Introduction

As Nigeria teeter on the edge of bankruptcy and most households increasingly find it hard to know when and where their next meal will come from, the jarring insensitivity of our leaders in government is simply shocking as their culture of mindless, selfish and wasteful public expenditure has continued unabetted.

Harsh conditions of living are choking the very life out of the people, exacerbating our collective miserable existence in Nigeria. It was said that Emperor Nero was playing fiddle while Rome burned. Our leaders have continued their culture of mindless squandering while Nigerians languish in misery.

A country struggling with bankruptcy

Nigeria is teetering on the edge of bankruptcy. The mindless plunder of our national treasury is deeply rooted in our expenditure problem. The persistent mismanagement of resources and our culture of wasteful public expenditure is encouraged by a total lack of accountability in the allocation and management of public funds.

In recent years, the Nigerian government has increasingly sustained the country on mounting debts. If Nigeria were a limited liability company, we would have been forced to “declare chapter 11”. We would have already filed for bankruptcy protection. Such is the dire financial situation that we find ourselves in.  Luckily, we are not a limited liability company, Nigeria is a country.

If we recall, the Buhari administration left a dismal legacy of high debt, high inflation and low economic growth. Tinubu has continued along the same path of increasing debts, deficits and debt-service to revenue ratio.  For instance,

Debt servicing rose from N1.06tn in 2015 to N5.24tn as of 2022. In fact, under President Buhari’s administration, the debt-service-to-revenue ratio grew from 29% to 96%.

We witnessed the Buhari-led government illegally connive with the National Assembly to increasingly rely on ‘ways and means’ as a budget-funding instrument.  fund annual budget i.e. Federal Government relied on loans from the Central Bank of Nigeria (CBN) to keep itself afloat and its annual budget funded.  In plain language, Emefiele – Governor of CBN was printing money for Buhari to run the government. That habit grew from N790 billion in May 2015 to N23.7 trillion in 2022.

In this intervening period (2016 and 2022) the Buhari government raised total revenues of N26.7tn and expended N60.6tn, leaving a deficit of N34.0tn (Budget office).

Nigeria’s public debt stock debt stood at N87.4 trillion (US$113.4 billion) in Q2 2023 from N49.9 trillion (US$ 108.3 billion) in Q1 2023.  It shows a growth rate of 75.3% on a quarter-on-quarter basis.

With the presidential request for new borrowing, coupled with the depreciation of the naira, the total public debt is forecast to reach N130 trillion.

More Loans and Debts

It’s on the back of this crippling debt-ridden financial situation mess that forced President Tinubu to announce that “The fuel subsidy is gone’ on the day of his inauguration. That poorly thought-through subsidy removal debacle has seen the price of fuel jump from 160 Naira per litre to above 600 Naira per litre today. There has also been the removal of currency restrictions that saw prices spike and the naira sharply devalued.

Last year, the country spent about 96% of its revenue servicing debt and the government plans to raise 9 trillion naira to help fund next year’s budget.

Since taking office on May 29th, the Tinubu administration has been desperately scraping the bottom of the barrel to borrow money from anywhere there can get it.

In June NNPC secured an emergency $3 billion crude oil repayment loan from Cairo-based Afrexim Bank to stabilize the exchange rate market. Strange that NNPC is taking over monetary policy management from CBN. The Nigerian press did not even border to inquire why NNPC should borrow money for CBN and why NNPC does not even have 3 billion dollars to lend to CBN. I suspect that any serious investigation will expose the sorry state of both CBN and NNPC. So, NNPC was forced to sell the ‘oil that is still on the ground’ to secure that emergency loan.

Other recent loan arrangements include;

1. Federal Executive Council (FEC) approves $1.5bn World Bank, $80m AfDB Loans
2. The Nigerian Federal Executive Council (FEC) has approved a $3.45 billion loan application from the World Bank to finance some projects.
3. President Tinubu seeking Senate approval to borrow an additional $7.8 billion and €100million, as part of his 2022-2024 borrowing plan.
4. World Bank Group expressed an interest in providing funding support of $1 billion and $2 billion to mitigate economic shocks, etc

With all these borrowings and talks about borrowing more and more money, our foreign debt is expected to rise further above $51 billion, which will further exacerbate the current unsustainable revenue-to-debt servicing ratio. Discerning minds can easily infer that we now borrow to service debts.

