OSHIOMHOLE’S critics should explain to Nigerians why Federal Government has proposed to spend N943 billion on debt servicing in 2015. At 21.67 per cent of the total expenditure plan and with lower revenues already buffeting the economy, debt may once more hobble development and drain scarce resources. Adams Oshiomhole is facing double jeopardy because his critics are ignorant of Nigeria’s external indebtedness which dates back to pre-independence period. However, the quantum of the Bendel State debt was small until 1978. The debts incurred before 1978 were mainly long-term loans from multilateral and official sources such as the World Bank and the country’s major trading partners. Oshiomhole’s critics are ignorant that a critical point was reached in 1986 when creditors refused to open new credit lines for imports to Nigeria. Therefore, the government approached the creditors for debt relief leading to the restructuring arrangements with the Paris and London Clubs in 1986, 1989, 1991 and 2000. The arrangement provided for the capitalization and restructuring of accumulated debt service arrears, their penalties, late and moratorium interests as well as maturities within the consolidated periods. Edo State debt started from pre-independence.
Oshiomhole has not borrowed and he is not like Dr. Okonjo-Iweala, Minister for Finance who revealed that a whopping $14.1 billion loans had been facilitated by her ministry for various federal sectors’ programmes and projects at concessionary rates of sometimes as low as three per cent from the international finance market. Some of the loans, she added have moratorium of between 5-10 years and are to be repaid in 25 years, thus making them cheaper and more attractive than borrowing from the domestic market. She assured, however, that the administration was very mindful of the debt-overhang history of the nation and would not borrow so much as to put the nation under another debt burden, as was the case until 2005. Edo State Government does not have the power to borrow like Federal Government. despite what Edo is losing much money from the federation account.
I want to educate Oshiomhole’s critics that by 1985 Nigeria debt profile had deteriorated seriously due to persistent inability of the country to meet its external debt service obligations. This resulted in mounting arrears and unmanageable growth of the debt stock relative to available resources. The external debt stock, which was about US$8.855 billion in 1980, grew to nearly US$19 billion by 1985. Correspondingly, the debt stock as a percentage of total export earnings and GDP rose to uncomfortable levels of 154% and 24 %, respectively.
Oshiomhole’s critics could not express concern over non payment of workers salaries by federal government and many state governors. For about three months now, 22 state governors are delaying or refusing to pay salaries. Oshiomhole has been able to pay workers and pensioners salaries and meeting other financial obligations up to date without depending on federal allocation. Federal Government is owing no fewer than 70,000 civil servants in 30 Ministries, Departments and Agencies of the Federal Government have yet to receive their three months’ salaries.
Oshiomhole’s critics are mischievous because they could not question how Federal Government has spent over 32 billion dollars on Ministry of Defence in the past six years without giving an account and the same government borrowed 1 billion dollars in the name of fighting Boko Haram in the North-East. They are mischievous because they are aware that Federal Government is expected to borrow $25 billion by 2015, Nigeria’s Debt Management Office, DMO, told the House of Representatives. This disclosure was made at a meeting with the House Joint Committee on Finance, Legislative Budget and Research, National Planning and Aid, Loans and Debt Management scrutinising the 2013-2015 Medium Term Expenditure Framework and Fiscal Strategy, MTEFF. The projected figure represents the country’s foreign and domestic borrowings flowing from 2013-2015 under review. DMO’s Director General, Dr. Abraham Nwankwo in his presentation on Nigeria’s overall debt profile and expected borrowing for 2013-2015 told the joint panel that for 2012, Nigeria external debt is projected at $9,021.53 billion; 2013 ($12,165.10 billion); 2014 ($14,585 billion) and 2015 ($16,765 billion).A breakdown for domestic debt was projected at: 2012 ($6,483.81 billion); 2013 ($7,125.93 billion); 2014 ($7,792.41 billion) and 2015 ($8,4441.86 billion).At the meeting, Chairman House Committee on Legislative Budget and Research, Opeyemi Bamidele, queried the absence of a debt ceiling and what it described as Federal Government’s “aggressive” borrowing from local and international sources, the lawmakers said the development has stifled chances for private business to access loans locally.
Oshiomhole’s critics should explain to Nigerians the alarming allocations for fuel subsidy that often exceeds the consolidated provision for infrastructure and human capacity enhancement for all federal ministries, departments and agencies. Oshiomhole’s critics should tell Nigerians about the fuel subsidy and why Nigerians are still paying that obnoxious money even as the price of oil is crashing on the world market. They should tell us what became of the various reports on corruption and why so much money has been reported “missing” at federal level and no one has been held accountable. They should also tell Nigerians why kerosene sells for more than N150 per litre when government claims it is sub-sidising it to sell for N50/litre.
