NIGERIA: FG BORROWS N4.1T IN FOUR MONTHS, ADDITIONAL $400M FOR PALLIATIVES
NIGERIA: FG BORROWS N4.1T IN FOUR MONTHS, ADDITIONAL $400M FOR PALLIATIVES
Ashiwaju Bola Ahmed Tinubu took the mantle of leadership as
President of Black Africa’s most populous nation on 29th May, 2023.
Tinubu is Nigeria’s 5th president since the
return to democracy in 1999.
Minutes after inauguration, the new Nigerian helmsman
pronounced an end to the payment of subsidy for Premium Motor Spirit (PMS)
among other far reaching policy turn-arounds.
These were followed by serious inflation and economic
downturn.
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Public outcry to the resultant high cost of living and a free falling national currency led the new government to engage in hurried programmes meant to cushion the effect on the citizens.
The frantic efforts included heavy borrowing to fund the
programmes and running of government.
Nigerians were enjoined to persevere with a hope for a better
future.
Analysts however frown at the over bloated cost of
governance and ostentatious perks of public office holders.
At a time Nigeria’s lawmakers are planning to buy vehicles
worth N160 million, the move by the President Bola Ahmed Tinubu administration
to borrow additional $400 million for palliative over subsidy removal has
stirred anger in the country.
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Many had expected a windfall from the removal of subsidy on Premium Motor Spirit (PMS), and were shocked the government is still borrowing so much.
The Nigerian Federal Government had earlier secured a loan
of $800 million for the conditional cash transfer to vulnerable Nigerians. A
further $400 million loan will bring to $1.2 billion the amount the Federal
Government is borrowing from the World Bank.
When Tinubu removed petrol subsidy on May 29, 2023, the
price shot up to about N650 per litre from barely N200.
He went further to float the naira, which caused spiraling
inflation and deepened the exchange rate crisis, as the national currency now
exchanges at N1,100/$ averagely in the parallel market.
While the masses are still adjusting to life without fuel
subsidy, the government, which has insisted that subsidy on petrol did not
return, has already borrowed $1.95 billion between June and September 2023. The
fresh $400 million loan alongside the $3 billion borrowed by the Nigerian
National Petroleum Company Limited (NNPCL) will bring Tinubu’s external
borrowing in about four months to over $5.350 billion. That is about N4.1
trillion.
Tinubu’s administration within four months had taken a $700
million loan to expand the AGILE projects to 11 states. The international
financial institution earlier in June approved the first loan of $750 million
for Nigeria to boost the country’s power sector through the Power Sector
Recovery Performance-Based Operation.
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Another $500 million loan has been taken under the Nigeria for Women Programme Scale Up (NFWP-SU).
With this level of borrowings, Nigerians now have a per
capita indebtedness of N400,000 to the World bank.
Nigeria’s total debt has jumped from N87.4 trillion in the
second quarter of 2023 to about N91.5 trillion currently.
Tinubu had announced the conditional cash transfer to 15
million households in a nationwide address to commemorate the country’s
independence on October 1 as part of measures to cushion the effects of the
removal of subsidy on petrol, which has led to an astronomical rise in the cost
of living and forced many to fall below the poverty line.
He also announced that the Federal Government would commence
the payment of N25,000 monthly to 15 million households for three months from
October to December 2023.
The administration’s bloated cabinet, high cost of
governance and the over N160 million SUVs for Nigeria’s 469 lawmakers are
projected to, in no distant time, push Nigeria’s debt beyond N100 trillion.
Meanwhile, the country’s crude oil production remains low and the refineries
are shut.
There are fears by experts that the money might go down the
drain without achieving the intended purpose of empowering the households and
raising their productive capacity along with that of the economy.
The Deputy President of the Trade Union Congress of Nigeria
(TUC), Dr. Tommy Okon, stated that borrowing money from the World Bank to share
to vulnerable people as palliative is an enemy of any economy.
He further said, “Borrowing money to give to the people as
palliative is an enemy of any economy. How will you pay back? If the government
is borrowing money for productive ventures, it means there is an expectation,
which is an investment but when you borrow to give out it is expenditure, where
there is nothing to expect.
What the government is doing could amount to doing exactly
what the previous administration did that yielded no positive impact on the
economy and the citizens. As far as I am concerned, it is economic waste.”
When you also look at what he has planned, to give N25,000
to households for three months which approximates N75,000, you ask yourself,
can N75,000 address the millions of suffering the government has already
inflicted on the poor? Will it make any significant impact in addressing the
consequences already being faced by Nigerians? Will the suffering suddenly end
after six months?
Government has to address high the cost of governance,
reduce wastes and create an enabling environment rather than expanding
ministries to give room for more ministers and aides.
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Borrowing for ventures that have no positive effect on
economic development is seen as bad policy.
Nigerians also wonder where, after the three-month
palliative period, the government hopes to get funds to pay back the debts.
They also tremble at the thought of Dollar exchanging for
over a thousand naira.
The citizens are tightening their belts while the government
is engaged in frivolous spending.
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