A nation's burden for the future

A nation’s burden for the future

Nigeria our beloved country will be celebrating her centenary. She has come of age as a collection of nations amalgamated to become one. A nation of about 170 million citizens comprising over 300 ethnic sub-nationalities. A country whose national and intellectual capabilities have not been harnessed one bit. A country of great possibilities projected as an emerging world economy and a potential world power.

The birth of independence I understood brought a great sense of pride, hope and belief of great things to come. A country that will be self sufficient in all spheres, but this was short lived as tribalism, nepotism and corruption derailed the young republic into civil war, coup and counter coups which robed us of the opportunity to lay a solid foundation for the future and left us in this present quagmire that we find ourselves in today.

As our history is checkered with ups and downs, so also has our economy been. Our fathers reminisce of the days of the groundnut pyramids in Kano, palm oil in the east, cotton in the north, cocoa in the west and rubber in the south. The days when agriculture was the bedrock of our economy, when we were self sufficient regionally contributing to the center, when we were proud to say we were Nigerians, when the naira was stronger than the dollars and pounds, when our armed forces was a pride of Africa when the police were more efficient, when you got a job during your last days in the university. These were in the days of our father.

So where did we start getting it wrong? From a predominantly agric based economy to petroleum based economy, our gradual degeneration and degradation as a country commenced. We transformed into a spending nation. Petrodollars gave us much money than expected and like a young man that came into stupendous wealth which he didn’t sweat for, we developed squander mania. Several oil windfalls and increase in prices of crude oil above our budgeted benchmarks have left a majority of the populace in poverty and squalor. The gap between the rich and the poor is wider than ever. In the midst of plenty we are still a begging country waiting for other countries to come and take care of our problems. Little wonder we are no longer taken seriously in the comity of nations. These days we borrow from every tom dick and harry. Mounting piles of domestic and foreign debts . For how long shall this charade continue?

What are we leaving for the future generations? Ans: DEBTS

According to Wikipedia, a debt is an obligation owed by one party(the debtor) to a second party the creditor. This usually refers to assets granted by the creditor to the debtor.

Governments the world over borrow to finance their programmes. Aggregate net government debts the world over rose from $54Trillion in 2011 from $22Trillion in 2007 an increase of 145% in 4 years. The Nigerian federal and state government are accumulating debts for the future via borrowing from different countries across the globes, financial institutions, governments and bonds from the stock market. Most of them having varying payment plans, terms and conditions running into many years with most maturing in 5,10,20years time. Most times these borrowing are justified with the reason that they will be employed for economic and infrastructural development. But what we have is massive looting of these borrowed funds with little or nothing being used for the purpose for which it was borrowed. Some states have so much mortgaged their future that they are no longer credit worthy in some financial institutions as they have been deemed as incapable of paying up their bills. In 2010, the federal government obtained more than N1trillion from the domestic bond market which now encouraged other states like ebonyi, kebbi, bayelsa, niger, ogun and lagos states to access the domestic bond market.

 Borrowing to fund government developmental plans is a good and legal aspect of governance but using the funds for the actual projects designated is the main problem.

Nigeria’s debt-to-GDP ratio stands @17.9% while that of Brazil stands at 35.7%, but the difference lies in the fact that despite this, brazil is utilizing her borrowing to finance visible and quantifiable infrastructure while ours cannot be seen in any sector of the economy. And it is also worthy to note that brazils high ratio is due to the 2 key sporting events that will be held in 2014 and 2016, which have led to an increase in infrastructure, furthermore, these projects have already yielded positive economic consequences . Their unemployment level has dropped to 5.85 in the latest data released from 12.3% in 2003, with youth unemployment falling to 15.6% from 19% over the same period.

Similarly, the USA has raised its debt ceiling to finance the newly passed Patient Protection and Affordable care act (PPACA) while the UK government borrowed heavily in the late 1990’s to shore up its national health service (NHS), which is very viable and verifiable today.

If all the funds borrowed by the government at different levels were deployed for the purposes for which it is borrowed, Nigeria would have been like Dubai. The issue with government debts rising, is that it is difficult to anticipate when the threshold will be crossed, leading to debt level spiraling out of control and when investors lose confidence in a governments ability to afford its debt, problems can compound and potentially lead to funding crisis. This will slow the economic growth leading to fewer jobs and less income. And when there is less income the poverty levels will rise and people will be more hungry. When people become more hungry to a point that they cannot bear it anymore a revolution will be born and chaos will rule the land for the foreseeable future.

In other to avert this waiting time bomb,a conscious effort must be made by various governments to be more proactive in funding their budgets, spending money on vital aspects that will help develop the economy. A 4billion naira edifice for first ladies in Abuja will not help the future of this country in any form, 4billion naira in construction of low income housing scheme for middle class workers in Abuja will go a long way to reducing the cost of accommodation in the capital city. Some other billions to relocate prostitutes etc is also not helpful. Borrowing to fund celebrations and recurrent government expenditures is no way to grow a virile economy.

Rather lets borrow to build good roads, hospitals, schools, colleges and universities, Lets borrow to invest in industries and factories, lets borrow to build sport centers etc. Bottom line lets borrow for the right reasons and ensure we do what we say we will do with the money borrowed.

,

Dr Nnanna Agwu

Portharcourt

17~2~2013.