Oshiomhole’s critics should tell Nigerians about an amended ‘special’ Multi Year Tariff Order to be known as MYTO 2.1 which officially took off 24th December 2014. Essentially, from 24th, December 2014, electricity tariff went up when service delivery has not improved significantly, the Nigerian Electricity Regulatory Commission (NERC) has announced that distribution companies will increase tariff for R1 and R2 (residential) consumers for six months. Other categories of customers would, however, witness an increase in what they pay for electricity.
Oshiomhole’s critics should tell Nigerians about why over the past 18 months, states have not shared the excess crude account and yet, the account is empty. Sometimes states are told they have taken money from it to fund subsidies including subsidy on kerosene but there is nowhere in Nigeria where kerosene is sold for N50. So, in the name of subsidy, large sums of money are being stolen.
Oshiomhole’s critics should tell Nigerians about why in few weeks ago, the Governor of the Central Bank of Nigeria, Godwin Emefiele, announced an 8.4 per cent devaluation of the naira, Nigeria’s currency, after admitting that a plunge in world oil prices and dwindling dollar reserves were making it difficult to defend the value of the currency. The naira is now trading at N187 to $1, compared to N165 in November.
Oshiomhole’s critics should tell Nigerians about the devaluation of Naira which has knocked more than $40 billion off the value of Nigeria’s economy because the last few weeks have been a bit of a disaster for many companies listed on the Nigerian Stock Exchange. Oshiomhole’s critics should tell Nigerians about several blue-chip stocks such as Dangote Cement, Zenith Bank, Transcorp and United Bank for Africa among several others which have hit one-year-lows as a result of the fall in oil prices, a general uncertainty regarding the 2015 general elections, Central Bank regulatory headwinds, and weak earnings from large companies. These have all contributed toward putting naira-denominated assets including equities at risk.
Edo State receives the lowest federal revenue allocation and is the least indebted state when compared with other states in the South-South. When Edo State Government under Adams Oshiomhole went to the capital market to obtain N25 billion bond for Benin City Water Storm Project, the opposition PDP opposed it. Over N20 billion naira has been paid by Edo State Government. Edo PDP did everything possible to frustrate it even though all our neighbouring states had done so. As at that time Oshiomhole was the only All Progressives Congress, APC, governor in the South-South. All the other states in the South South went to the same market and raised between N75-N200 billion.
Out of the six states in the South-South, Edo State has borrowed the least. Whereas our debt profile is around N10-12 billion, the other states in the South-South zone are indebted to the tune of between N100-200 billion. This fact was corroborated by the Minister of Finance, Mrs. Okonjo Iweala, who also is a minister under the PDP led Federal Government. “She was reported as saying that in 2013, Akwa Ibom earned about N250 billion, followed by Rivers that earned about N220 billion, Delta about N200 billion, Bayelsa with eight local government areas earned about N197 billion, that same year Edo State earned less than N60 billion. And these are PDP states in the South South. And when you look at the debt profile, they borrow more.”
Data as at December 2013 show that the top internal debtors are Lagos (N278 billion), Rivers (N129 billion), Akwa Ibom (N125 billion), Cross Rivers (N116 billion) and Delta (106 billion). But the total domestic debts profile of the states and FCT as at December 2011 was N1.233 trillion, according to DMO records.
States domestic debt profile rise to N1.445 trillion in the last two years, with Lagos, Akwa Ibom, Rivers, Cross Rivers as the biggest debtors. Records posted on the Debt Management Office (DMO) website shows Lagos and oil-producing Niger Delta states as the biggest domestic debtors in the country. The record placed Lagos, Rivers, Akwa Ibom, Cross Rivers, Delta and the FCT as the biggest internal debtors among the 36 states in the country and the Federal Capital Territory. But the internal debt figures soared to N1.445 trillion by December 2013, representing an increase of about 17.19 percent.
The least indebted states, according to the records, are Katsina (N270 million), Kebbi (N853 million), Yobe (N1.1 billion), Jigawa (N1.6 billion) and Anambra (N3 billion). Plateau tops the list of the biggest domestic debtors in the North with N52 billion. It is followed by Kano (N32 billion), Nasarawa (N28.8 billion), Zamfara (N28.2 billion), Gombe (N27 billion), Benue (N24 billion), Borno (N23 billion) and Kwara (N22 billion).
