Last time I checked, the 2022 appropriation bill had been successfully passed by the Senate before proceeding for its annual recess.
It’s worth noting that a total sum of N17.126 trillion was passed by the Senators as against the N16.391 trillion tendered to the joint session of the National Assembly (NASS) by President Mohammadu Buhari.
The 2022 budget has it that the projects to be executed in Nigeria in the upcoming fiscal year will be financed by the foreseen assistance of both local and international loans yet to be sought, albeit mainly local borrowing, having estimated the expected oil benchmark for the year among other sources of the finance.
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It’s pertinent to acknowledge that governments in rich as well as poor nations borrow money from such domestic and international markets as the World Bank, the International Monetary Fund (IMF), and commercial banks.
In rich nations, government borrowing obviously stimulates the private economy; it creates jobs and raises incomes of the majority of the population of the affected nation, thereby improving their standard of living. However, in poor or developing nations, government borrowing does not generally produce the same results or the required effect.
In Nigeria, for instance, for decades now, the government incessantly enjoys domestic and international borrowing but pathetically, such gesture hasn’t stimulated the private economy as anticipated. To say the least, the role of Foreign Direct Investment (FDI) in the country’s economy has not been significant.
Between 2009 and 2015 alone, the government engaged tremendously in international borrowing. This gesture was reflected in the country’s balance of payments deficits. In spite of the enormous borrowing by the government, grants received out of benevolence, and debts rescheduled as well as forgiven, the nominal income per capita hasn’t shown any significant improvement.
The country average income per capita on a monthly basis for the recent years was about USD130 dollars or thereabouts which was far below the $500 average income for the poorest African countries. Pitiably, the country cannot presently boast of up to USD80 dollars as its monthly average income per capita.
Conspicuously, Nigeria has recently faced an unprecedented population growth. Although the population is increasing at an alarming pace, its purchasing power is not.
Such a phenomenon as posited above has two cogent and inevitable effects on the economy. The first is that the rapid increase in population impoverishes the country as a whole, hence making the accumulation of capital very difficult. Secondly, the low purchasing power limits the internal market.
The major economic plight in a country like Nigeria remains that the government has not been accountable to the people. Thus, it can borrow as it pleases, and the unsuspecting electorate would still foot the bills.
We must acknowledge that the government will continue to borrow as long as there are interested lenders, provided the fiscal policies of the country remain docile. This is why suchlike policies are seriously yearning for restructuring.
Besides, there’s enormous politics involved in international lending. Though Nigeria can invariably find her way as regards assessing loans from either official or unofficial sources via the use of her international connections or immunity, for how long will she continue to depend on external borrowing? This, among other paramount questions, is required to be raised by any one or analyst who truly thinks good of the country.
It would be recalled that during 1966-1974, or thereabouts, developing nations were growing at a high rate simply because they were yet to be involved in external borrowing or importation of goods and services. In view of this, their annual average growth rate stood at 7%.
But in order to meet their subsequent population growth needs, many of them began to import heavily, particularly capital goods, oil and foods. Funnily enough, they are mostly involved in export-oriented strategy as it’s presently witnessed in Nigeria in the oil sector.
It’s not anymore news that the borrowing, especially external, that’s captured in the 2022 budget, which is not unusual in the Nigeria’s budgeting pattern, has been generating a lot of ripples and mixed feelings in various quarters, thereby making several Nigerian analysts as well as social commentators – both home and abroad – to be involved in series of fallacious arguments. This is probably owing to partisanship, incompetence, quackery, unpatriotism, ignorance, or what have you, as the case may be.
It’s amusing and perhaps very awful to realize that sometimes most Nigerians play politics with issues of national interest, particularly very sensitive economic matters. We are not unaware that borrowing is necessary, but it ought not to be seen or adopted as a measure that needs to be taken if a country must survive or grow.
Editor’s Note: this post concludes here