Nigeria, Debt, Inflation and Abracadabra
By Emeka Uzoatu
The country Nigeria is no stranger to problems. Since it came into existence through the benevolence of European colonialists, the contraption has been dogged with a plethora of them. However, the saving grace remains that we have always come out of them sans much damage.
But of all the problems presently confronting our country, none stands out like that of the rapid dwindling of our economic potentialities. Sad as it is, it has suddenly become obvious that we can no longer afford things that we used to give out for gratis to our neighbours ab initio.
Of course, that the economy is a sine qua non for human existence on earth has been argued by more competent scholars. According to some, it’s arguably the superstructure on which the rest structures are, peradventure, inclined to for air. Making it the singular most important determinant of wholesomeness in all nations.
Though remembered today more for the fringe results of the advocacy, their primary position still holds strong. Any wonder it took a snowclone of it – It’s the economy, stupid – to launch Bill Clinton to the 42nd presidency of the United States of America (USA) in 1993. When it was coined by James Carville, a strategist for his campaign, it made so much sense that it became the linchpin of the contest that saw to the dethronement of an incumbent.
Here in Nigeria, this truth has often been doubted to our peril. Ever since the various governmental interregnums that have governed us since independence from Britain in 1960. Normally emphasis has often been paid to other diversionary areas to our peril.
It must however be pointed out that we started out well. At the achievement of self-governance, our independence constitution guaranteed a sound economic base. Till the preferred heirs to the legacy left behind by the colonialists took the nation for another fiefdom. As though hellbent on returning us to feudalism, they ended up ruffling more feathers than they cured.
Following their toppling by the military in the bloody putschs of 1966, the tide was to turn for the worse. The permutation of soldiers who ended up running our affairs till 1979 did the best they could, though. Only that as they opted to bow out, they found reason to strike again after just another electoral cycle. This time on the eve of the Orwellian year, 31st of December, 1983.
That time around, they hung on again till 1999. And as it turned out, they found no other Nigerian to hand power over to this time than one of their own. That he had shed his khaki for an agbada notwithstanding. But having supervised the earlier 1979 handover to civilians, he immediately became the toast of the Western World.
To give him his due, he really gave his all in the economic front. He reached out at home and the diaspora for the best hands the nation had on offer. So much that but for his attempt to run for an unconstitutional third presidential term, his legacy would have reverberated more.
According to statistics from the Debt Management Office (DMO), he had met a total foreign debt of $28 billion. Following agreed write-offs by the London and Paris Clubs of foreign creditors, he left just foreign debt of $2.11 billion.
The next interregnum supervised by Yar’adua and GEJ was through, another $1.39 billion was added to it. And by the time GEJ ran the show alone, a further $3.8 billion was incurred; bringing the total of our foreign debt to a galloping $7.3 billion.
When the current dispensation mounted the throne, the story changed astronomically. Suddenly Nigeria’s external debt became the biggest in sub saharan Africa. After several bouts of rescheduling, it lately stood at $40.06 billion. And the government is set to borrow a large tranche to balance the 2023 budget proposal.
All this comes into special focus following PMB’s recent address at the 77th session of the United Nations General Assembly (UNGA77) in New York. In what is fated to be his last address at the assembly, he expressly called for two alternatives.
First is the expansion and extension of the Debt Service Suspension Initiative for countries facing fiscal and liquidity challenges. Secondly, he demanded the outright cancellation of the debt of countries facing the most serious challenges.
While the answer to his plea waits, the country is almost doubling over on account of its mounting inflation indices. As released by the National Bureau of Statistics (NBS), in August 2022 it jumped to 20.5%, its highest vault in nearly two decades.
In the same month food inflation rose to a staggering 23.12%, significantly higher than the 20.30% recorded a year earlier. Analysts are agreed that these are the result of the pressure mounted by the ancillary high cost of fuel and other nefarious imports.
Nigerians are now left at the edge of a precipitate situation. Many end up thanking the heavens that it had not gotten to the level in Turkey. According to the Turkish Statistical Institute, in June, 2022 consumer prices rose 78.6% year-over-year.
Meanwhile, the news about town is that, to get by, our central bank now prints more money like once upon Idi Amin’s Uganda. The only hope being that we don’t become like Zimbabwe and Venezuela where the process spiralled them to hyperinflation.
Anyway, all hope is not lost. After all, according to classical economics, inflation allows borrowers to pay lenders back with money worth less than when it was originally borrowed. So in no time we might end up like the people of the Polynesian island country of Samoa. In 2021 they posted a negative inflation rate of 3.2% year-on-year.
O yes, and then our nation will post no more balance of payment problems. Our national budget will no longer end up in a deficit. Very easily we’ll meet with worldwide benchmarks for all spheres of development. Including education, making it impossible for lecturers in our public universities to proceed on their habitual strikes.
Once more, we’ll yet again adorn the gab of the Giant of Africa, the slough of which we had been gradually shedding over the years. And thenceforth all the men, women and children of our blessed nation shall live happily ever after.
Or am I just dreaming?