Nigeria insists its debt is still within tolerable level in spite of recent warnings by global financial institutions, the World Bank and the International Monetary Fund; BENJAMIN UMUTEME writes
Over the years, experts have continually warned Nigeria’s fiscal and monetary authorities over the country’s increasing debt profile. This was further reinforced by the International Monetary Fund at its 2018 Spring meeting in Washington DC, USA.
The April 2018 Fiscal Monitor states that global debt hit a new record high of $164 trillion in 2016, the equivalent of 225 percent of global GDP. Both private and public debt have surged over the past decade. According to the report, high debt makes government’s financing vulnerable to sudden changes in market sentiment. It also limits a government’s ability to provide support to the economy in the event of a downturn or a financial crisis.
In emerging market economies, public debt is at levels seen only during the 1980s’ debt crisis. For low-income developing countries, average public debt-to-GDP ratios are well below historic peaks, but it is important to recall that debt reduction from earlier peaks involved debt forgiveness. Moreover, low-income developing countries’ debt climbed 13 percentage points in the last five years.
Along with debt, the cost of debt service has been rising rapidly in low-income developing countries. The interest burden has doubled in the past ten years to close to 20 percent of taxes. The escalating cost reflects in part the increasing reliance on nonconcessional debt, as countries have gained access to international financial markets and expanded domestic debt issuance to nonresidents.
Stating the obvious
Presenting the Global Financial Stability report, Financial Counselor and Director of Monetary and Capital Markets Department, Tobias Adrian, warned that rising public debts in emerging economies may constitute direct risk to financial stability.
According to him, short-term risks to financial stability had increased, and medium term risks remained high, while vulnerabilities in global markets might make the road ahead bumpy and put growth at risk.
“Rising foreign debts remain a big risk to financial stability. The debts that are accumulated quickly are deteriorating and could pose financial stability crisis in the future in emerging markets,” he said.
Adrian said also that the Fund had continued to track debt issuance programmes in emerging markets which Nigeria belonged to, and that bank-dollar liquidity mismatches also remained a concern.
High debt stock really a concern to government?
According to information on the website of the Debt Management Office (DMO), Nigeria’s total public debt stands at N21.7 trillion.
A breakdown puts the federal government domestic debt at N12.58 trillion and the domestic debt of states and the FCT at N3.34 trillion.
The external debts of the federal government, states and the FCT stand at N5.787 trillion.
However, Minister of Finance, Mrs. Kemi Adeosun, has dismissed the warning IMF warning saying the country’s rising debt profile was nothing to worry about as, “the borrowings were for financing capital expenditure to stimulate the economy”.
The latest warning by the IMF is reinforcing what many financial analysts in the country have been shouting about in the past three years.
In an interview with Blueprint, Presidential hopeful, Jaye Gaskia noted that Nigeria debt was unsustainable. According to him, for a country to spend about 30 per cent of the 2018 budget has been proposed for debt servicing.
Economists and financial analysts at several fora have expressed concerns over the country’s raising debt profile but each time the fiscal authorities have countered saying Nigeria’s debt was within the debt threshold acceptable internationally.
However, many have faulted this argument by government officials. For Mr Jaye, the argument that the country’s debt was within the threshold does not hold waters.
According to him, the fiscal authorities are been economical with the truth. “They are comparing our debt with those of advanced economies forgetting that we do not have the kind of infrastructure they have.”
Another economist, Mr. Friday Efih asserted that those in government were only piling up more debt for the generation yet unborn to pay.
“Presently, the country’s revenue have depreciated, so to say our debt is manageable is not true. What they are failing to tell us is how they hope to repay the mounting debt,” he asked.
But the Finance Minister continues to argue that while “some countries debt levels are as high as 55 per cent of their GDP , “ Nigeria ’s is at less than 20 per cent, so we are not actually one of the countries they are expressing concerns about , however , we will continue to manage our debts very responsibly.”
Bringing down high debt
The Bretton Wood Institution further noted that countries with elevated government debt are vulnerable to changing financing conditions, which could hinder their ability to borrow, and put the economy in jeopardy. Accordingly, it further noted that historical experience have shown that high debt and deficits in a country increases the depth and duration of a recession—such as in the aftermath of a financial crisis—because governments are unable to deploy sufficient fiscal support to the economy.
The Financial body insisted that it is imperative that low income developing countries strengthen their tax capacity as this will allow them to service their debt. It will also allow them to finance spending priorities—such as health, education and public infrastructure—to attain the 2030 Sustainable Development Goals.
