Laws are made to guide human conduct including the institution of government. They govern all aspects of our existence from birth to death and how we should relate to one another and conduct the affairs of governance. Ideally, no one is above the law and the law ought to guide all institutions and operations of government. Civilised societies are hallmarked by their adherence to the rule of law in all its ramifications.
Incidentally, Nigeria’s economic and fiscal governance has grounded various laws and policies and part of the reasons for the country’s economic under performance over the years lies in our refusing to be bound by rules that have been freely enacted and adopted by our government. Nigeria freely enacted the Fiscal Responsibility Act in 2007. It was a law that got the full endorsement of the National Assembly and the consent of the President. The President in 2007 freely assented to the bill for it to become law as he did not withhold his veto. Thus, the National Assembly did not need to override a presidential veto. Sadly, that is where the story ended as most of the law’s provisions have been observed in the breach.
Section 42 of the FRA specifically provides that the President shall, within 90 days from the commencement of the Act and with advice from Minister of Finance subject to the approval of National Assembly, set overall limits for the amounts of consolidated debt of the federal, state and local governments pursuant to the provisions of Items 7 and 50 of Part I of the Second Schedule to the Constitution and the limits and conditions approved by the National Assembly, shall be consistent with the rules set in this Act and with the fiscal policy objectives in the Medium Term-Fiscal Framework. So many 90 days have passed since July 2007 when the law commenced yet no step has been taken to fulfil the law. The word used in the section is the mandatory “shall” and not the discretionary “may”.
What could be responsible for this state of affairs? Evidently, the push for this law appears to be a desire by the Obasanjo administration to be seen to be complying with international best practices and to be in the good books of international finance institutions especially the Breton Wood institutions. Thus, successive governments saw no need to be bound by any rules in the management of national debts and borrowing. Successive presidents acted as if the law does not exist and successive ministers of finance have pretended they were not the addressee of the FRA. The National Assembly may have passed some resolutions on the subject matter and the civil society organisations issued some media releases on the matter but that is where it ended.
The benefits of implementing this provision are legion. It includes the fact that once the President makes a proposal for debt limitation to the National Assembly, it will become a public issue that will be subjected to intense debates, interrogation and public scrutiny. Probably, there may be public hearings before legislative approval. The impact of this is that it will lead to greater accountability on how much is to be borrowed, the purpose of borrowing and how it will be expended, repaid, etc. it will also put in the public domain the parametres for setting the limits especially its relationship with productivity, revenue, gross domestic product, etc. Experts also raise issues about the sustainability of the debt regime; the different pathways to financing public works and infrastructure development through investments, public private partnerships as against borrowing. Thus, the cost benefit analysis of the different pathways would be examined before a decision is reached. Essentially, this public debate may to an extent limit the unbridled discretion to contract new debts which the leadership of the executive easily gets when they ask for project by project legislative approval. The big picture would have been the subject of public interrogation.
The refusal to follow the law has led to a situation where after the debt write-off in 2005-2006, Nigeria quickly started piling up debts even during periods of high oil price. And the Goodluck Jonathan administration left the national debt at N12.118tn being the outstanding debts as of June 30, 2015, one month after the administration left power. Strikingly, the available debt figures from the Debt Management Office as of September 30, 2017 indicate that our national sovereign debt has hit N20.373tn. This is an addition of about N8.255tn in two years and three months. This amounts to about N4tn debt accumulated every year. Upon all parametres of reasonableness, rationality and fiscal responsibility, this is not the way to run a sustainable fiscal regime.