Senators divided over Buhari’s $29.96bn loan request

Some members of the Nigerian Senate are divided over the $29.96bn loan request pending in the National Assembly, Punch report.

While some of them vowed to resist the approval of the loan request whenever the debate on its general principles came up on the floor of the red chamber, others noted that it was the only option for now.

The senators, who spoke on and off the record for obvious reasons, said the general outcry that greeted the news of the loan request, which was earlier rejected by the 8th National Assembly, was enough reason for the National Assembly to reject it again.

They argued that the improved revenue which the country is deriving from the ongoing border closure, amendments to the Finance Bill and the Deep Offshore and Inland Basin Production Sharing Contract Act, were enough to adequately fund the 2020 budget, particularly the capital component.

President Buhari had last Thursday, resent the $29.96bn 2016-2018 external borrowing plan to the Senate for its consideration and approval.

Buhari made the request a day after the International Monetary Fund warned Nigeria against rising debts.

The Debt Management Office has also said out of Nigeria’s total debt profile of N25.7tn as of June 2019, external borrowing accounts for about 32 per cent while the 68 per cent is domestic.

The President’s financial plan was approved by the Federal Executive Council in August 2016 and sent to the 8th Assembly in September 2016.

The then leadership of the National Assembly led by Senator Bukola Saraki and Yakubu Dogara, rejected the request in November 2016.

Buhari had asked the 8th Assembly to approve plans to borrow the amount abroad to fund infrastructure plans from 2016 to 2018.

The President of the Senate, Ahmad Lawan, who read the fresh request sent by Buhari during plenary last week, did not give details of the executive communication.

In the letter, dated November 26, 2019, Buhari said the 8th National Assembly approved only a part of the external borrowing request forwarded to it in September 2016.

The Chairman, Senate Committee on National Planning and Economic Affairs, Olubunmi Adekanmbi, said every request of the executive must be treated on its own merit and the exigency of the situation.

He said, “Nigeria currently has a budget of N10.33tn; definitely, we have to generate revenue in that order, otherwise it will become a statement of wish that may not be accomplished. We have to look at our revenue potential and actual situation.

“Borrowing is to fund deficit. If there is a shortfall in the internal revenue capacity of the country, there are two options. It is either we scale down on our aspirations on what needs to be done, or we look for money by other means.

“As a committee, we oversee the Revenue Mobilisation and Fiscal Commission, which is an institution of the federation to look at the revenue opportunities of the country and make sure that they go into the Consolidated Revenue Account.

“Our committee would have a retreat with the commission in January next year to look at how we could block all leakages in our revenue centre across the federation.

“It is quite possible, that if our revenue mobilisation architecture is sufficiently safeguarded against leakages, it is possible that Nigeria may not need to borrow as much as it is currently borrowing.

“But for now, in the absence of those blockages, we would either scale down our aspirations in terms of what we want to do, or we look for alternative means. That is the reality and there is no shying away from the fact.”

When asked if he felt that the idea of borrowing was healthy for the economy or not, Adetunmbi said, “It is difficult to say that borrowing is not healthy for the economy because even in corporations, there is difference between equity and loans.”

He added, “It is not everything that you can do with your resources. That is why lending institutions are there. I think Nigerians should be more interested in following our money rather than questioning where the money is coming from.”

Adetunmbi, therefore, challenged Nigerians to probe the utilisation of the revenue accruable to government either generated internally or sourced from foreign lending institutions, and make sure that it delivers value to the economy.

But the Chairman of the Senate Public Accounts Committee, Senator Mathew Urhoghide, said more borrowing should be discouraged since the country over the years, had been diverting foreign loans for other purposes.

He said it would be painful for a nation to take billions of dollars to augment budget deficit as against executing projects that would have a direct impact on the lives of Nigerians.

He said, “If we had our way in this country, we would have no reason to borrow. From experience, the borrowings that we have made have shown that the monies borrowed in the past were not properly utilised.

“We are borrowing money to pay salaries. What do we have in terms of infrastructure to justify the nation’s huge indebtedness? Is it roads? Is it power?

“In 2013, the National Assembly approved the request of the Federal Government to borrow $1bn. NNPC was supposed to get $600m out of that money for the gas to power project but the corporation did not get anything from it and it was diverted to different things.

“The government ended up using the money to renovate airports, and fund the Second Niger Bridge and Lagos-Ibadan Expressway. Today, we are servicing the debt. Nobody is asking questions about how we spent the money.

“Most of the money that has been borrowed over time has not been properly utilised. If they are for the repairs of the infrastructure, what is the state of our infrastructure today?

“If the agencies generating revenue are remitting what they are collecting, we don’t need to borrow because we are using foreign loans to meet up with deficit.

“Government has told us that taking foreign loans is cheaper than borrowing internally but our debt profile is increasing every day. Now we are going to spend a whopping N2.4tn to service debts in 2020, which is higher than the amount earmarked for capital projects.

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“Execution of capital projects is the only thing that can bring solace to the 200 million Nigerians. The personnel cost is only serving the interest of some Nigerians in public service.

