Obasanjo said things might get worse economically as Nigeria, as well as other African countries, kept piling up debts, saying he was worried for the future generations who would have to pay such loans.
The ex-President said this on Friday in Lagos as a keynote speaker at the “Why I am Alive” campaign.
The initiative, tagged ‘The Nigerian Story,’ had the founder of Trinity House, Pastor Ituah Ighodalo, as chairman of the Board of Advisors.
Presenting his speech, titled ‘Nigeria: The challenges of debt and sustenance of democracy,’ a copy of which was made available to our correspondent, Obasanjo said as at 2015, Nigeria’s total external debt was about $10.32bn.
By March 2019, the former President said the country’s external debt had increased to $81.274bn, noting that to service this current level of indebtedness, Nigeria must commit at least 50 per cent of its foreign earnings.
“Such a situation talks about an impending bankruptcy. No entity can survive while devoting 50 per cent of its revenue to debt servicing,” Obasanjo said.
“It has recently been pointed out that in 2018 that total debt servicing took over 60 per cent of government revenue. What’s more, we are not doing enough to address the fundamental, deep-seated and structural challenges that inhibit the expansion of our economy,” the ex-President added.
Obasanjo, who served twice as a democratic President of Nigeria between 1999 and 2007, said to worsen matters, the present government was currently seeking to add another $29.6bn loan to “our already overburdened debt portfolio.”
President Muhammadu Buhari had recently submitted a loan request of $29.6bn to the National Assembly for infrastructural development.
Although several economic experts and Nigerians have knocked Buhari for the latest loan request, there are indications that the loan proposal will be approved by the legislature.
The Senate President, Dr Ahmad Lawan, and the Speaker of the House of Representatives, Mr Femi Gbajabiamila, have repeatedly said anything Buhari does is in the best interest of the country. Noteworthy, the Senate has already begun moves to accede to the request.
However, Obasanjo said although debt could be used to finance growth and/or development, he said it was a “double-edged sword” that must be wielded with a high degree of discipline, responsibility and foresight.
He said, “A well-calibrated debt for infrastructure and other developmental goals could be very positive. However, we do not need to speculate. We need to examine our historical experience.
“Everyone knows that our governments are notoriously deficient in serious and adequate discipline and most often lack competence and consistency as well.”
The ex-President said, for instance, the country borrowed to build a light rail in Lagos, embarked on the project, but a governor abandoned the project for his full term of four years at 65 per cent completion – when the country should have started paying down on the loan.
At the same time, the former President said there were bus terminals that were declared open but not used.
He said this type of situation was not in Lagos alone but in other states like Rivers and Cross River.
He further said, “The Federal Government built a nice looking extension to the Murtala Mohammed International airport that looks completed from outside but not in service.
“To rub ‘aboniki’ on the injury, some clowns are talking of demolishing the main airport and rebuild from scratch. Where on earth is a poor country wasting resources that way?”
Obasanjo said his fears were born out of his experience about jumbo loans “and my agony in getting rid of our external debts and developing a sustainable approach to address our domestic debts.”
He said, “It was a painstaking exercise that involved not just a national strategy but a continental and international one which eventually yielded significant gains.
“To now see all those efforts, go to waste barely less than 15 years after that watershed moment is more than disturbing. It is painful and retrogressive.
“Nigeria’s leadership was key in the campaign for debt relief in the late 90s/early 2000s. Our relapse into debt will be wrong, signalling to the rest of the continent and could be tantamount to backing the entire continent into another era of ‘highly-indebted poor countries.’”
Stating that it would be irresponsible to bequeath debt to future generations, Obasanjo said, “For once, all Nigerians need to rise up and shout in one voice and call on the National Assembly to rise up to its core duty and responsibility and save our children and our grandchildren and great-grandchildren from being mired in debt.
“Let us use other options. Saudi Arabia, I understand, will be raising over $20bn to finance projects through private equity. We can do likewise.
“We have several national assets that could be used to raise some of the funds that we need in this respect for infrastructural development to give assurance to private sector investors and PPP (Public-Private Partnership) investors, if necessary.”
Meanwhile, the ex-President said things would get worse when oil and gas that Nigeria relies on would no longer command premium demand as in the past.
He stated that 50 per cent of countries in Africa had discovered oil and gas in reasonable quantities and were offering more attractive terms to investors than Nigeria was offering and so the countries were drawing away “serious” investors from Nigeria.
He said, “There are even more discoveries outside of Africa that have given better attractions to international oil and gas investors. There are alternatives in the wind, solar and other forms of energy that are becoming cheaper by the day with ever-improving technology in these areas.
“The issue of climate change is daily making oil and gas less important than they had been up till now. Electric cars and solar-driven forms of means of mobility and transportation will make oil and gas more in the ground than being exploited for transportation.”
To make the future sustainable, Obasanjo urged the government to focus on key areas such as education; health and social well-being; manufacturing and industrialisation; infrastructure; and agribusiness.
Amid rising debts, the International Monetary Fund also recently warned Nigeria, stating that the country’s debt to gross domestic product ratio at 28 per cent had increased but was still below the average for sub-Saharan Africa and Africa as a whole.
The IMF Senior Resident Representative and Mission Chief for Nigeria, Mr Amine Mati, said at the public presentation of the ‘Fall 2019 issue of the regional economic outlook for sub-Saharan Africa,’ that the Federal Government needed to increase its drive to create more jobs and revamp its fiscal consolidation.