Nigeria is a plural society and the largest democracy in Africa. In the past four years, it would appear that the Muhammadu Buhari administration has been wittingly foisting upon the nation its socialist economic principles and ideology at the expense of innocent Nigerians. The wrongful application of the administration’s statist principles has in turn seen the fortunes of the nation precipitously going down the hill and Nigerians are going poorer by the day.
It must be mentioned that the same asphyxiating statist principles had long been abandoned by both China and the Soviet Union because of the debilitating drawbacks of the so-called classless socialist economic principles. Even Venezuela which adopted it some years back under President Hugo Chavez is now in economic bankruptcy in spite of its massive oil and mineral resources. Indeed, Deng Xiaoping and Mikhail Gorbachev abandoned the ideology when it could not engender the much needed prosperity for their people and nations.
As it has turned out, “Buharinomics” which is characterised by a big and ever growing government, continuously yawning recurrent expenditure, swelling consumption spending without a matching creative government and increase in productivity in the economy has led to a government that spends about 60 per cent of its revenues servicing debt.
With the government wallowing in fiscal deficit, it embarked on taking foreign loans to pay its maturing local debts and even salaries of its workers. Recall that in the 58 years’ history of this country, the Buhari administration has the unenviable record of extravaganza borrowing. In fact, within its first 29 months, it took foreign loans of almost $7 billion. Yet, there was not much to show as to what was done with the loan.
Only recently, the Central Bank of Nigeria warned that the debt level of Nigeria was close to the level it was before the country got debt forgiveness in 2005.
The country’s debt level which was N943 billion in 2015 has now climbed to N2.04 trillion without any increase in productivity in the economy or corresponding increase in the level of infrastructure development to bring down the cost of doing business in the country so as to improve the competitiveness of goods manufactured in the country.
Under the administration, recurrent revenue speedily jumped incredibly from N2.59 trillion in 2015 to N4.04 trillion in 2019. The Federal Government must do a rethink on this kind of economic spending that almost doubled the country’s debt service to revenue ratio from about 45 percent in 2015 to 70 percent in 2019. If the government’s spending is increasing productivity in the economy that would be understandable. But, in this case, high debt service to revenue resulting from high government spending that is not positively impacting on productivity in the economy is already asphyxiating the economy too.
Things have never been so bad like this in this country, since it became independence in 1960. Today, massive hunger, mass unemployment, poor health and economic disaster of great proportion are all starring Nigerians in the face even as the country is faced with massive local and foreign debts. This, no doubt, accounts for why millions of Nigerians are migrating in droves to other countries for improved standard of living. Indeed, the country may be headed for social and economic disaster of great proportions if nothing is done immediately to put its economy on the right footing.
If the present borrowing by the Federal Government continues, experts are of the opinion that it could cripple the country and creditors would have no option than to demand for Nigeria’s strategic oil reserves or a proportion of the country’s oil earnings every month, (as China is now doing to Venezuela) and other important national assets. If the government refuses, the creditors could take possession of the country’s offshore assets. This, of course, includes all oil cargoes leaving the country’s shores for other countries and the forfeiture of Nigeria’s foreign reserves to the creditors.
Such a scenario, which is actually possible, could happen to Nigeria if care is not taken. Recall that China currently takes about 30 per cent of the proceeds of Venezuela’s oil sales to offset its heavy overdue debts to China.
Looking ahead, it is a good thing that President Buhari has secured a second term mandate. As history beckons on him for a second term, he must remember that posterity, which is the judge of all human beings will judge his actions and inactions while in power. He must therefore use the opportunity of his second term to write his name in gold in the annals of the country.
