Prof. Chris Onalo, Registrar/Chief Executive Officer, Nigerian Institute of Credit Administration (ICA) otherwise regarded as the doyen of credit management in Nigeria holds the view and very strongly too that the country is in dire financial straits and requires critical measures to tide things over. He said that much in this interview with Ibrahim Apekhade Yusuf Excerpts:
The rising debt profile of the country which had been incurred by previous administrations in course of managing affairs of the state is a serious cause of concern, no doubt.
Consequently, we stand today as a country indebted to the tune of -N-8.5trillion domestic debt rising from issuance of bonds by the federal government, and the state government of course, it is speculated that put together, the debt owed by the states would be within the region of about -N-1.69trillion. And for an economy that is as debased, the biggest in Africa, which is also quicken for rapid development. It cannot be said that the borrowing is staggering and frightening. But the major concern behind the borrowing by any country to fund the economy is to ensure that the borrowing is used for projects that quickly deliver development for the economy of the country concerned. In the case of Nigeria and in particular the outgoing government, which has borrowed within the period of Jonathan administration, up to -N- 5trillion in addition to what was brought forward from the previous regime, the incoming government has the herculean task as to how to liquidate these debts.
The incoming administration, therefore, has got a big task. But I think the incoming government can address the issue quickly and see that negotiation within the various stakeholders is brought to bear. And of course, looking at the Debt Management Office, it will require critical restructuring to be able to move in from the right direction that would stem the tide of further debt growth. And then in order to make fund available to the incoming administration, there may be need for the Buhari administration to really tie the noose here and there in order to create fund necessary for the liquidation of these debts. By that, I’m referring to -a-no-giving-up effort to fight corruption because money is tied down within the domestic sphere and for those that may have in one way or the other taken funds that is not theirs, there should be proactive step to recover the funds so that there would be much more fund in the government kits.
Obviously, the incoming administration will be looking for fund to run the economy and if they have to start with borrowing, I can tell you the country may snowball into another regime of excess debt hanging on our neck. The government must be ready to put in place the mechanism that can enable it to retrieve ill-gotten wealth or some elephant projects that are tied to financial obligation but has no immediate value as far as economic development is concerned. And such projects may have to be stepped down again against the backdrop of the criticality that it offsets in the development of the economy and how it can quickly translate into opportunity for economic advancement of the ordinary Nigerian. So, I see the incoming government having a very tough time with this. I think it is the reasonable thing to do as people are saying because there is legitimacy, there is no way the government will not look into certain transactions that may have been in place by the outgoing regime if such transactions have very strong negative impact on economic development and to which more resources have been committed. So, there will be need for a private eye to look into it to end any further drain on the liquidity status of the economy.
Dwindling funds across states
Hitherto very few state governments can be said to have mobilised enough internal resources to generate revenue. Other than that, majority of the states have been depending on what they get from the federal government to run the affairs of the state. So you should expect that when there is a major crash in what constitutes the national wealth, obviously, their fall would be without measure, it will be very devastating.
But again, on one side of the monster, we refer to as corruption, most states could not boast of capital projects. Project that you know enable the citizen to embark on their own economic activities whilst in turn deliver revenue to the government by way of levy, taxes that you pay. So much went into corrupt practices, the corrupt window and then much also went into the bloated civil service structure that we run, too many workforce doing nothing, you can’t have a good economy in that kind of state. So the recurrent expenditure has never been brought down. But then, the income has gone down. So, obviously the state would be in deficit and that cannot be blamed on the centre because the centre equally is affected by the oil block whilst crashed prices. And any attempt by the state government to borrow, either within the state or from friendly financial institutions in other countries of the world, would compound the economic condition of the state, of course, will increase the debt profile inherited by the state because the question will be either you go for direct investment by individual organisations in foreign countries or out rightly asking for borrowing.
Missing $20billion Excess Crude Oil Account
The money is the subject of controversy. One side is saying it is there and the other side is saying it is not there. But the money is missing that is the principal word. They are the representative of the states and as such they are familiar with the process of the funds earned from the sales of crude oil. So wherever the money is hanging they could think where it could possibly be and I think the NNPC is at the centre of it. So if the money is there, both NNPC and the Governors’ Forum through their Commissioner for Finance can be able to explain whether the money is there or not. Then a panel should be set up by the government to investigate. But if there is no need for that, assuming that NNPC at certain point will stop sharing the fund which is from the excess crude oil, then how do we share? It means that the money is there and it has to be shared because this is a distress moment for the economy and wherever they can lay hands on free money we need to get it out in order to reduce the debt burden that is already looming and becoming very visible. And the incoming administration should be concerned either at state level or federal. So, wherever the excess crude oil money is, it has to be traced and shared accordingly.