States with above N10 billion domestic debts are Adamawa (N15 billion), Bauchi (N16 billion), Ebonyi (N13 billion), Enugu (N12 billion), Imo (N12 billion), Oyo (N19 billion) and Taraba (N13 billion). Others include Abia (N31 billion), Edo (N12 billion), Kaduna (N9 billion), Kogi (N7 billion), Ogun (N58 billion), Ondo (N30 billion), Osun (N41 billion), Oyo (N19 billion) and Sokoto (N5 billion).
On the other hand, the foreign debts profile of the 36 states and FCT was N489 billion ($3 billion) as at June. Of the $3 billion external debt, $2.9 billion is multi-lateral while the remaining $108 million in bilateral loan. A breakdown showed that Lagos, Kaduna and Cross River States led the pack, accounting for $611.25 million or 25.64 per cent; $215.68 million, or 9.05 per cent; and $113.03 million, or 4.74 per cent.
Debt Management Office (DMO) indicates that Plateau is one of the three states in the federation with the lowest external debt (as at December 2012). The external debt of the state was estimated to stand at $21.934 million (i.e., approx. N3.487 billion) as at December 31 2012 -this very modest and impressive debt profile was the third lowest in the country. It presents something for Plateau people to be proud about, because the state government has been able to manage the meagre state funds judiciously and has not gone to seek stupendous loans to cover the high security payments to STF members in the state.
In its effort at ensuring reduction of unemployment and increasing participation in businesses for self-sufficiency, the Edo State Assembly in December, 2014 approved the state government’s request to access 2 billion naira loan under the Micro Small and Medium Enterprises Fund (MSMEDF). The lawmakers took the decision after considering a letter sent to the Assembly by Governor Adams Oshiomhole where the governor gave cogent reasons for his intention to secure the loan. Prominent among the reasons given by the governor is judicious disbursement of the loan when secured to help boost micro, small and medium scale enterprises in the state. “Pursuant to this, the Central Bank of Nigeria (CBN) has granted N2 billion loan to each state as well as FCT Abuja for the disbursement to micro, small and medium enterprises. This is to increase access to finance for micro- enterprises that abound in all the states of the federation.”
Divulging that all preparation as well as necessary guidelines required by the Central Bank of Nigeria (CBN) for assessing such loan has been completed, Oshiomhole maintained that, the Special Purpose Vehicle (SPV) has been set up and Irrevocable Standard Payment Order (ISPO) has also been signed and dispatched for consideration of Minister of Finance and copies sent to both Accountant General of the Federation and CBN Governor.
Oshiomhole’s critics and Nigerians are aware that Federal Government will find it difficult to implement key infrastructure projects next year going by the details of the 2015 budget proposal, which was presented to the National Assembly, findings have shown. The 2015 budget proposal, however, showed that the government had slashed capital expenditure by about 43 per cent to N634bn, compared to about N1.1tn spent in 2014. This is expected to significantly affect government’s ability to executive major capital projects in the coming year.
According to the document, the share of capital vote to total expenditure has also reduced to 14.6 per cent, up from 23.8 per cent recorded in the 2014 fiscal year. Also, the non-debt recurrent expenditure for 2015 is proposed to increase by 6.6 per cent to N2.6tn, down from N2.4tn in the current year. With the pressure on existing infrastructure persist, we are of the view that the allocation to the capital expenditure is relatively low, hence it will hamper growth and development in 2015.
Oshiomhole’s critics should know that Nigerians are very sad that it took a drastic drop in the price of crude oil in the international market for the managers of the Nigerian economy including self-styled experts to realize that the Federal Government must exercise restraint in the squander mania that has been going on in the country including plugging of loopholes to beef up Government revenue base.
Nigerians however wondered if the recent decision by the Federal Government to spend more than N9 billion to purchase stoves for “rural women” was not part of frivolous expenditure that had brought the economy to its knees.
Oshiomhole’s critics should know that Edo has been able to pay workers and pensioners salaries and meeting other financial obligations without depending on federal allocation. With a meagre monthly allocation of less than one billion naira from the federation account and an internally generated revenue of little above one billion naira a month, the governor has maintained a motivated workforce paid as and when due; built, renovated and reconstructed primary and secondary schools across the state; rehabilitated and constructed health facilities; built and reconstructed roads and streets designed and completed with covered drains, walk ways and street lights; provided communities across the 18 local government areas in the state with portable water and electricity as well as flood control, environmental sanitation and beautification.
Mr. Inwalomhe Donald, a public affairs analyst, writes from Benin City, Edo State.
