FINANCE Minister, Ngozi Okonjo-Iweala, the other day, urged the National Assembly to quickly approve the Jonathan administration's 2012-2014 external borrowing plan of US$7.9 billion for the execution of its pipelines project. Although the external financing need surfaced two months after the formal presentation of the 2012 budget to the National Assembly, the minister has asserted that: 'These resources are very key for our 2012 budget. (They) are mostly soft credits with very low percentage of interest, but with a commitment charge from the African Development Bank and the World Bank, the Islamic Bank and other multilateral donors, including China and India. These are people who want to assist us'.Nigerians will discount at their continued economic peril the catch in these apparently solicitous loan offers. The IMF/World Bank and their direct nominees in key Federal Government agencies have been in charge of the economy since the return to the civilian dispensation without ending the excessive federal fiscal deficits, which alone have prevented national economic turnaround. It may be recalled that commercial credits were offered in the same guise of assistance in the 1970-80s. But despite substantial debt service and interest payments on the loans, the balance continued to attract huge interest charges and penalties, which became problematic external debt burden that defied numerous debt rescheduling agreements. Owing to the debts, the London and Paris clubs of creditor countries through the IMF/World Bank planted their acolytes in key organs of government to manage the economy, a situation that persists till now.In 2006, the creditor countries not only extracted $12 billion as a supposed debt exit cash pay-off, but also gratuitously imposed a World Bank-administered policy support instrument, which, by suborning the apex bank to use the Wholesale Dutch Auction System (WDAS) and bureaux de change (BDCs) for the disbursement of official foreign exchange, made it impossible for the country's oil earnings to impact positively on the economy. It is instructive that not a single central bank in any of our erstwhile creditor nations employs WDAS and BDCs for managing foreign exchange already in the banking system. Notwithstanding the justifications adduced by the minister for seeking the loan, the lurking danger for the country in dining with an expanded multilateral loan cartel comprising the World Bank and African Development Bank, acting for and on behalf of our erstwhile creditor nations on the one hand, and China, India and Islamic Bank-promoting nations on the other is the foreboding of the ultimate 21st century economic enslavement.The Debt Management Office has explained that the fabled pipelines project involves the Abuja Light Rail Project, Zungeru 700MW Hydroelectric Power Project, 200-bed ultra-modern hospital in a yet unspecified location in Yobe State, erosion watershed management project (Hadeja/Jama'are and Sokoto Rima), Zaria regional water supply project, etc. It is unclear which of the projects is ongoing as claimed and what proportion remains unexecuted. The geographical location of the projects is perhaps aimed at ensuring unquestioned adoption in the present circumstances. It is quite obvious that most of the projects would not generate enough revenue to defray the financial costs.In the meantime, the achievement of multilateral offerings down the years is mixed. Beneath the toga of unsolicited assistance, some 40 per cent of multilateral loans are usually eaten up by consultancy fees and concealed kickbacks for colluding key personnel of the donor agencies and recipient countries. But the core objective is to make the recipient country a puppet state as it is robbed of its independence; inputs for funded projects are tied to or sourced from abroad particularly the donor nation, and as a result such goods are often overpriced while the technology and management is donor country specific. Not unexpectedly, there is a high incidence of partially completed projects just as the completed projects are poorly maintained, mismanaged and function in fits and starts. In the light of the foregoing, government should arrange for those donor agencies that harbour no ulterior motives to choose particular projects, have them fully executed as well as managed for a specific period before handing them over to the states and the Federal Government as the case may be. The proportion of local and foreign workers as well as trained personnel required at the various stages of project execution and management should be clearly spelt out beforehand.In furtherance of the national interest, however, government should put away the demeaning begging bowl for foreign investments and loans. For, even in the unlikely event that the above multilateral agencies settle for the altruistic option, the yearly tranche of the external loan being dangled comes to about N420 billion or just 1.1 per cent of the projected 2012 GDP (and it will probably dwindle in subsequent years). Contrary to official expectation, that amount of investment will neither spur the required economic growth nor dent the pervasive poverty in the land through jobs to be created. Government should instead focus on implementing sound fiscal and monetary measures. Rather than being pontifically dismissive of the chronic fiscal crisis engulfing the economy, the government should stop the pretences, openly acknowledge the fact that it defies the Fiscal Responsibility Act (FRA) and every Appropriation Act by subjecting the economy to about five times the approved fiscal deficit limit of three per cent of GDP yearly, as if the country is extremely broke. The inhospitable economic climate, the futile four-decade-long CBN war against unstable prices, low volume of bank credit to the real sector, and the 55 per cent idle installed manufacturing capacity are full-blown symptoms and enough proof of the prevalence of excessive fiscal deficits.Strict adherence to the FRA deficit limit is intended to enthrone stable and conducive economic conditions in which bank lending rates across-the-board become comparable to the lowest rates available in the focused economies. Such a development would, within a few years, push up the volume of domestic bank credit to the private sector as a proportion of GDP from the lowly 30 per cent or so (one-third of which was non-performing, no thanks to the harsh economic conditions) in 2009, close to 100 per cent as in Malaysia and Singapore, or quondam peer group countries. In terms of the projected 2012 GDP of some N38 trillion, there could be over N20 trillion additional bank credit at world competitive rates (or over 47 times the yearly tranche of the proposed external loan) at the disposal of local investors for financing activities ranging from private-public partnership projects to the full spectrum of private business initiatives. It is when such massive private investments complement the relatively meagre regular government budget spending that jobs will be created in the required numbers, productivity will be enhanced, economic growth will be inclusive and poverty will reduce.
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