The Presidency on Monday responded to criticisms by former President Olusegun Obasanjo, who took exception to Nigeria’s rising debt profile.
Reacting, the Special Adviser to President Muhammadu Buhari on Media and Publicity, Mr. Femi Adesina, said the federal government did not borrow to consume but to invest in capital projects that will drive development.
Former President Olusegun Obasanjo had on Monday queried President Buhari’s plan to borrow more money, declaring that borrowing to accumulate debt for the next generation is criminal.
Obasanjo gave his opinion in an interview with Channels Television in the aftermath of an event in South Africa.
The former President lamented that if the existing debt was left unserviced or unpaid, it might become a problem for successive administrations.
While noting that borrowing is not a problem, the former Nigerian leader stated that what could be a problem would be what one is borrowing for and the plan or capacity to pay back.
“But if you are borrowing and accumulating debts for the next generation and the next generation after them, it is criminal. What are you borrowing for?” Obasanjo asked.
“If we are borrowing for recurrent expenditure, it is the height of folly. If we are borrowing for development that can pay for itself, that is understandable. Then the payment, how long will it take to pay itself?”
The ex-President recalled that in 1999 when he came to power, the country was spending $3.5 billion to service debts that kept on increasing.
“When I came into government as elected President, we were spending $3.5 billion to service debts. Even with that, our quantum of debts was not going down.”
But while replying, Adesina said that Nigeria’s current Gross Domestic Product can comfortably accommodate the volume of borrowings.
He too spoke on Monday while speaking on the Channels TV programme, ‘Politics Today’.
Adesina is in New York as part of Buhari’s entourage for the 76th United Nations General Assembly.
While fielding questions on the possibility of the federal government lapsing into fresh borrowings in its bilateral meetings at the UN Assembly, he said, “You don’t go to the UN to seek borrowings. Any borrowing will not be approved until it goes through the National Assembly.
“The President is not going to borrow again. That is not the essence of the summit. When he meets with other presidents at the multilateral meetings, whatever is done there will not go through the back door. That meeting will be reported and whatever action is taken will go through the National Assembly.
“The President is aware of Nigerians’ clamouring against borrowing. He doesn’t live in space. He lives among the people. Many times, at the Federal Executive Council meeting when issues of borrowing come up, he talks about it.
“He says he knows people are saying his administration is borrowing too much, but we are not borrowing to put in our pockets. We are borrowing for development.”
Adesina said that this is the difference between the Buhari regime and others who he accused of “borrowing to steal, to pocket and to waste.”
“This administration will borrow and use it for development. And we can see evidence of those borrowings and the salutary impact it has had on our national infrastructure,” he said.
Asked about the recent outburst by former President Olusegun Obasanjo who said it is wasteful to borrow for consumption, Adesina said, “I read what president Obasanjo said.
“He said clearly that when you borrow for development, there is nothing wrong with it. That is the purpose of what the former president said.
“Whoever wants to take a negative slant can do so. But the essence of what the former president said was that there is nothing wrong with borrowing for development.
“And one thing about this Buhari administration is that it borrows for development.”
He explained that “many times, the Minister of Finance has come out to say that the extent of borrowing to Nigeria’s GDP is tolerable. That the GDP can accommodate the borrowing. If it goes beyond that, there will be a red flag.
“Yes, it may be on the high side but the GDP can accommodate it.”
Asked if 100 per cent of what is borrowed actually goes for development, the aide said the question is better answered by the finance minister.
He said, “Propositions for borrowing that are brought before the FEC meeting. It must be thoroughly discussed. If anything comes and it’s for consumption, it will not sail through.”
He insisted that the borrowings were largely for capital projects.
Asked about a probable protest on September 24 when the President is due to address the assembly, Adesina said, “that would be consistent with democracy.
“If some people march in solidarity for the President, then it is okay for others to march against him. It is allowed.”
Nigeria’s debts now stand at N33 trillion and will rise to N35 trillion as the Federal Government seeks foreign loans to deliver key infrastructural projects.
President Buhari last week wrote to the National Assembly, seeking approval to borrow $4,054,476,863 and €710 million in an addendum to the 2018-2020 borrowing plan.
In the letter, the President explained that owing to “emerging needs”, there is a need to raise more funds for some “critical projects”, while seeking the parliament’s nod to also approve grant components of $125 million.
In July, the National Assembly approved the sums of $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.
The Presidency on Friday listed the projects that the new loans are meant for.
One of the projects is the rail line from Kano to Maradi in Niger Republic.