A little over seven years ago this month, Nigeria exited from its huge Paris Club debt – about 30.5 billion dollars, we were told, of which 18 billion was purportedly written off in return for an irrevocable commitment to pay over 12 billion within three months from October 2005. Following the exit many a professional praise singer and even some otherwise serious-minded pundits hailed it as one of the greatest achievements – if not THE greatest – of any leader in the country’s history. Some apparently over-enthusiastic praise mongers even dubbed it Nigeria’s Second Independence, after the first on October 1, 1960.
President Olusegun Obasanjo, himself, set the high celebratory tone of the occasion several days ahead of the actual exit in the second week of July, 2005. “My dear fellow Nigerians,” he said in a special national broadcast on June 30, “It is with great joy that I address you today on one of the pillars of success of this administration. It is the debt relief already announced.”
In the broadcast he lamented how previous governments got the country in hock for so much, only for its officials to waste and steal the loans. “We came to believe in the Machiavellian philosophy of the end justifying the means,” he said. State governments, he added, “contracted loans with outrageous conditions and interest rates and failed to perform.”
Predictably, nowhere in his speech did he remember to mention the role he played as military head of state back in the late seventies in securing the first so-called jumbo loan which was really gratuitous – it was during the first oil boom when we were being told money was no object but how to spend it – and which was the very beginning of our sad debt saga.
Equally predictably, however, he praised himself for his heroic role in bringing the sad story to an end. “I,” he said, “can only say for those that doubted that we would ever get debt relief or those that felt that we were merely junketing around the world doing nothing, history and events have vindicated us.” He secured the relief, he said, by working hard to create a new leadership that broke with the past; a new leadership which rejected the past attitude of “business as usual.”
And then when finally the deal was done, he told a delegation of the Organized Private Sector, one of the myriads of visitors that trouped to Aso Villa to congratulate him, that Nigeria’s debt burden was gone for good. The exit, he said, has “removed the debt burden on Nigerians today and in the future.”
A few Nigerians, notably the late lamented professor of Economics, Sam Aluko, had dismissed the debt’s size as dubious, to begin with. “My committee (the National Economic Intelligence Committee which he chaired),” he said in an interview with The News (October 9, 2000), “produced evidence for General Sani Abacha, that out of the money borrowed by Nigeria, at least 7 billion U. S. Dollars did not reach Nigeria. All we borrowed from 1979 to 1999 was about $27 billion. We paid $28 billion we are still owing $29 billion. What type of arithmetic is that?”
Aluko then questioned our approach to settling the debt. He argued that if we could manage our resources well we could pay five billion dollars annually on the debt “and it would not affect our internal economic progress at all.”
Not surprisingly, doubts about the size of our debt and criticisms of the onerous terms of our exit – Professor Jeffrey Sachs, the American Special Adviser to the UN Secretary General on Millennium Development Goals, described the creditors as “nasty and stingy” for extracting 12 billion dollars from a country with an annual budget of three to four billion dollars – by the likes of Aluko were studiously ignored by a president determined to achieve what he apparently believed was a historic first.
Barely seven years after that “feat,” it is now obvious that the president’s claim about our exit from the Paris Club removing the debt burden on Nigerians “today and in the future” was a classic case of hyperbole. For, as the recently rested Newswatch said in the cover story of its June 11 edition, we seem to be “Back in the Debt Trap.”
The country’s debt stock presently stands at 44 billion dollars, 5.6 for external creditors, the rest (5.96 trillion in Naira) domestic, according to Newswatch, quoting Dr. Ngozi Okonjo-Iweala, the Finance and Co-ordinating minister. Some experts, says the magazine, put the domestic debt even higher – about 9.1 trillion Naira, if you include the bonds issued by the Asset Management Corporation of Nigeria (AMCON) and the Debt Management Office (DMO) in April and March.
The external debt of 5.96 billion dollars is without cognisance of the 7.9 billion requested by the President Goodluck Jonathan for the Senate’s approval, a request which will invariably be granted.
The country’s current debt stock, Newswatch said, grew by 153.75 per cent between December 2006 and March this year. But, says our internationally well regarded minister, this is nothing much to worry about. Large as the increase is, she says, it is only 17 per cent of Nigeria’s Gross Domestic Product (GDP) – a far cry from the ceiling of 30 percent set by government and even further away from the International Monetary Fund’s (IMF’s) 40 per cent benchmark.
The minister, on sabbatical from the World Bank where she is vice-president and whose presidency she lost to an American backed candidate in an essentially two-horse race only recently, has said she is more worried about the size of the domestic debt than the external’s. She should be equally worried about both, if only because we were told the same story of “not to worry” (shigo, shigo, ba zurfi, as the Hausas would say) some 35 odd years ago when the country gratuitously took its first external jumbo loan which eventually landed us in the peculiar Paris Club debt mess which cos