The Broken Promises On Debt Relief

By Eric Teniola

Apart from his re-election on April 19, 2003 when President Olusegun Obasanjo/ Atiku Abubakar presidential ticket scored 24,456,140 votes against General Muhammadu Buhari/ late Chuba William Malachy Okadigbo’s 12,710,022, no other event was celebrated by President Obasanjo during his eight year tenure more than the debt relief granted Nigeria in 2005.

It was celebration galore at that time in the Presidential Villa. Most of his aides including Ministers, special advisers and assistants were in a joyful mood. The entire press section in the Villa including Mrs. Remi Oyo, Tunde Olusunle, Musa Aduak, Justin Abuah, Steve Itugbu and Sule Katsina were in their best elements celebrating.

In 1970, under General Yakubu Gowon Nigeria’s debt profile was 570 million dollars.

In 1979 under General Olusegun Obasanjo Nigeria’s total debt stock was 3.2 billion dollars with over 5 billion dollars in foreign reserve. In 1985, under General Muhammadu Buhari Nigeria’s debt profile rose to 18.5 billion dollars and in 1995 under General Sanni Abacha, it rose to 34.1billion dollars. In 2002 under President Olusegun Obasanjo, Nigeria’s debt rose to about 39.9 billion dollars due largely to interests, surcharges, and penalties.

The debt relief granted to Nigeria in 2005 was negotiated by the Economic Management Team led by Mrs. Ngozi Okonjo Iweala who was then Minister of Finance. She is still serving in that ministry in spite of our dwindling fortunes.

One of the conditions for granting us debt relief at that time was the understanding that the additional 1 billion dollars will be put into human welfare budget of health, education, food security and infrastructure development.

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Upon assumption of office in 1999, President Olusegun Obasanjo established the debt Management Office and named Mr. Akin Arikawe as the Director- General of that office.

Mr. Arikawe who is from Igbotako in Ondo State later rose to become the Permanent Secretary in the Ministry of Finance before his retirement. It was the Debt Management Office that pioneered the success of debt relief for Nigeria in 2005.

With the relief, Nigeria cleared its arrears of $6 billion of the $30 billion owed following which there was stock reduction on the Naples terms while Nigeria was to buy back the remainder.

It was the first time Nigeria ever had total freedom from the Paris Club debt. The package in final terms yielded debt relief of about 60 % of Nigeria’s Paris club debt while Nigeria had to pay off the 40% balance through a buy back operation.

The total right off at that time was close to $20 billion which compare favourably with the $40 billion right-off of debt for the 18 highly indebted poor nations of the world by the developed nations.

President Obasanjo had to broadcast to the nation on June 30,2015 that the achievement was worth celebrating because what Nigeria expected at the close of the exercise would be relief of close to $20 billion which was well beyond the total revenue of Nigeria for one year.

President Obasanjo told Nigerians: “Fellow Nigerians, how did we get to the point where our debt burden became a challenge to peace, stability, growth and development? Without belabouring the point, we can identify political rascality, bad governance, abuse of office and power, criminal corruption, mismanagement and waste, misplaced priorities, fiscal indiscipline, weak control, monitoring and evaluation mechanisms, and a community that was openly tolerant of corruption and other underhand and extra-legal methods of primitive accumulation”.

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These all took place in this country, before our very eyes, and at times in active complicity by many of us. Even community leaders and religious bodies accommodated corrupt individuals and exalted them. Money replaced traditional values, money took over souls, and we came to believe in the Machiavellian philosophy of ‘the ends justify the means’.

State governments contracted huge loans with outrageous conditions and interest rates and failed to perform with the funds, most of it being squandered on white elephant projects or simply looted. We often forget that stolen and wasted funds were monies meant for growth and development especially education, health, roads, water, electricity and other social services.

Contracts became the only basis for determining transactions and engagements with the public and privates spheres. We pray to God that we get beyond these debilitations and develop a collective conscience that is anchored on transparency, accountability, probity, value-for-money and due process”.

On July 26 2005, President Obasanjo told the National Assembly that of the total debt stock at that time the Federal Government owed 75% and the states’ Government owed 25%.

I want you all to weigh that statement in the present day Nigeria. Have those commitments been met?

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Now eight years after, are we celebrating any debt relief any longer? Is our Economy not in comatose? The situation of our economy has become so doubtful that nobody wants to talk about it. The ministry of finance is not forthcoming on the true position of our economy. So many contradictions!

The safest conclusion is that our economy is in bad shape. Most states are financially grounded now unable to meet their obligations. Our roads are bad, our hospitals are in decay, the structures in our public schools have become so shameful, and there is massive unemployment. At present we face the agony of blasted hopes and shattered dreams.

Do we even remember that there was a debt relief? It is now clear that we have been taken for a ride.

On a personal experience, I attended the funeral ceremony of my friend, Chief Soniran Oluwole Sowemimo in Abeokuta recently in company of Justice Deinde George Soremi, Toye Akiyode, Jare Dada, Soso Ogunlana, Bayo Sofolahan, Babs Adeyemi, Kola Adebayo and Chief Dipo Odulate. On my way back on Lagos- Ibadan expressway, I was in the traffic for over 8 hours.

Oscar Wilde (1854-1900) wrote in the Ballad of Reading Gaol” We did not dare to breathe a prayer or to give our anguish scope! Something was dead in each of us, And what was dead was hope”.

Eric Teniola, former editor of The Punch and a retired director at the Presidency wrote in from Lagos Lagos.

 

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