“Look at the case of the Deep Offshore and Inland Basin Production Sharing Contract Act that we amended, Nigeria has been losing revenue over the years.

“To borrow money in order to fund infrastructure is not a way out. It is better for us to look inward and make sure that our revenue profile is improving,” he said.

Urhoghide challenged his colleagues to improve on oversight, especially over revenue generating agencies so that the complete amount of money generated would get to the government coffers to fund the budget and prevent deficit.

A senator from the North Central geopolitical zone, who spoke off the record, vowed to speak against the loan request during second reading.

He said, “National Assembly recently amended the Deep Offshore and Inland Basins Production Sharing Contract Act, and we have also approved the Finance Bill to raise revenues, why do we need to borrow again?

“Personally, I’m going to speak against the request whenever it comes up for second reading because we should be cautious about the plight of our people.

“This government is always taking foreign loans without taking into consideration, the implications on the economy and we have to take a stand as a parliament.”

A ranking senator from the South-South geopolitical zone, who also spoke on condition of anonymity, also corroborated the position of some of his colleagues who had spoken against the approval of the loan.

He said, “We have increased the VAT, and amended other acts that gave room for an upward review of our tax laws. I wonder why we cannot fund our budget with the proceeds.

“Oil firms are still flaring gas in the Niger Delta yet our government refused to muster enough political will to stop the practice so that we could make more revenue.

“Instead of borrowing money, why can’t we fix the refineries and save the trillions of naira we are spending on subsidy?

“As for me, I’m not in support of the $29.96bn loan request.”

But a senator from the South-West geopolitical zone, told our correspondent on condition of anonymity, that the Buhari administration would ensure judicious utilisation of the money in the overall interest of the citizenry.

He said, “This government is very prudent. There would be more road infrastructure, extension of rail to all the states of the federation and there would be great improvement in our education and healthcare when the money comes.”

The Senate President, Ahmad Lawan, had last month cautioned the Federal Government on the continued reliance on borrowing to fund the infrastructure needs of the country

Instead, he suggested a Public- Private Partnership option, to save the country from heavy indebtedness.

Lawan stated this at the opening session of a two-day public hearing organised by the National Assembly on the 2020 Federal Budget held at the National Assembly last month.

He had said, “We cannot continue to borrow to build our infrastructure, I belong to the school (of thought) that believes that, where we can have a PPP to build our infrastructure, we should do that.

“I feel that if we can build our road from Abuja to Kaduna or (to) Kano with private fund and design a way to collect their money, we should do that.

“Other countries have done that and it worked. As long as we are not short-changed, we have to look at it. If we have to borrow, we should borrow. Where there is another opportunity we should explore that.”

Also, on Thursday, no fewer than 42 civil society organisations raised concerns over Nigeria’s increasing debt profile, asking that efforts should be made to stop the trend.

They expressed worry that President Buhari again submitted to the National Assembly request for the approval of $29.96bn loan under the 2016-2018 External Borrowing Plan at a time the Debt Management Office reported Nigeria’s indebtedness at June 30, 2019 in the sum of $83.8bn.

The CSOs said Nigeria’s indebtedness was an increase of 31.35 per cent over the $63.8bn debt outstanding as of June 30, 2015.

The groups, in a statement, noted that while Nigeria deployed 54.3 per cent of its earned revenue to debt service in 2018, it deployed 54.2 per cent of all its earned revenue to debt service in the first half of 2019.

They argued that if at a debt level of $83.8bn, Nigeria was deploying over 54 per cent of its revenue to debt servicing, the country, after taking the new loan of $29.96bn, would need not less than 65 per cent of its revenue to service a new debt level of $113.7bn.

But the chairman of the Senate Committee on Local and Foreign Debt in the 8th National Assembly, Senator Shehu Sani, has explained why the National Assembly rejected President Buhari’s request for $29.96bn loan request in 2016.

Sani, in a statement sent to our correspondent in Abuja, said, “We turned down the Federal Government loan request of $29.96bn to save Nigeria from sinking into the dark gully of a perpetual debt trap. We didn’t want our country to be recolonised by creditor banks.”

Nigeria’s external debt in 2015, according to him, was $10.32bn before Buhari assumed power.

He lamented that the figure escalated to $22.08bn in the second quarter this year, which he said, represented 114 per cent increment.

He said, “If we had approved that loan request, our external debt could have catapulted to over $52bn and that is not sustainable.

“With the current escalation of borrowing, we will be walking into debt slavery and moving from being landlords to tenants in our own country.

“They will always tell you that even America is borrowing and I don’t know how rational it is to keep on borrowing because another country is borrowing.

“If we keep listening to bankers and contractors, we will keep borrowing and burying ourselves and leaving behind for our children a legacy of debt burden.

“Loans are not charities. Most of those encouraging more borrowing are parasitic consultants, commission agents, rent seeking fronts and contractors.”

Sani, who is now the Director, African Centre for Peace and Development, therefore urged the federal lawmakers to be well-guided.