD TRUTHS.

The worst illiterate is the political illiterate. He hears nothing, sees nothing, takes no part in political life. He doesn't seem to know that the cost of living, the price of beans, of flour, of rent, of medicines all depend on political decisions. He even prides himself on his political ignorance, sticks out his chest and says he hates politics. He doesn't know, the imbecile, that from his political non-participation comes the prostitute, the abandoned child, the robber and, worst of all, corrupt officials, the lackeys of exploitative multinational corporations. - Bertolt Brecht

The fact remains one of the numerous campaign promises of President Buhari in 2015 was dollars to Naira exchange rate his personally frown at why the rate should be above #200 then he was even quoted to have said he will make it 1 to 1 during a rally in Owerri though that was later debunked by his media aides, but that doesn't dispel the disdain Mr. President has towards high rates of dollars to Naira, unfortunately, the reverse has been the case as there has been a free fall for the rate and except right approach and proper fiscal policy respite and pressure on the Naira might continue.

The current Government added more pressure and created room for multiple exchange rates when in 2016 they came out with a policy to give dollars at 'subsidized' rates to those going on Pilgrimage, it was unprecedented and you will wonder how or perhaps what pilgrimage contribute to the Nation's economy to have been that 'honoured' whereas manufacturers and other exporters equally got different rates and that decision marks the beginning of a chaotic exchange rates. Saudi Arabia for comparison pumps and average of almost 10m bpd, with less than 35M population, have a GDP of over $700B and per capita of $23K, whereas we pump less than 2M bpd, with a population of over 200M GDP of over $450B while per capita is $2,100

Another of such is petroleum subsidy which translates into almost $300 monthly, Whereas Mr President before his election into office in 2015 affirmatively said he doesn't understand what subsidy means and it's pure scam, his administration has been paying that same 'scam' for 6 years, only the recently passed PIB by the National Assembly which he signed will alter that. 

Also, contrary to several claims of diversification of our economy to generate other non crude oil incomes, the fact according to many multiple reputable reports obtained online, sales of crude oil still account for over 80% of the country revenue.

Our bank cards 'used' to be a valuable tool for transactions on several merchant website and many easily from the comfort of their home use it to pay for good and services without needing to exchange to dollars, the official rate is applied and bank charges incurred, that was initially reduced to maximum $1,000 monthly and thereafter to a paltry $100 maximum, What several Nigerians don't understand is, many have professional bodies, association and organisations that require annual subscription payment, many have to resort to sourcing dollars from BDCs and black market and then obtain a dollar card to be able to maintain their subscription since banks won't give you dollars to pay your subscription and ATM has been restricted these and many of such policies are the reasons behind this multiple rates. The DG of WTO Dr. Ngozi Okonjo-Iweala during her first official visit to the Country after her appointment was ratified bitterly complained and kicked against having multiple exchange rates.

Unfortunately, many Nigerians were made to believe our taste for foreign items is putting enormous pressure on our currency, if only they do a background check and obtain official records of such importation which already shows massive decline in the last 5 years they will be suprised our citizens purchasing power is diminishing amidst massive poverty in the land. It might be the perfect time to look into the issue of estacode of Government officials which is in 'hard currency' too

If this Government is serious about the country economic woes and wish to turn it around, it's economic team needs to create new strategies as it seems they have been trying trial and errors and result have keep reflecting in errors and safe the Nation economy because we are at this level due to their decisions, actions and inactions.