Tinubu’s Voracious Borrowing Without Accountability: An Old Problem Taking New Dimension

Yesterday, things were bad under Buhari, but they are now worse under Tinubu. Wale Edun, a long-standing ally of President Tinubu and the current minister of finance and coordinating minister of the economy, assured Nigerians that the current administration will not rely on borrowing like the past administration. However, it has been observed that the Nigerian economy has been burdened by public debt, as reflected in the consistent deficit budget and constant borrowing.

The dwindling revenue and increasing government expenditures has led to frequent borrowing. These continuous borrowing and the justifications provided by the current administration for it is nothing but sophistry.

The government may need to borrow money to stimulate economic growth when a country has low domestic savings and a high current account payment deficit, requiring funds from external sources. There are two main reasons for external borrowing. The first reason is to boost consumption or to finance the temporary balance of payment deficits. The second reason is structural, such as the lack of domestic long-term credit or to avoid hard budget constraints. However, the current administration, like past administrations under President Buhari’s leadership, has significantly misused the idea of borrowing, going against universal principles.

The government has always justified constant borrowing by citing infrastructural development and other economic reasons. However, in Nigeria, our continuous borrowing seems to be for the political and financial benefits of the political class. Consequently, the country remains in a stagnant state. Under the pretext of borrowing for infrastructural development, the current administration has enriched themselves and a select few through questionable projects and procurements. Former President Buhari left Nigeria with a debt burden of about N77 trillion, which has now increased significantly under the current administration in a year to about N121.67 trillion. This has led to an economic crisis, with food inflation rising to 40.87 percent in May from 25.28 percent in June as reported on the National Bureau of Statistics (NBS). The consumer index (CPI). Nigerians have been affected by this as they can no longer afford the same quality of food. Electricity supply remains unreliable, impacting Small and Medium Businesses (SMEs), despite an increase in electricity tariffs. Fuel subsidy has been removed under the guise of generating more revenue for infrastructural development, yet there is no evidence. The discussion for a new minimum wage between the labour union and the government was narrowly approved because of mass protest by ordinary Nigerians, characterized by repetition, shouting and a blame game, until a mere N70,000 was approved which cannot even buy a bag of rice. The continuous borrowing for consumption without enhancing production is a long-standing issue that has worsened in Nigeria under Tinubu’s administration.

Nigeria’s total public debt stood at N121.67 trillion in Q1’24, which is made up of N65.65 trillion and N56.02 trillion domestic and external borrowings respectively, comprising N111.52 trillion federal government’s debt and sub-national government’s N10.15 trillion debts. According to the report by The Chief Executive Officer of Financial Derivatives Limited, Bismarch Rewane, “Nigeria is moving from a debt sustainability path to a debt trap path”.

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In his July 2024 presentation at the LBS Breakfast titled “Death or Debt Trap? 21st Century Road to Economic Salvation,” Rewane declared that while debt accumulation itself is not necessarily bad, its proper utilization is crucial in determining whether it becomes a trap. He explained that using debt for improving infrastructure and public services such as healthcare and education is beneficial, but if it is used for consumption, corruption, or mismanagement by political leaders, it can lead to a trap. Rewane pointed out that the lack of infrastructural development and high levels of absolute poverty serve as evidence supporting his assertion.

My concern, shared by millions of Nigerians, is that the current administration’s increasing reliance on loans is jeopardizing the future of the next generation. The negative effects of accumulating loans without proper management has left the country at the cross-road. This is because a significant portion of the government’s revenue is used for debts serving, resulting in an ongoing rise in poverty, higher unemployment, closures of industries due to high cost of operation. Nigerians are surviving, rather than living well. If this trend continues, the country will become heavily indebted and may ultimately become further tool of the West in the future as a result of debt trap.

The continuous borrowings by the current administration has not been able to produce any desired result on the economy due to corruption and fiscal indiscipline by the political class. The heavy debt burden by the Nigeria government has always resulted in great pressure on the budget and deficit financing as habitude aid, the reason the president is calling on the National Assembly to increase the 2024 budget to N34.9 trillion from an initial N28.7 trillion budget he signed into law on January 1. The president is seeking an amendment to the budget to provide N3.2 trillion for infrastructure projects and N3 trillion for recurrent expenditure, but we all know is more money to share, and the end of this is further borrowing.

Nigeria is currently in a precarious situation, like a train lying on the tracks waiting for an impending disaster. We must stand up and free ourselves from this mental battle. To prevent this catastrophe, Tinubu’s administration must prioritize preparing a surplus or balanced fiscal policy to minimize the need for borrowing. In situations where borrowing is necessary, the government should utilize the funds judiciously for their intended purposes, while also avoiding misappropriation, diversion, and mismanagement. This approach will help to steer clear of deficits that lead to borrowings.

Dear citizens, we need to realize that the current excessive borrowing in Nigeria is not for developmental purpose. We must take significant action to move beyond our passive acceptance of this situation and hold our leaders accountable. It’s time to overthrow those incompetent Political leaders and the entrenched pattern of continuous borrowing that benefits only a few individuals without promoting investment. Let’s disrupt this status quo.

A well-organized, non-partisan intellectual Nigerians must come together to address this issue. It is a serious problem that must be fought and overcome through peaceful means and a deep understanding of global nation-building. Only through collective action can we push our leaders to prioritize actions that are essential for our development. It is time to question the continuous cycle of deceptive borrowing by the current administration for consumption without meaningful infrastructural development.

CHIEF PETER AMEH,
NATIONAL SECRETARY, CUPP

FORMER NATIONAL CHAIRMAN, IPAC.

2019 EX-PRESIDENTIAL CANDIDATE