Debt Cancellation For Who?

ThisDay Back page represents one of my best pages in any newspaper in Nigeria and I always look forward to it. However the above captioned article by Kayode Komolafe on January 19, 2005 was below average. I would have pardoned him for a bad day which does happen to anyone from time to time but to be parochial and pedestrian on issues of economics and finance represents one of the endemic problems we face as a nation so I chose not to let the sleeping dog lie.

I am yet to understand the effect a national consensus and the passing of a debt cancellation law by every local government , state and national assembly, will have on the fact that we need to keep up with our obligations to the Paris and London Clubs. To restate the obvious, most of our debt is owed the Paris Club which is made up of mostly governments of the developed world which are democracies and also face the challenges of providing health care and employment for their people and are under no obligation to Nigerians. Komolafe should know that Nigeria is not classified under the category of Least Developed Countries (LDC) which, are the countries that have been identified by various multilateral institutions as needing debt relief to speed up development. These countries are now at the various stages of economic and structural reforms under the enhanced Heavily Indebted Poor Countries Initiative (enhanced HIPC initiative). Ours is a case of our weak and corrupt public service leading to squandering of national resources and I do not know who we should blame but ourselves. Till date we are still resisting any form of reform that will usher in fresh ideas in the bureaucracy.

I am also at loss for what will be the basis of this cancellation of debt. Is it to reward us for mis-managing the little we have or to congratulate us for all the foreign investment our public office holders are making all over the globe? At the last count after the President’s tongue lashing of the South Africa Owambe, and uncomfortable reception money launderers now get from the West, the new destination is now Morocco and Mauritius to tell you how far these shameless people can go just to hide away what belongs to all us and allow our people die of poverty. They are the real rock between us and the Millennium Development Goals not the Paris and London clubs.

Komolafe argued on the fact that in servicing the debt we have paid the principal many times over and pathetic as it sounds I don’t know how many shares he has returned to a company on the account that he has received enough dividend to cover his initial investment and I wonder who will do that if the company is still in business.

It’s a pity that President Obasanjo has been shouting himself hoarse on the debt relief to a point that it’s becoming a joke to his numerous hosts in the West because they have not really noticed a remarkable change in our attitude. A simple analogy is someone owing you N20m and buying N3m Jeep. Even though you know that his jeep cannot pay your debt but his consumption pattern does not connote any form of austere times so why will you let him of the hook.

I did not watch the “emotional outburst” of our dear finance minister on CNN but I believe that she should know better. When some countries are yet to release the Abacha loot for fear that it may finds its way back to their coffers through another conduit certainly debt cancellation for Nigeria cannot be on the table for the creditors. Anyone of the creditors who is listening is only extending courtesy in line with the west’s well schooled diplomacy. Our Honorable Minister of State for Finance, Mrs. Nenadi Usman made a public revelation that they know the state governors who remit state funds abroad once allocations are released thereby putting unnecessary pressure on the foreign exchange market and yet the statement was allowed to fizzle out. People like Komolafe should devote their energy to exposing those governors to the public instead of rewarding them with “The Lazy Thisday award” nomination like my good friend Osita Chidoka will call it. A governor who builds a school block is now praised for investment in education. The press including Komolafe should be more critical in their work by monitoring the efficiency and effectiveness of public spending across all arms of government. That way we can ascertain if the available resources are being well utilized before calling for national consensus on debt cancellation. For whom do we seek debt cancellation? The masses who the government has withdrawn every subsidy from in the name of freeing funds for development or the Governors so that they will have more funds to remit?

More than Dr. Okonjo dramatizing on CNN we should support Alhaji Ribadu to catch more big fishes like he just did, because the issue of the police man and the bank has been a big scandal in the banking industry. Yet the announced amount falls short, by far, from earlier information available in the banking industry. Alhaji Ribadu should hire forensic accountants, if need be, to get to the root of the matter. Luckily for us, it was invested in our own treasury bill so it will not involve cumbersome legal procedures at Switzerland and London courts to secure a net off.

