Whoever wins needs to send a Loans Procurement Bill to the National Assembly immediately he assumes office in May next year to fund infrastructural development

Ayo Akinfe

[1] In the wake of the coronavirus pandemic, the International Monetary Fund (IMF) published a report in which it warned that Nigeria’s debt-to-gross domestic product (GDP) ratio was growing at an alarming rate. Although still within reason as the federal government’s external debt of $40bn is still less than 10% of GDP, the way it is growing gives cause for concern. It is only a matter of time before it gets out of control

[2] There is nothing wrong with borrowing to fund capital and revenue-earning projects as by and large, they pay for themselves within a five to 10 year period. This is for instance how Eurotunnel was built and today, the facility is a great money earner

[3] Nigeria’s total annual budget is only $30bn, of which at most $9.5bn can be spent on capital projects nationwide. If we are to build up our ports, railway network, power plants, water treatment works, road network, etc, Nigeria has no choice other than to find private capital. It is a myth that the country is rich and has deep pockets to fund all these developments

[4] Just to put everything into perspective, the Durban-Johannesburg high speed rail link will cost $30bn and the Crossrail train network in London costs about $20bn. When Nigeria’s total budget is less than $30bn, it is delusional to think we can fund such projects through the finance ministry

[5] Even when I look at the urgent issue of port decongestion, do you know it is costing the UK £1bn to expand the port of Tilbury? If we are to make Calabar, Port Harcourt, Warri or Ikot-Abasi deep sea container ports, I believe we would have to invest a similar amount. At the moment, none of them can take large ocean going vessels like Lagos. Big ships going to ports other than Lagos have to anchor out at sea and have their cargo unloaded through the use of smaller ships. Until we fix this, Apapa will continue to look like a war zone. At the moment, no investor is willing to take the plunge and expand these other ports. One of the Niger Delta governors has to pursue this matter with evangelical zeal. He should make it his life mission and calling, kind of like how Frederick Lugard made amalgamating Nigeria his mission on earth

[6] Back to the issue of borrowing, where Nigeria has a problem is with her 36 states. They are currently borrowing to pay salaries, are not investing in infrastructure and their debts are just spiralling out of control. In Osun State for instance, Rauf Aregbesola borrowed to fund his school feeding programme, while in Kogi State, Governor Yahaya Bello borrowed money to fund recall proceedings against Senator Dino Melaye

[7] As soon as a new president assumes office on May 29 2023, he needs to send a Nigerian Loan Procurement Bill 2019 to the National Assembly. It should spell out stringent conditions for borrowing. No state should be allowed to borrow money internally or externally unless it is for infrastructural development and is self-financing and totally repayable within 10 years

[8] Projects like the new rail network for instance are fine as such ventures will pay for themselves. Also, the Lagos and Rivers state the governments are planning urban metros in Lagos and Port Harcourt. These governors can be allowed to take out loans for the projects as long as they are self-funding

[9] Ultimately, the only solution to this problem and the way out of this vicious cycle is to get Nigeria’s states generating enough wealth to pay for investment but that will not happen until loans are taken out to build revenue-generating ventures. It is kind of like a chicken and egg situation. Personally, I think we will be fine the day Nigeria has an annual budget of say $200bn and a GDP of about $2trn

[10] The only man who knew how to invest without borrowing was Obafemi Awolowo. He built Cocoa House, Liberty Stadium, Western Nigerian TV, Airport Hotel, etc without borrowing a penny. When he was federal finance minister, he also allowed Nigeria to prosecute a civil war without borrowing a penny. Do you know that most of Nigeria’s foreign missions and houses attached to our numerous embassies abroad were bought by Awolowo when he was finance minister between 1967 and 1971. However, we cannot bring him back, so have to expand on his thoughts. I am yet to see one governor of his calibre in Nigeria at the moment though