Nigeria must borrow more

Kemi Adeosun

Speaking to Daily Trust newspapers amidst other reporters recently, the Minister of Finance, Mrs Kemi Adeosun, told the participants: “we have no choice but to borrow”. She disclosed that the Federal Government received “about N140 billion” from the federally allocated revenue while she must cover N330bn a month before she could embark on a single capital project. This disclosure by the main manager of the Federal Government’s finances is hardly reassuring for those who look up to her for cheering news of steps being taken to grow the economy with innovative ideas. 

She merely announced a monthly financing gap of N190 billion without explaining how the gap would be bridged. The implication was that if things continued this way, the Federal Government would have to depend heavily on borrowing to run a large portion of both the recurrent and capital platforms of our annual budgets.

It is evident that this financial overload includes outstanding commitments accumulated by past governments, which is normal. However, this regime has only worsened the situation by carrying avoidable extra loads, such as the N500 billion annual allocations to the Social Welfare Programme. A government faced with a crippling cash crunch and huge budget financing gap that Adeosun peddles should be cutting down on the cost of governance until the bones will nearly be showing. 

Instead of doing so, the Buhari regime actually added more financial burden to itself in order to fulfil a campaign promise that was made without the prevailing economy in mind. Not only this, the regime did not go far in reducing the number of Ministries, Departments and Agencies (MDAs) which it should have done to cut the nation’s coat according its cloth. 

The long list of ambassadorial nominees recently announced indicated that we are going on as though we were still having an oil boom. The President’s ideological commitment to a centralised, big, strong Federal Government (rather than massive devolution of powers) will always ensure it runs severely short of funds to meet up, and this will soon prove untenable. 

The truth is that lenders are not lining up to automatically offer loans to people just for the asking. Loans are not provided based on need but character, strategy and capacity to pay back. Financial institutions do not lend to countries or entities demonstrating financial indiscipline. Any economic entity – individual, corporate or national – earning N140bn per month and spending N330bn cannot be a serious candidate for loans when there are so many others, more serious, wanting those funds. 

Buhari must slash the size of his government and channel funds to real sectors that will grow the economy. If we are to “spend our way out of the recession” it should not be wasted on consumption but productive endeavours.