“No one can predict the ebb and flow of countries’ economies. Prudent and successful governments prepare in good times to face the storms looming on the horizon,” the Fund noted.
Is Nigeria preparing to face another storm?
Mrs. Adeosun noted that the debt rate accumulation is slowing down, as the country is replacing debts with revenue and refinancing our debts.
IMF Director, African Department, Abebe Aemro Selassie, feels that Nigeria’s ability to build buffers is critical to answering the debt sustainability question. “So it’s not really revenue collection just for revenue collection sake but the development objectives that the government itself has laid out.”
Mrs. Adeosun is quick to add that while the government has taken note of the concerns raised by the body, it does not mean that Nigeria will stop borrowing . “That we are listening means it is good advice for all seasons; you listen to good advice , which is manage it sustainable , which is what we are doing ;increase our revenue, which is what we are doing, and get our economy growing, improve the tax base so that we can continue to invest in infrastructure because that’ s what will lead to industrialisation, and that is what will lead to job growth.”
The Fund urged Nigeria to use the window of opportunity afforded by the present economic upswing to strengthen the state of its fiscal affairs. adding that they should explore ways of reducing government deficits and debt in a growth-friendly way.
But Nigeria really heed this sound advice considering it is bent on bridging it infrastructure gap according to the country’s finance minister?
Featured How Melaye’s recall failed
Like a cat with nine lives, Dino Daniel Melaye, Senator, representing Kogi West Senatorial District last Saturday, survived the plot by his constituents to recall him. OYIBO SALIHU reports that the ‘gang up’ to recall Melaye from the National Assembly failed woefully
How it started
It all started in June 2017, when the proponents of the recall of Senator Dino Melaye, a member of the All Progressives Congress (APC) in Ijumu local government area of Kogi state, Mr. Cornelius Olowo, led others who are mostly political aides to Governor Yahaya Bello, to recall Melaye who is adjudged as the best Senator from the state.
Grouses
Olowo’s grouse among other issues was that the Senator has failed to represent the district, alleging that Melaye has no constituency office in the district and that the Senator is always enmeshed in many troubles in the Senate.
But pundits are of the view that the crises between the Senator and the state Governor Bello and the inability of the national body of APC to wade into the crises might have caused the recall process.
Signatures of petitioners
However Olowo and his associates in the effort to recall the Senator moved round the seven local government areas that formed the district to gather signatures of petitioners in preparatory to remove Melaye from the National Assembly.
Alas, within two weeks the proponents of the recall claimed that they have garnered 189,870 signatories of registered voters from the constituency.
According to him, signatories from Yagba West, were 55.7 percent; Lokoja, 54.8 percent; Kogi, 52.77 percent; Yagba East, 52 percent; Ijumu (Melaye’s local government), 51.8 percent; Mopa/Moro, 50.4 per cent and Kabba/ Bunu, 46.7 per cent.
The arrowhead of the recall having collated the signatories with the believe that they have gotten enough to actualized the recalling process led other members to the Independent National Electoral Commission (INEC) in Abuja seeking to recall Melaye.
Supreme court
In view of this development Melaye who openly accused Governor Bello for sponsoring his removal from the National Assembly headed to court to stop the process but lost at the appeal court and proceeded to Supreme Court.
Though INEC did not await the out come of the apex court on the matter when the Commission horridly fixed Saturday 28, 2018, for the verification of the signatories of the petitioners.
Spurious collation of signatures
Apparently the desperate plot to recall Senator Melaye, the Senator representing Kogi West Senatorial District, failed because the foundation of the process on the side of the people that spearheaded the project was faulty and spurious.
Apathy Greeted Verification Exercise
More so, the apathy that greeted the verification exercise is enough evidence to conclude that the people of the western senatorial district still love Senator Melaye, despite the series of crises that has befallen the Senator of recent.
Investigation during the verification exercise revealed that one person appended his signature for over fifty names without the concert of the owners of the names. Even names of deceased persons and signatures appeared on the petitions which clearly shown that the recall does not emanated from the electorate in the district.
Petitioners’ protest
For instance, a registered voter at the polling unit at the premises of the Lokoja Club, Samuel Olokotun, protested the appearance of his wife’s name on the petitioners’ list, saying that his wife was never a signatory to the petition, threatening to sue the perpetrators of the unconstitutional act.
Another voter, who simply identified himself Thomas, went emotional when he said her daughter that died in 2016 was included as one of the petitioners.
