Press Release: EXTERNAL DEBT TO FIGHT INSURGENCY WITHOUT DUE PROCESS

The attention of Centre for Social Justice (CSJ) has been drawn to the request by President Goodluck Ebele Azikiwe Jonathan asking for the National Assembly’s authorisation to borrow the sum of USD1 billion from external sources for the continuation of the fight against Boko Haram insurgents. The President’s letter to the National Assembly states that the borrowing is to upgrade the equipment, logistics and training of our Armed Forces and security services to enable them more forcefully confront the insurgency.

Nigeria cannot be looking for resources to fight the insurgency while refusing to block the leakages in its fiscal system. First, the waste that emanates from the loss of over 350,000 barrels of crude oil every day to theft has been left unattended by the Federal Government. 350,000 barrels of crude oil a day at an average price of $100 dollars per barrel is $35m a day which will amount to $1.085billion in a 31 day month like July 2014. This sum is more than the $1billion requested. The second is that the Federal Government has refused to call to account the natural and artificial persons who brazenly mismanaged various security contracts including the Abuja CCTV contract. Pray; how can the FGN be asking for approval to borrow when it has failed to properly husband the resources entrusted to it? Where is the guarantee that if the loan is approved that the resources will not be mismanaged?

The third is that the enabling legislation – the Fiscal Responsibility Act (FRA) authorises borrowing only for capital expenditure and human development provided that such borrowing shall be on concessional terms with low interest rate and with a reasonably long amortisation period. The request for approval is required to present the cost benefit analysis of the loan detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied. The specific source of the loan and the interest rate attached to the loan are not disclosed. Essentially, it is not known whether the loan will be concessional which according to the FRA means a loan at not more than 3% interest rate per annum. It is also not clear whether the President intends to send in a Supplementary Appropriation Bill since this request was not one of the funding sources of the 2014 Appropriation Act.

In the circumstances, while the continuation and even increasing the tempo of activities against the terrorist groups is desirable, it will be contrary to common sense, law and reason for the National Assembly to approve this request without following the procedure laid down in the FRA and starting the process to make the fiscal system more accountable. CSJ therefore demands as follows:

  • The President should identify the specific source(s) of the loan and the attached interest rates.
  • Urgent and concrete steps to block the leaking pipes of waste and corruption should be set in motion before the approval comes.
  • Specifically, the recovery and return of the money used for the Abuja CCTV contract back to the treasury. The recovery is based on the fact that the consideration for which the money was paid had failed – Nigeria derived no value for money from the installations.
  • The audit of defence spending since the return to civil rule in 1999

In conclusion, a country blessed with abundant resources, fritters it away and then proceeds to borrow is like a man who lives by the bank of the river and washes his hand with spittle. It is not too late for the President and his ministers to live up to their oaths of office by managing our resources in the best traditions of prudence and greater value for money.

 

Eze Onyekpere Esq

Lead Director

1 Comment

  • Lawrence Sobiye

    Haba, our government dont seem to be serious at governance and be prudent in the management of resources. What the hell on earth did Mr. President wanted to do with $1Billion.
    The money is too much, in a country where there are Eleven thousand, eight hundred and eighty-six (11,886) abandoned projects that will cost an estimated N7.78 trillion to complete.

    This people will almost make one to mis-talk.

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