How long should we continue to borrow all in the name of “capital project”? Nigeria’s dependence on foreign loans for the execution of capital project is becoming worrisome. Recently, there has been public outcry following the announcement at the Forum on China-Africa Cooperation summit that Nigeria had signed a 500 million US dollar loan facility with the China Exim Bank. One of the high profile personalities in the nation to have raised alarm over the rate Nigeria is amassing debt is the former Minister of Environment and now United Nations Deputy Secretary-General, Amina Mohammed. However the Acting Finance Minister, Mrs Zainab Ahmed, during a visit to the Nigeria Custom Service said “we do not have a debt problem, our debt to GDP is still low, but instead we are facing a low revenue challenge”. She further said, “Nigeria do not have the revenue to pay salaries as well as to meet the recurrent and capital expenditure”. However she failed to mention that more than 60% of the nation’s revenue is used for debt servicing leaving the country with less than 40% for recurrent and capital expenditure.
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Despite the increase in revenue generation that supposed to bring about productive ventures, the economy is still characterized with high rate of unemployment, high rate of inflation, high interest rate, and low capacity utilization of oil industry. There also exist low investments, high level of corruption, weak institutions, low per capita income, poor infrastructure, deteriorating economic activities, and accumulated debt. While I am totally for the nation’s investment in the capital project that will boost economic growth, I stand against foreign borrowing because I know these funds when provided will be looted or mismanaged. Leaders come and go, but the debt remain. While the leaders leave to enjoy their stolen loot, the good people of Nigeria are left with the reality of the debt and are made to face the hardship and frustrations that follows.
China is no “Father Christmas” and the Chinese are known to be shrewd businessmen who fight dirty. I see all the recent “mutually benefiting” relationship with the Chinese government as a strategy to re-colonize Nigeria. Great Britain has done it before, the American government has done it before and now it is the turn of the Chinese government. The Chinese are also known to give loans and send their expatriates and resources all the way from China to execute the project. The Chinese interest in Nigeria is not because of their love for the Africa nation but for crude oil. This is needed to drive their economy. Therefore Nigeria should tread with caution before receiving loans from them because the Chinese can be liken to the “Shakespearean Shylock”. Some African nations have already fallen into the “China loan trap”.
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Nigeria has been one of the most backward developing countries in terms of management of funds and revenue owing to weak standard of good governance. Just like biblical times, Nigeria has experienced “years of plenty” and equally “years of famine”. Nigeria has always borrowed for capital project but how has it improved the condition of its citizen? The power sector in Nigeria can be liken to a “bottomless pit”, that has swallowed trillions of naira with nothing to show for it. Or is it when funds are allocated for road and rail project and it get done halfway and abandoned.The leakages and avenues for looting and mismanagement of public funds should be blocked before accruing more debt for the nation.
Borrowing should be a last resort by the government to improve the economy, and if we need to borrow, the loans should be ploughed into productive venture so as to accelerate economic activities in the country.