By Isaac Asabor
If there is any idiomatic expression that unarguably finds expression on the debt quagmire which Nigeria is at the moment enmeshed in, it is the law of holes, or the first law of holes, which is an adage that says, “If you find yourself in a hole, stop digging.” It is used as a metaphor, warning that when in an untenable position, it is best to stop making the situation worse. For instance, there is wisdom for an excavator that is in a hole to be stopped from digging by its operator.
Regrettably, despite the astuteness that characterizes the foregoing cliché, there are ample evidences to demonstrate the fact in this context that Nigerian political elites are fragrantly doing the contrary as they continue to dig deeper and deeper into the hole of indebtedness without minding the adverse consequences on the people, and to a large extent on the economy.
Reiteratively put, they have continued borrowing money from willing international organizations and countries in the pretense of running the economy, so to say, without realizing that by doing that that they are making the people poorer as their predilection to borrowing is unarguably plunging the country into the hole of indebtedness.
The forgoing cannot be pooh-poohed as the extent to which our leaders resort to inexpedient loan-taking since Nigeria became a democratic nation, particularly during the era of former President Muhammadu Buhari is becoming worrisome.
For instance, external debt under Buhari’s regime rose from $7.35bn in December 2015, and culminated to $37.2bn in June 2023 under President Bola Ahmed Tinubu’s regime. This excludes support provided by the Central Bank of Nigeria (CBN) amounting to N25tn. Ultimately, President Buhari moved Nigeria’s debt profile from N42tn to N77tn. This has had attendant effects on debt servicing, which rose from N1.06tn in 2015 to N5.24tn as of 2022. In fact, under President Buhari’s administration, the debt-service-to-revenue ratio grew from 29% to 96%.
In fact, during the administration of former President Buhari, the CBN extended beyond its monetary policy remit, having a firm grip on fiscal policy with its outsized role. In fact, CBN policies increased the money supply from N18tn in 2015 to N55tn in 2023. While it provided unrestrained liquidity to the Federal Government, the apex bank abandoned its primary mandate of price stability. It continued to apply blunt tools by raising the Monetary Policy Rate (MPR) from 12.5% in 2015 to 18% in April 2023. This did not taper the inflation rate, which rose to 22.5%, while food inflation galloped to 24% as of April 2023.
In a similar vein, since his exit as Nigeria’s president, food inflation has continued to rise despite over N800bn spent by the CBN under his watch, not to talk of the opportunity provided by the Anchor Borrowers’ which unfortunately was touted to have repayment challenges. Not only that, unemployment rose from 10.4% in 2015 to 33.4% in 2020 under President Buhari’s watch as the clumsy exchange rate management, with a wide difference between the official and parallel market rates, made it difficult for businesses to thrive. Buhari also prevaricated on the subsidy removal, wherein his administration spent at least N10tn to service. While Buhari’s government planned to have the subsidy removed as the price of crude rose; it failed to act, and continued a wasteful venture that only required firm commitment to implement.
While his administration wound up, it had the chance to seize another round of oil windfall with skyrocketing oil prices reaching $114 per barrel (April 2022) but with little incentive to do so, as CBN “printing presses” continued to flood the system with liquidity. Nigeria’s oil production slipped below one million barrels per day at a time when oil economies skyrocketed to an unprecedented fortune. The attendant effect is that the non-oil share of public revenues grew rapidly from 44.6% in 2015 to 59.4% in 2022. However, Nigeria’s spending was untargeted as several BudgIT analyses continued to show that the Nigerian budget was performing below par, with agencies spending public funds without the mandate to do so, foreclosing any chances of fiscal consolidation.
In fact, it is convincing to peep into the inanities that played out under Buhari’s tenure, and opine that there are salient reasons to say that the Warri-Itakpe, Abuja Light, Abuja-Kaduna, Lagos-Ibadan rail projects, and the Kaduna-Kano, Lagos-Ibadan, Enugu-Port Harcourt, Bodo-Bonny, Apapa-Oshodi-Oworonshoki-Ojota road projects are enough stirring evidences to demonstrate that the former president giddily watched the mismanagement of funds allocated to the projects.
This is even maddening as he, ahead of the last presidential election, relished in partisanship to take pride in the execution of the Ajaokuta-Kano-Kaduna rail line: an important act to bring gas to the industrial heartland of Northern Nigeria, ostensibly to promote the All Progressives Congress (APC) as a progressive party.
Given the foregoing, it can bluntly be asserted in this context that Buhari’s administration did not change any Nigerian’s quality of life, as virtually everyone under his administration witnessed unprecedented rising inflation and weakened exchange rates. This is despite spending over N1tn on social spending, warehoused inside a new Ministry, and leaving behind a grim picture of the 133 million Nigerians now in multidimensional poverty.
Added to the foregoing socio-economic burden which Buhari’s tendencies to misgovernance brought upon Nigeria for the spate of 8 years, it is expedient to urge President Tinubu not to toe the same trajectory as unremitting taking of external loans would push Nigeria and Nigerians deeper into the hole of indebtedness.
The reason for expressing the foregoing view in this context cannot be farfetched as it is obvious that among the many dangers threatening the very foundation of the Nigerian state is the government’s increasing reliance on internal and external borrowing to finance its operations.
To this view, it is germane to recall that Nigeria’s public debt stock which includes external and domestic debt stood at N87.38 trillion (US$113.42 billion) in Q2 2023 from N49.85 trillion (US$ 108.30 billion) in Q1 2023, indicating a growth rate of 75.27% on a quarter-on-quarter basis, while the total external debt stood at N33.25 trillion (US$43.16 billion) in Q2 2023, while total domestic debt was N54.13 trillion (US$70.26 billion).
Surprisingly enough, while addressing a joint session of the National Assembly on Wednesday in Abuja during the presentation of the 2024 Federal budget proposal, President Tinubu said, “Accordingly, an aggregate expenditure of 27.5 trillion naira is proposed for the Federal Government in 2024, of which the non-debt recurrent expenditure is 9.92 trillion naira while debt service is projected to be 8.25 trillion naira and capital expenditure is 8.7 trillion naira. Nigeria remains committed to meeting its debt obligations. Projected debt service is 45% of the expected total revenue”.
Be that as it may, it is expedient to remind the presidency, with particular reference to Mr. President and the minister of finance and our lawmakers that the first law of holes says that the first step in getting out of the hole you dug for yourself is to stop digging, while the second law of holes has it that if a boss digs himself into a hole, all subordinates are expected to jump in with him and the third law of holes says if a subordinate digs a hole, never expect the boss to jump in with him.
Interpretatively put in this context, it is expedient to urge the government to stop taking loans as doing that will be pushing Nigeria deeper into the hole of debt, and that our leaders should not forget that as they continue to dig themselves into debt hole that it is every Nigerian that is suffering. In fact, the most shocking principle of the law of holes is the third one which says, if a subordinate digs a hole, never expect the boss to jump in with him, meaning that whatever decision our “big men” takes, it is we, the “common men” that suffers, because they do not ‘jump in’ with us.
In fact, it is no more news that Nigeria[s debt servicing has exceeded revenue, even as the country has gone overboard, threatening its ability to pay back. As if the foregoing dangers are not enough it is obvious that savings for the rainy day are been frittered away as funds like the Excess Crude Account (ECA), which has been on the decline.
Having said much, there is wisdom to urge the government to refrain from digging Nigerians into the depth of debts as it would not augur well for both the present and future generations of Nigeria.