What are the implications of these developments for Nigerians? Put simply, more severe hardship that’s left many households struggling to survive in Africa’s most populous nation? We were already the poverty capital of the world making up about 13% of the global population in extreme poverty. There is no doubt that the already dire living conditions have worsened under President Tinubu, who has urged the people to bite down and endure these hard times.

There is denying the fact that the condition of living of Nigerians is worsening. Households are increasingly finding it difficult to manage in many areas including affording staple foods, clothing, house rent, car maintenance, transport fare, health services and drugs, and school fees, exacerbated by low savings and low & stagnant minimum wage.

Government Waste Continues

Despite all these, the senseless plunder and squandering go on unabated.

• The President appointed 48 ministers, 20 Special Advisers, and a retinue of appointees, making the appointments the largest since the return of democracy in 1999.Why 48 Ministers, for what? To compare, President Jonathan had 33 ministers, which some would argue was too large and unfordable.   In these dire conditions that demand drastic rationalisation of government expenditures, President Tinubu’s government is busy bloating the size of the government.  A government that is already unsustainably too large and too bloated to be efficient affordable or viable.  A responsible government should streamline public offices and appointments to optimise costs.
• We have all heard about how the federal government spent a whopping $507,384 or N391 million Naira on hotel accommodation for President Bola Tinubu at the 78th session of the United Nations General Assembly (UNGA).
• We hear about a 6 billion naira ($6.3 million) presidential yacht, tucked away under the allocation for the Navy.
• There were all sorts of executive goodies in the recently approved N2.1 trillion ($2.7 billion) supplementary budget. Included as follows are provisions for;
• Buy SUV vehicles for the presidency, amounting to N2.9 billion ($3.6 million), and another N2.9 billion to replace operational vehicles for the presidency and estimated N4 billion ($5 million) to cover the cost of renovating the president’s residential quarters.
• The approval also includes official vehicles worth N1.5 billion ($1.9 million) for the unofficial office of the First Lady.
• These were coming on the heels of the National Assembly approving SUVs estimated at N57.6 billion Naira for themselves. It is conventional for the Assembly to provide SUVs for themselves every 4 years at the inauguration of a new assembly.In previous assemblies, people would collect their vehicles and sell them off.
• According to reports, the vehicles would cost N160 million Naira each or about ($200,000 US Dollars each).

Worse still, our lawmakers decided to reject our locally manufactured SUVs, whose patronage will boost capacities and the local economy in favour of Japanese Toyota SUVs that are not only more expensive multiple times over and would further deplete scare foreign exchange.

In this regard, the appearance of the Chairman of the Senate Committee on Services, Senator Sunday Karimi on National television to explain the basis of their choice to Nigerians was quite instructive.  According to him, their choice of super luxury Toyota guarantees better quality, name recognition and fit for bad Nigerian roads.

His shocking display of ignorance, arrogance and tactlessness is evidence of leadership devoid of sense or reason and totally out of touch with the day-to-day realities of Nigerians.The list goes on.

I can’t help asking myself – how did we get here? In a place where most things don’t make sense anymore. How did we get here?

There is no doubt that President Tinubu’s government has continued the same mindless culture of wasteful public funds expenditure despite our mounting unsustainable national debt burden.  One would have expected a serious government to start mitigating these wastes and cutting down on frivolous expenditures.

A right-thinking government should be desperate to set the tone to mobilise the support of Nigerians in this difficult time.   The absurd part of the situation is that Nigeria largely borrowed these funds to finance consumption during the immediate past Buhari government, as shown in the recurrent funding gap. The current insanity is that we have now fully extended our external debts to finance consumption.  How did we get here?

Conclusion:

It is common sense to stop digging when you are in a hole and want to get out. Why can’t we start copying from Countries that have successfully pulled themselves out of poverty such as China by emphasizing the following amongst others?

• Targeted expenditure that will only concentrate on essentials to boost productivity.
• Emphasizing domestic Savings to boost possible investment capital accumulation.
• Curtailing deficits by drastically reducing the size and cost of government.

Instead of thinking about how to boost growth investments in new capital or how to shore up our desperate education and health sectors to drive economic growth and development, our leadership have continued on this path of wasteful consumption and mindless expenditure of loans.

This madness must stop. Our political leader’s addiction to plundering our public funds must stop. However, the culture of mindless plunder and squandering will continue unabated until we begin to insist that they stop. Our apathy has allowed this insanity to go on for too long.

Nigeria, how did we get here?

Written by Dr. Okey Ndubueze