Thomas wrote on his Facebook wall, “I had a bad experience today, the evil men behind Dino recall open up my old wounds today, my late daughter, miss Thomas Faith that dead on July 18, 2016, at FMC Lokoja her name was among the petitioners, her name is in number 729 on that evil list, her voters card is still with me, how do they got the VIN number? is it her ghost that came to sign without the voters’ card? Whosoever did this will see hell”.
Anomalies characterise recall
However these are few out of many anomalies that characterised the recall of the Senator as many people were astonished when they saw their names duly signed on the petitions without their knowledge which shows that Olowo and his cronies stayed in the comfort of their rooms and concocted the signatures
INEC
Obviously, the results of the signature verification conducted by INEC last Saturday, as part of the recall process show that the petitions were not from the constituents .
In the results announced after the exercise, INEC stated that out of a total of 351, 140 registered voters in the senatorial district , only 18 , 743 signatories representing 5.34 per cent were verified.
Similarly, the commission observed that 189 , 870 petitions were received by the electoral umpire but 20, 868 petitions were presented for accreditation , which indicated fictitious claims.
In addition, for a recall process to proceed to the next level which is referendum , the number of signatories must reach 50 percent plus one of the total number of registered voters in the district .
Sadly, the exercise in Kogi West fell short by 45 .66 percent , which means that the constitutional requirement was not met according to the INEC declaration officer Professor Gabriel Moti, a senior lecturer at University of Abuja.
Comments trail failed recall
However, various comments after the failed verification exercise have trailed the process. The immediate past governor of Kogi State, Idris Wada, of the Peoples Democratic Party (PDP), the All Progressives Congress (APC), the deputy governorship candidate of the APC in the 2015 elections, James Faleke, on Sunday said the result of recall exercise of the senator representing Kogi West, Melaye, was an indication of what the state governor, Bello, would face in 2019.
The people and the parties, who mocked the Kogi state government over the result, lauded the people of the west senatorial district for standing with the truth.
Wada said the development had shown that falsehood could not prevail over truth, adding that the result was a reflection of the wish of the people.
He said the failed recall exercise was a lesson for politicians that with their Permanent Voters Card (PVC), the people have the power to throw out any underperforming elected officials.
On his part, Faleke said the result had shown that Governor Bello was never popular among the people of the state.
The member representing Ikeja federal constituency in the House of Representatives in series of tweets on his personal handle said ultimate loser in the failed recall exercise was the APC.
According to him “Until those who worked so hard to win the election for the party in Kogi are given due recognition, Governor Yahaya Bello will continue to struggle politically without results.
“The recall project has failed. The people won. The outcome today is not just about Dino but the open rejection of the Yahaha Bello led state government”.
The state chairman of the APC, Haddy Ametuo, in his reaction, said the recalled initiated by “ghost voters” had revealed that “Melaye is the most popular senator ever produced by Kogi west”.
He said, “This is a sign of what to expect in the 2019 general elections. No amount of financial inducement and coercion will change the will of the people of Kogi state in the future elections.
“As the state Chairman of the ruling party in the state, I am calling on both parties: the petitioners and the petitioned to embrace peace and heed to the voice of God because the voice of the people is the voice of God”.
The national publicity secretary of the PDP, Kola Ologbondiyan, said the governor and his team were cautioned over the recall.
He said, “Governor Yahaya Bello and his men were warned not to use the standard they see around Lugard House to measure the people of Kogi West. They refused to listen and kept boasting that they are in charge.
“Lessons have been learnt on both sides but certainly, the biggest of such lessons were learnt on the GYB side. It is now clear to them that there is no individual power, no matter your position, that can ever be greater than the will of the people”
Also in the opinion of an analyst in the state Dr Mustapha Ahmed, advised the security agents in the state to arrest and prosecute Owolo for falsifying people signatures.
The failed recall has implications particularly in Kogi politics. Beside the fact that majority of the petitions were spurious, the outcome of the verification indicated that the voters have power to resist the impunity of political leaders.
Are Nigerian youths working hard enough?
As the president of a democratic country, suggesting the bulk of your electorate is lazy is not usually a good idea and doing so at an international business forum, even less so
And that is what a lot of Nigerians thought about comments made by their president, Muhammadu Buhari, on a visit to London last week.
Commonwealth business forum
Speaking on a panel during the Commonwealth Business Forum, President Buhari said that “a lot of” Nigerian youths claim “they should sit and do nothing” but expect to get “housing, healthcare and education free”.
