BudgIT’s dire verdict, on states and their debts, made sensational headlines. But it was hinged on two suspect premises.
One, the delegitimization, if not criminalization, of debts. That premise is arch-conservative, if not outright archaic.
Good old usury is at the core of any financial system, international or local — barring the alternative Islamic banking. It makes the big difference between working for money and money working for you.
Besides, with the neo-con unrelenting screeds about smaller government and more private sector participation, the debt market gathers more fillip.
BudgIT’s second suspect premise is a fixation with growth without development. Its analyses gripe at “heavy” debts. But it freezes its mind to whatever developmental goods such “heavy debts” could do.
That rings true of Lagos (which BudgIT canonizes as the best) and Osun (which BudgIT demonizes, using its one-track technique, as the worst). It would appear not completely right, if not outright wrong, on both scores.
But there is a valid fact that appears to drive BudgIT’s fear — and dire verdict: both the Federal Government and the states have a parlous record of misapplied debts, thus causing socio-economic troubles for the future generation.
Still, not even legitimate fears should cripple financial creativity, in the grim reality of vanishing resources.
If you don’t have the cash to stimulate economic growth and midwife development by providing social infrastructure, and you still shun the debt market, all you are running is a voodoo economy that, sooner than later, would collapse on you.
That is the point BudgIT missed; but which Lagos and Osun excellently push. That has helped to revamp the Lagos economy as a national model. It may yet push the Osun economy outside the perpetual woods.
Ironically, the statistical nay voices, that back then told Lagos it was heading for doom, when the Bola Tinubu governorship started the financial revolution way back in its first term (1999-2003), is now telling Osun it’s on a scary journey to nowhere.
Yet, linked to its meagre earnings from the Federation Account, Osun would appear to trump every other state, in the quality of infrastructure it has birthed. The creative use of debt did the seeming magic.
Now, how can that be bad for anyone — the Osun economy, the Osun people or even the Osun future generation, on whose behalf BudgIT’s ringing stats yelp, in an amusing irony of statistical hysteria?
But back to Lagos and BudgIT fears.
When Lagos embarked on massive urban infrastructure renewal, most — if not all — of the roads were not tollable: Kudirat Abiola Way (old Oregun Road), Awolowo Road, South West Ikoyi, Yaba-Lawanson-Itire road, Ikotun-Igando road, LASU-Iba road and the Lagos Business District, complete with the renovation of the Tinubu fountain and statue, finished at the tail-end of the Tinubu government in 2007.
Yet, all the roads gave business and commerce a fillip, boosted real estate value and enhanced the state’s ability to expand its tax net and boost internally generated revenue (IGR).
Lagos couldn’t have achieved this great infrastructural upgrade by depending on conventional sources of funding, with an IGR of N600 million a month as at May 1999.
Yet, when Lagos started its financial activism, getting into the bond market and approaching international finance agencies for developmental loans, the emotive lobby wept and howled and whimpered that Lagos was shackling its future generation to soulless peonage.
The present realities have debunked that. Lagos, by those very actions, has become a model economy among Nigerian states.
But if Lagos continues to borrow — by BudgIT’s stats, at 24.2 per cent of states’ total debt, the highest borrower — it is because the job is not yet done; and it’s still in the throes of expanding its economy to suit its sweet-sour bill as the country’s foremost land of opportunities, not because its managers are reckless or soulless.
Yes, a bit of caution would do — everything after all, no matter how well done, can be improved upon.
But that caution should come with empathy — empathy, springing from thorough understanding; not statistical stacking of cards that spreads needless alarms.
Back to Osun, and BudgIT’s penchant for stats for stats’ sake, flowing from a wilful lack of appreciation of the complete picture, is well and truly alarming.
Here is Osun, in BudgIT’s dock, verbatim as reported by Premium Times:
“Osun’s spending plan over the years came with the borrowing of N18.38 billion to build six mini-stadia to amuse, and at best make its youthful population active.
“Also borrowed was N30 billion at a lending rate of 14.75 per cent, for roads and waterworks infrastructure which generate no income and therefore cannot provide for long-term sustainability repayment plans.
“Another N11.4 billion was borrowed at a 14.75per cent lending rate to build schools, which would also unfortunately bring in no income into the State’s coffers. Even more debilitating to Osun’s economic prospects was that the repayments for all these debts ran concurrently, and deductions were made out of whatever revenue was to accrue to Osun State.
“Taking these loans which did nothing to improve internally generated revenue amid large Overhead costs means the bulk of the State’s existing revenue is instead diverted into debt repayment.”
Running through the BudgIT “charge sheet” is the craven worship of capital; and abject contempt for human development — hence the gratuitous lines about building mini-stadia to “amuse” Osun youth (so, you can’t boost the economy through sports?); and waterworks not fetching cash.
Yet, the human is the most critical in the developmental mix.
Indeed, BudgIT’s claim that borrowing to build schools is wasted investment, simply because it doesn’t translate to instant cash, is nothing but ringing fallacy. Behind every investment is the concept of delayed gratification.
Besides, between Osun and Ondo, two neighbouring states, with two parallel situations, history beckons.
Two governments, at very early stages in their lives, staged educational summits. While Osun used its to revamp and radically modernize education, and still preserve Awolowo’s most vital developmental legacy of free education, Ondo, by vibes coming out of its summit, appears preparing to wriggle out of it. Yet, Ondo grosses some coins from oil, Osun doesn’t.
If these “expat experts” (with apologies to Wole Soyinka’s The Interpreters) cannot appreciate the sacrifice to the future generation that went into Osun’s thinking, they can at least save the empty statistics that not only suggests the contrary but also helps to mislead the unwary.
The penchant to mislead also applies to BudgIT’s claim that because some roads are not tolled, they don’t — or can’t — contribute to IGR. That is another fallacy; as the Lagos experience has shown.
Lagos and Osun are battling the odds in the worst of economic times. The least they deserve is misleading stats, that shut from its sight the complete picture.
