Viable alternatives to the jumbo loan

We have argued in the second part of our comment why it is a bad piece of news to take another jumbo loan to grow our economy and meet other national challenges. In this final segment, we proffer solutions to deal with government’s insolvency. In other words, we argue that there are alternatives to borrowing.

It is well known that the government expenditure on public servants is very high. By some estimate, over 70 per cent of total revenue is spent on the civil service constituting about 1.2 per cent of the national population. Foreign missions are over bloated even though the country’s status in the continent requires diplomatic channels but the overstretch can be met with virtual embassies in the foreign ministry. Similarly, foreign trips and the humongous allowances for such exercises are mouthwatering and paid in hard currencies.

Elected officials and political appointees have over-bloated and unproductive aids.  A cursory look at the elected parliamentarians, state governors and the president show a superfluity of staff that is not required and mostly redundant. They have stuck to this practice as ‘‘job for the boys.’’ No serious country with a performing bureaucracy does this. Why should the government have more than 37 ministers representing the states and the federal capital territory? An unwieldy cabinet is sheer waste of national resources. Indeed, the government should have been guided by the frequently quoted Oronsaye report on the restructuring of the federal civil service and the mechanics of rightsizing the public service to save funds for other vital national projects. To be sure, the cost of governance is burdensome and needs to be cut drastically – to save us from loan for consumption.

The government needs to put in place an effective financial management structure. Until the Debt Management Office (DMO) was put in place by the Obasanjo administration, the country depended on foreign sources for verification of its liability. What a shame!  All areas of financial leakages and wastes including over-invoicing must be blocked. Over-invoicing/inflation of contracts is a bleeding gash in the country’s financial health. Nigeria is the only country in the world where globally quoted costs are inflated barefacedly by public officials without consequences. This practice needs to be stopped.  The country will not need to resort to another external borrowing if proper financial management behaviour and practices can be institutionalised. The single treasury account introduced under the Jonathan administration and retained by the current administration, despite its limitation, is forward looking. Other policy instruments should be adopted to cut cost of governance and reduce fiscal irresponsibility.

In this dire financial straight besetting the country, the government has not accounted properly for the proceeds of corruption running into billions of dollars repatriated from western countries and more are still coming. Truly, government has affirmed that it has recovered a huge amount of money from corrupt individuals and corporate bodies. Although initially lost to the country, they come as windfall, which should be harnessed and applied to priority areas of the national economy. What is more, a federal court has ordered an anti-corruption agency to make public the figures but till date, there has been no compliance. At the Senate screening the anti-corruption agency head failed in 2017 as the first question to him was on the same issue of evidence of recoveries from corruption proceeds. Where is the evidence in 2020?

Indeed, we inherited a disarticulated economy from the colonial masters to the extent that today we produce what we do not require and rely largely on external sources to meet our basic needs. External consumption takes a toll on capital formation. So, there is a need for sectoral re-articulation in ways that we can engage in production in areas where we have comparative advantage, especially agriculture and harness the inherent value-chain to engender productivity. Also, the country is blessed with other minerals that are waiting to be tapped. There is therefore, the urgent need to harness and commercially tap these other revenue sources (especially, the solid minerals) available to the nation.

Besides, government needs to address basic infrastructure for industrial production albeit bit by bit. In addition, government needs to ensure adequate security, not through militarisation of society but by the nurture of civic culture and the provision of opportunities for the citizenry.  As things stand today, foreign direct investment will continue to take flight from this country until government wins the war against insecurity.

Equally important, is what development economists have called the ‘‘residual factor.’’ We need to invest in knowledge and skills processed through education and then reap the benefit of a knowledge-driven society where creativity and innovation are mainstreamed for the benefit of the society.

It is important to note that public officials need to curb their fiscal irresponsibility. They should lead by example by a demonstration of fiscal discipline. The fleet of presidential jets which are maintained by public funds is a drain on the wealth of the country. Also, the appropriation of N37 billion to renovate the National Assembly complex smacks of fiscal rascality.

Above all, there is the need to go back to the basic and implement political and fiscal restructuring of the country in ways that the state can flex their economic muscles by developing the natural endowment in their territories. As some observers of the continent have noted, Africa harbours most of the resources that the world needs to survive in the 21st century. Certainly, Nigeria has a generous share of them. The encumbrances of a federal behemoth have not helped matters. Government can act fast and save itself and the peoples of this country by restructuring the polity. That current unitary structure has held the country down for too long. There can’t be wealth creation until there is fiscal federalism, for instance.

We are convinced that if the foregoing suggestions are implemented, the country will not need to tread on the tortuous road to borrowing. However, should the president and the National Assembly ignore our candid analysis and advice and proceed to sign the country’s death warrant, which the jumbo loan represents, present and future generation will hold them responsible for the foreseeable consequences for the country and its people. Indeed, the task to build Nigeria is not the task of a single administration but a continuum. The incumbent administration should prioritise its agenda of development, focus on and solve at least one of the country’s pivotal infrastructural problems and perish the thought of sinking the country into an intractable and irredeemable debt overhang. It is too expensive. We can’t afford it.