Of late, the issue of Nigeria’s indebtedness to many financial and developmental agencies across the world has dominated the nation’s public space. Perhaps the most recent example of this matter is the reported seizure of aircrafts in the Nigerian presidential fleet by a Chinese company who the government of Ogun state is alleged to have breached a duly entered agreement with. This is just the tip of the iceberg as this embarrassment of indebtedness and inability to honour duly entered contractual obligations has long become a stain on Nigeria’s fiscal integrity.
I was still at the Law School when the famous Trendtex v CBN (1977) case broke in which the Yakubu Gowon military government got itself judicially humiliated following the irresponsible importation contracts spree tagged the “Cement Armada” but typically reneged on payment and instead baselessly claimed “sovereign immunity” in defense to the creditors’ demands, a plea which was famously rejected by the English legal legend, Lord Denning, MR, who summarily found the Nigerian government liable for purely commercial transactions she duly entered into, be they domestic or international obligations. Sadly, that irresponsible official behaviour has continued to characterize our official businesses till date – all to the rapid diminution of Nigeria’s sovereign integrity.
To say that Nigeria has fallen into an interminable debts trap is simply an understatement, as it has already become a national pastime to be debating whether or not the ever-bourgeoning debts burden is sustainable, whether or not we can carry on living off other people’s money in the absence of a realistic capacity to timeously pay back “as and when due.”
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As far as I am concerned, all these national embarrassments are ultimately begging the question: How realistic is Nigeria’s sovereignty? A debtor is always at the pleasure of his creditors and the notion of sovereignty and national pride and integrity are blatantly compromised the moment a nation fiscally and monetarily loses control of her economy, which implies national bankruptcy. On the other hand, a “debts trap” exists when a borrower who is unable to pay his loans is forced to take yet other loans just to offset older debts, thereby foreclosing the possibility of complete repayment. In most cases, the new loans incurred are actually used to service the mounting interests from the debts, leaving the capital unpaid.
The key dividing line between “affluence” and “poverty” is that the affluent is always the creditor because he has enough for himself and extra to give (invest) away as loans. On the other hand, the poor suffers from material insufficiency and has to routinely swallow his pride and beg for more loans from his rich neighbours with the promise to pay back and if he eventually defaults, his neighbours are at contractual liberty to resort to any measure they deem fit to recover their money, including the enslavement of his debtor, or if necessary, impounding whatever asset he can trace to him in order to recover his money.
There is nothing fundamentally wrong with borrowing if the transaction has a built-in plan to repay the loan from the proceeds of whatever the loan is meant for. In our farming tradition, for example, a helpless start-up young farmer may have to borrow seed yams from his more prosperous neighbours, usually uncles and other close relatives, with the understanding (though unwritten) that within a reasonable period of time, he would have multiplied the borrowed yam yields (capital) so that he can conveniently repay the borrowed seed yams to his benefactor, possibly with considerable increment, while he can now continue with his own farming and capable of sustaining his family and, possibly, also lend out to younger entrants who may come to him for help. But for that to happen, he (the borrower) would have wisely denied himself of the better parts of his yields so as to grow his own stock as quickly as possible instead of shamefully returning to his uncles or benefactors for additional loans of seed yams.
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So, if you borrow and utilize it productively, you would not only have created wealth for yourself but would also have grown the community’s economy. The problem of Nigeria is that it borrows just to satisfy her wayward lifestyle of waste and hedonism thereby compounding her poverty and making it almost impossible to recover from the debt bondage. That is the summary of the economic predicament of today’s Nigeria. It took a long time coming.
The overall architecture of the colonial economy was designed for agriculture and raw materials production for export and they succeeded in their objective as the colonial economy was strong enough to sustain the population and more importantly, strengthened the currency in circulation then. Understandably, the immediate post-colonial Nigerian economy was initially also structured to thrive on agriculture and natural resources with the hope that eventually, value would be added to those produce through local processing before exporting them. That way, some values would have been added and a secondary layer of employment would have been created thereby leading to increased economic well-being for all.
Suddenly, with the influx of petrol-dollars and the seizure of governments by military juntas, emphasis shifted from the production of wealth through agriculture and related processing activities to the lazy sinecure sharing of the National Cake in the form of petrol-dollars. An all-pervading siesta syndrome soon evolved and Nigerians were misled to believe that they could enjoy all the good things of life without having to sweat for them. Government officials started flying first class and obscenely living large with largesse like the Udoji Award inebriating the public. That is the origins of the corruption, nepotism, gross incompetency and insecurity of today.
The assumption behind the proposition that the Naira is “overvalued,” is that the Nigerian economy cannot be grown any further, and that income and wealth can never be developed through positive State policies as we have chosen the “Allah Kia Ye” economy where hard work and frugality became otiose. If the government has facilitated the opening up of vast farmlands at nationally productive scales over the past several years, Nigeria could possibly have now become the world largest producer of some agricultural products which would have positively imparted her Balance of Payment status and, by implication, the Naira forex exchange rate.
It is like saying that a nation is over-populated. Population becomes a negative factor only if a country is unable or unwilling to harness her huge population productively. A large productive population will in turn optimally energise the demand for goods and services in terms of large-scale and sustainability. Majority of the teeming population we saw in the streets during the recent 10-day protests are not integrated into any workable national economic plan that could have transformed them from volatile socio-economic parasites into law abiding productive members of society.
India and China are two good illustrations of the point I am making about population burden. They wisely slowed down on their population growth rate while at the same time expanded their economic productivity base and in no time created phenomenal economic booms resulting in unprecedented wealth and material surpluses. Particularly for China, she has since crossed the break-even point between over-population to under-population with the result that the government recently started encouraging the people to have more babies to service the ever-expanding economy.
So, the thought of an “over-valued” Naira is a pitiable admission of the unwillingness of the leadership to use our God-given human and natural resources productively and proceed to consciously shake off the yokes of poverty and under-development by changing from the present corrupt and wasteful national economic management ethos to a more productive one within the framework of positive leadership by example, accountability and patriotic policy focus.