However, the problem I have, perhaps, given my profession as a credit economist, is that there is a growing absence of honesty in government in Nigeria. For a very long time we have not been able to come to terms with delivering the dividends of democracy without sacrificing the national interest and management of the economy which gives opportunity for everybody to create other wealth for the country. That is my major problem. There is this disconnect. But the, there is nothing I can do about that other than saying it the way I have said, and then someone out there should listen and say okay someday we could have a dramatic change that could address this issue where dividends of democracy does not necessarily mean giving out some sort of financial handouts to pay and then ways and means by which we can enforce the law to deal decisively with the culture of corruption in this country so that fund would be available which belong to the people to develop the infrastructural need of the country for the people to bring out the best in them. I think that the state government, particularly the incoming administration, should develop governance character that is completely different from what has been the norm so far. There must be a deliberate effort on the part of the state government to look inwardly, identify economic potential that are available in the country and harness them; putting up laws that encourages indigenes to set up enterprises creating employment for people and thus contributing to the GDP. Because as it is now, the GDP and the debt ratio to GDP is too wide and there is no way any economy can survive with it. Obviously, looking at it from that springboard, the impoverished status of this country can be better argued that Nigeria is yet develop because we still have extreme poverty in the land.
Nuggets for new government
I look at this as an opportunity for the incoming government to grasp, and that is why the kind of people that the incoming government wants to present to Nigerians as a team that they want to work with becomes very critical. If you want to recycle the same people who have been used to the age-long economic permutations of this country, the same thing of course, is going to be repeated again and that means that we are going nowhere. I like to cite South Korea. South Korea by the World Bank rating has the best Credit Guarantee Cooperation, well-managed, funded by the government almost once. The history is there. And look at the South Korean economy which resulted to very massive conflict between the South Korean’s and North Korean’s, economic wise South Korea is the strongest, but military in North Korea is giving them serious challenges. But the World Bank said any emerging economy that wants to develop should use the template devised by South Korea.
Nigerian government has ties with the South Koreans, I recall during Obasanjo administration, I had a talk with the Authority Officer in Korea Credit Bank and he said they are waiting for the Nigerian government to come and invite them, and that never happened. So, the question is why do not try to emulate good things anywhere we see such things? Within African countries, Nigeria is the only country that has not established a Credit Guarantee Cooperation, instead we go around it and we talk about Agricultural Credit Guarantee Department in the CBN.
It shouldn’t be in the CBN and then we have National Agricultural and Cooperative Development Bank which is today now Bank of Agriculture. It was formally a baby of the CBN, that shouldn’t be. So, we have a problem there. The elites are really creating major problem for this country. The few elites that understand the economic calculation are taking advantage of the ignorance of the masses to hold the nation to ransom. So, I perceive very strongly that the incoming government if it wants to be different from the previous regime, they really need to sit down and neutralise their mind and go for the new development like a campaign “Good thinking Good Product.” That is the quickest thing I think they can grasp from. We all read from the pages of newspaper different suggestions coming from different angle some of them are so selfish some of them are intended to recycle themselves, some of them are intended to fight back other people. But that is not the issue. The issue is Nigeria has it so blunt and so bad.
We have had an unending quarrel, we have had to fight ourselves and we have had to say all sorts of things. But the Nigerian nation must remain. We have not really been able to do one or two things, we have not been able to stop Nigeria from reproduction, I mean people are still marrying wives, people are still marrying husbands, children are still coming in; and more people going to schools, universities everyday NUC is licensing new universities as it were, you are producing new people, have you ever thought of their future? The world is becoming increasingly selfish, countries around the world are contending with their own domestic problems and they are saying to Nigerians, for goodness sake keep yourself, manage your own resources and make your country a big place. I can come there and visit, look at what you have and how you have developed your own country and go back to my country. So, I think the incoming government must think well not to repeat the mistakes of the past or replicating the problems of the past.
