Nigeria @ 50: Nation still servicing loans obtained at Independence

Nigeria is still servicing  loans obtained just after the nation’s Independence in 1960, and that the loans were what the nation used then to set in motion regional government.

According to the Director General of Debt Management Office(DMO), many developmental activities such as road networks construction and government houses were built with such loans.

The Debt Management Office (DMO) however summed up  Nigeria’s local and foreign debts at $29 billion, revealing that some of the loans the country is currently re-paying were obtained shortly after the nation attained independence in October 1960.

Director-General of the DMO, Dr. Abraham Nwankwo, disclosed this at the Forum of the News Agency of Nigeria (NAN) yesterday in Abuja.

“Two major clarifications: After independence, Nigeria did borrow; Nigeria did borrow in the 60s.  Indeed, if you go to our loan books now, which are available for public scrutiny, you find out that some of the loans we have in our books now were borrowed in 1965, 1970, in 1968,” he said.

Nwankwo said the then central and regional governments took the loans to execute major projects, adding that it was on record that they were specifically used to “build major roads, monumental houses of assemblies in Kaduna, Enugu, as well as in Ibadan”.

Nwankwo explained that the loans were used to establish many federal universities and other notable tertiary institutions. According to him, most of the successful agricultural projects of the past were funded with borrowed monies, adding: “We have the details of some of the monies that were borrowed in 1960.”

The DG said he was in custody of the record of the country’s national development plans of the 60s and 70s in which the central and regional governments issued development loan stocks.

“Borrowing is not new to Nigeria and indeed, as I said earlier; borrowing is an integral part of a modern economy,” he said. Nwankwo described the DMO as a permanent feature of every emerging economy because governments all over the world, no matter how developed, needed to borrow to fund major projects.

“In this way, you are in the position to fast-track development; this explains why even countries like United Kingdom, United States, France and Germany that are so well advanced still borrow domestically and externally,” he said.

He said more than 90 per cent of private companies worldwide could not function unless they borrowed, noting that it made sense for them to borrow to expand and enlarge their turnover. According to him, it therefore makes sense for government as an economic agent to borrow to accelerate growth and development.

However, Nwankwo stressed that borrowed funds must be used judiciously to execute the project they were borrowed for. “We have to together ensure that the proceeds of borrowed funds are used in such a way that they generate maximum output, maximum growth, maximum employment, maximum poverty reduction,” he said.
He added: “As at now externally, we are owing $4.27 billion – as at the end of June 2010. Domestically, at the end of June 2010, Nigeria is owing N3.76 trillion.

“If you combine the two under one denominator in dollars, the total public debt as at the end of June 2010 is about $29 billion.” Nwankwo said that 85 per cent of the external debt was from the concessionary window of the World Bank and the soft window of the African Development Bank (ADB). “These are windows where the total finance charged of what you have borrowed is not more than 1.25 per cent per annum,” he explained.

The director-general further explained that loans from the concessionary window had longer re-payment periods.
He condemned the brandishing of wrong figures on Nigeria’s debts, stressing that the DMO was the only agency allowed to comment on the volume of the debts. “The Debt Management Office is the only agency that can tell you how much Nigeria owes externally and domestically,” Nwankwo said.

Source: Thisday.

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