Unsurprisingly social media erupted and the hashtag #LazyNigerianYouths was born.
In a statement soon afterwards, the president defended his words. His media aide quite rightly pointed out that the president never used the word lazy. But that didn’t do much to quell the angry masses online.
BBC reality check
One Twitter user said: “I am a 2nd class upper graduate of chemistry science from University of Lagos, I am now a shoe maker cos I couldn’t get a job, I am not lazy, I am not lazy I am not lazy #LazyNigerianYouths”.
To get to the bottom of this heated debate, BBC Reality Check looks at the stats and asks – in a country famous for its hustle – how much are young Nigerians contributing to the economy?
Ask a Nigerian what they do for a living and you’re likely to get a minimum of two answers, three is normal – four, not beyond the realms of possibility. And, as many of these #LazyNigerianYouths posts demonstrate, when a salaried job is out of the question Nigerians can find creative ways to make money.
As the president said in his speech, 60 percent of Nigeria’s population is under 30 – that’s roughly 107 million people.
A lot of them are still children but a huge chunk are of working age and yet can’t get a job.
Unemployment in Nigeria almost tripled from 2014 to 2017 from 6.4 percent to 18 percent, according to the Nigerian National Bureau of Statistics. It increased at roughly the same rate for 15 to 34-year-olds as it did for older workers.
But here’s the crucial difference – from 2014 to 2017 Nigeria’s older labour force increased by 3.9m, its younger workforce increased by 8.2m.
Nigeria’s economy
Meanwhile, Nigeria’s economy, which relies on exports of oil, tanked because of the slump in the global price of oil. It would make sense that most of these young people would struggle to find jobs and they did.
Even though there was a recession, in both age groups the number of people who found work increased by about one million. (Nigeria came out of recession in September 2017).
So despite their lack of experience in an increasingly competitive market, just as many young people as older people were able to hold on to their jobs or even to find jobs.
Cue cheers from Nigerian youth everywhere. But it may not all be good news.
It’s important here to look at underemployment – those who work fewer than 40 hours a week or are working in jobs where their pay doesn’t match their qualifications.
A total of 40 percent of Nigeria’s 80 million-strong workforce is “unemployed or underemployed”.
In the 15 to 34 age bracket this is much higher, more than half (52%) work less than a 40-hour week. That means 22.6 million young people are struggling to get by.
National transfer accounts
An interesting stat from 2004, in a report by National Transfer Accounts, which studies populations and economic change and is based at Berkley University in California, said that Nigerians spent more than they earned until they were 32. That means, despite working, they didn’t earn enough to get by.
That was 14 years ago, we don’t know whether the same or worse is true in today’s economy. But inflation has rocketed over the past three years, only recently slowing down, while wages haven’t risen, so it’s likely young people are facing a similar challenge and relying on older relatives for support.
It’s also likely that a lot of young people are working in the informal economy, which is huge. The IMF says the informal economy makes up more than 60% of the country’s GDP – the highest in Sub-Saharan Africa. But it’s also mostly low-skilled, low-paid work, with inferior working conditions and zero benefits.
Lagos could be the hustle capital of the world, epitomised by the street hawkers in every traffic jam, where hundreds of young people carry boxes of plantain chips, biscuits, water, even kitchen appliances or enormous cuddly toys.
They weave in and out of traffic jams, breaking suddenly into a fierce run to secure a sale, abandoning sandals in their wake as they try to keep up with drivers who refuse to lose their place in the queue.
Despite their doggedness, these young people aren’t earning as much, or contributing as much to the economy as those working in say, banks or phone shops. And they definitely aren’t paying tax.
But then, the argument goes, why should they? There is something even deeper that this debate has brought to the surface – Nigeria’s struggling public education system.
10.5 million Nigerian Children Out of School
Unicef puts the number of Nigerian children out of school at 10.5 million, the highest in the world – by size, not proportionally. And the quality of public education has slipped so low that it has become a last resort for many families.
Three-quarters of schools in Lagos are private, according to the World Bank. On top of that, anyone who can afford it, including the president himself, sends their children to school abroad. And that’s why #LazyNigerianYouths is being used to celebrate individual achievement despite the odds set against it.
Nigeria is one of the fastest growing countries on the planet, set to surpass India and the US by 2050, so the electorate is only getting younger.
This presidential incumbent – who will be 76 by the time elections come next February – would be wise to start thinking about how he addresses them.
Source: BBC
