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PRESS RELEASE BY THE COUNCIL OF THE NIGERIAN ECONOMIC SOCEITY
[NES] 24th May, 2005
EXTERNAL DEBT BURDEN UNSUSTAINABLE AND INCONSISTENT WITH MILLENIUM DEVELOPMENT GOALS
A statement to the Press by the President of the Nigerian Economic Society (NES)
Professor Sam Olofin
Under Shagari Administration we were described as an under-borrowed country and compelled by some of our development partners to contract our first major external loan of about 2.6 billion U.S dollars. Our policy makers who bought this idea and our development partners who goaded us into contracting these loans must accept joint responsibility for our current level of external indebtedness and the debt-servicing burden that is today seriously threatening our development prospects.
Some have compared its potential effects on the economy with that of the Transatlantic Slave trade for which there is yet to be any reparation. They may be right is some sense if nothing is done to urgently arrest the crippling effects of our debt-servicing obligations that is mounting daily. If the recent debt servicing arithmetic is correct (and we are never sure of this), we have on a principal that was less than $19 billion in 1985 so far made interest payments of over $40 billion and yet are left with between $33 and $36 billion to pay up.
The rate of interest accrual is such that we are spending as much as four times as we spend on education or fifteen times as much as we spend on health to service our foreign debts annually. This is totally unacceptable and unsustainable either in the short run or in the longer term. It is inconsistent with the pursuit of the millennium development goals [MDGs] which among others things expect us by the year 2015 to reduce poverty and hunger by 50 percent; achieve universal primary education; eliminate gender disparity in primary and secondary education by the year 2005; and between 1990 and 2015 to reduce child deaths by two thirds; reduce deaths of mothers due to child bearing by 75 percent; stop the spread of AIDS; and reduce proportion of people without safe drinking water by 50 percent.
Some of our development partners have described our debt-servicing burden as sustainable. Simple calculation of some ratios may suggest this but in reality is only sustainable if we divert the bulk of our oil earnings to service our debts, and at the expense of development goals, which our creditors are supporting through pursuit of MDGs, and Blair's Africa Commission development goals for example. It would amount to policy inconsistency on their part to be supporting the realization of these goals on the one hand while expecting us to continue to divert resources away from them to finance interest payments on our debts.
They cannot expect us to continue to pursue both. If they are serious about their commitment to helping us to achieve the various development goals to which they are giving strong support through their various development agencies such as the World bank, DFID among others, then something has to be done and very urgently too to free us from our debt servicing burden.
The problem needs to be tackled from various angles. Our policy makers are already paying more than lip-service attention to problem of corruption and the fear that any debt cancellation would enrich corrupt leaders. Further steps would need to be taken in this regard to ensure that the war against corruption is sustained and made comprehensive in coverage. We need greater accountability in investigating and documenting the genuine debts, what they were expended on and who should be held accountable for their misappropriation.
On the part of our creditors they would need to amend their laws to make money laundering into their banks from our corrupt leaders more difficult; make the identification and repatriation of already stolen funds stashed away in their banks or invested in various assets much easier than it is at the moment. Ignoring these responsibilities and merely expecting us to continue to honour our debt-servicing obligation is not only unrealistic, it is unsustainable.
As part of our internal measures to free resources for the finance of development we must desist from expending resources on non-priority projects. The recent launching of Presidential Library is a case in point. It is surprising that none of the horde of advisers around the President could detect that the whole project was ill timed and ill conceived. It represents two steps backward in the fight against corruption while we have been struggling to move one step forward. Was this a deliberate attempt to ambush the President in self-contradiction? If the leadership role of the President in the war against corruption is not to be compromised the least the executors of the project owe the public is to audit their list of donors and ensure that any public funds (those made on behalf of the States or Governors for example) are publicly returned to where they belong, otherwise the EFCC should be invited to investigate the sources of some of the questionable donations. Secondly the executors of the project should be advised to wait until the President vacates office before embarking on redeeming the pledges and donations.
In a similar spirit nothing should be done to worsen our business environment through incessant and frivolous resort to the weapon of impeachment. No local or foreign investor would want to invest in an unstable economic and political environment. True enough there may be impeachable offences against the President that are deliberate or inadvertent. The silent majority must speak out against our legislators who resort ever so often to impeachment weapon to distract the President and the country thus creating instability under the guise of checking the President's excesses.
There must be better ways of going about checking the President including the making of enforceable laws, which is the primary responsibility of the legislature. We are the only country where the President is threatened with impeachment every now and then to pursue the narrow interests of legislators. Could the current impeachment noise be a way of distracting everyone including the President away from the war against corruption? The legislators must be seen to be joining hands with everyone to pursue the country's collective interests rather than wasting valuable time and resources on frivolous impeachment plots at every opportunity.
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Professor Sam Olofin
President,
Nigeria Economic Society (NES)
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