It is also decent that we understand that the Tsunami situation cannot apply to us. If the world responded to a disaster by supporting bereaved people we should not go cap in hand begging that we are bereaved too. Ours is not a case of poverty but that of weak public institutions and squandered resources. The Finance Minister also should know the implication of declaring bankruptcy on a World Network like CNN and then seeking for foreign direct investment (FDI). Having lived abroad she should understand what happens to an individual that declares bankruptcy because his former wife went on a spending spree on their joint credit card account when the going was still good between both of them. The system shuts you out of credit because you are not creditworthy. If we have been overcharged in anyway we should prove it and get refunds but to expect debt cancellation with ever increasing oil and gas reserve while we are buying new presidential jets is a bit too much on other people.

Komolafe referred to the work of the Russian Legal scholar, Mr. Sack, who made a case for debtor nations on the basis of odious debt, unfortunately in our own case the despotic men are still around in various forms. Apart from General Abacha and General Murtala Muhammed all the other military heads of state are still either occupant or intended occupants of the Aso Rock villa. The creditors who of course know better than we all do about Nigeria will be waiting for 2007 to remind you about odious debts argument.

Even arguing on the odious debt principle Komolafe should have towed a more refined line like Xavier Sala-i-Martin and Arvind Subramanian of the IMF who in their article, “Addressing the Natural Resource Cause: An illustration from Nigeria”, called the debate for debt relief sterile and pointed that creditor nations are wary because of the level of misuse of public funds and this has made them reticent on the issue of debt relief. They went ahead to recommend that any debt relief should be channeled by the creditors directly to the private sector to provide the much needed funds for real economic growth. They also argued for direct disbursement of oil proceeds to the population with all 18 year old and above ladies as the only beneficiaries. They cited studies that have proven that development outcomes are strongly correlated to the degree of empowerment of women in the household. For the government, they advised that it should get its revenue from taxation like every other government in the world.

We should learn from the President’s Gulliver’s travels for Foreign Direct Investment (FDI) that due process cannot be sacrificed on the altar of pity and friendship in the established systems; without governance assessment reports like Standard and Poor’s, the Investment bankers and fund managers of London, Switzerland and New York will never look our way. These are serious institutions managing people’s life savings and pensions fund. It is only when we concentrate and get our acts together that anyone will regard us as serious. Looting and waste are still a norm in the public sector and not the aberration so no creditor will take any weeping minister’s plea even on “Space Network”. Until we get critical of our public office holders and make them really accountable, all these appeals will get us to no where.

China is not being built on aid rather on focus, commitment and sincerity of the leadership. Our ruling class has not shown any of the qualities so nobody will take us serious. Last week, the Canadian Minister of Immigration our equivalent of Internal Affairs Minister resigned to clear her name on the allegation by an illegal Indian immigrant that he sent Pizzas to her campaign office during election on the understanding that she will help him regularize his 18 years of illegal stay. Though the Minister is claiming ignorance of the pizza delivery, she resigned to clear her name. Today, the level of power generated for electricity swings like a pendulum despite abundance of natural gas (one of the cleanest source of power supply) in this country and Mr. Liyel Imoke keeps telling stories every year despite the huge investment in NEPA. Is it not about time the press takes a critical look at what is going on in NEPA and ask Mr. Imoke questions including public declaration of his assets?

If we cannot solve a problem as basic as power after six years, I do not think we should expect any debt relief unless it is destined for the private sector. Heaven and even earth now only helps those who help themselves. Komolafe should kindly remind the President of his 1999 promises and insist that he redeems them. The real apathy is that of the press not holding the elected public officers accountable to their promises and actions at tremendous cost to all of us.

Mr. Toochi Uchendu is a Chartered Accountant and lives in Lagos
tochukwuu@yahoo.com