 Barely two months ago, the National Assembly had approved $8.9 billion loan for the current administration and, of course, in the days in the last 48 hours, President Mahmoud Bari has once again sought another $4.9 billion loan. Nigeria's current debt profile is about $3.35 trillion higher and climbed in. Both political parties have once defended or come against this loan and, of course, early in the morning, we had spoken about Senatali Undume who was berating the National Assembly for the speed with which they went ahead to approve the request of another $4.9 billion loan by the current administration. This morning, we're speaking with economist Ken Ife to share his thoughts on this. Good morning, Mr. Ife. Thanks for joining us. Good morning. Good morning, and thanks for your welcome. Now, let's start with your views or your thoughts on another $4.9 billion loan request. Looking at where we are coming from in, you know, from 2015 and what Nigeria's debt profile was then and where we currently are, do you agree with the narrative that Nigeria needs to continue to borrow in order to build? Yes, I see yes. The reason is because there are so many things that we need to do and all of them require investment. Even to fight corruption, you need investment in technology systems. Anything security you need, you need investment. To pay jobs, you need public investment in public money. To fight COVID, you need investment. And if you don't have the money, if you don't have your savings, the alternative you have is to either sell your assets or gamble. There are laws guiding our borrowings. This time round, like in 2005, 2005, we didn't even know how much we were going. They said it's just about $30 billion. 40% of that money was actually penalties and implement all kinds of things. This time round, we have, first of all, borrowing is on the exclusively stated list. Also, it is governed by fiscal responsibility Act 2007. And the law says if you want to borrow, it doesn't matter what that makes you go for it. It has to be your actual expenditure and human resources development. And then it also states that you need to have a fiscal strategy prepared for what you want to do and make an expenditure framework. And then that borrowing has to be on processional terms and a long term frame. So the law is very, very clear on what needs to be done in connection with having more transparency, accountability, and transparency in public finance management. But if it's a nice, really neat to borrow. And the answer is, of course, we need to borrow. And even crying about this particular request, this part of 2018-2020 MF, we are still going to borrow more and more under the 2008-01 and 2008-04 million expenditure framework. Now, the particular money is asking for has already been foreseen by the fiscal strategy that has been captured in the million time expenditure framework. It was is in the growing plan. It's been approved by National Assembly on all relevant authorities, all of them. And all happens at the point of dying. You still have to come back to the National Assembly and still seek permission again. So it is in the works. The second question is how necessary is it for us to borrow? Every country in the world, even the richest country America, losing billions of dollars. In our own case, we are confronted with major challenges. But first of all, visions of Nigeria today from the WC is that in 2030, our GDP will rise to 1.64 billion. And in 2050, it will rise to 6.4 billion. And the thing is that it's inconceivable that in the current state of our GDP, we're ever going to get that level of outlook without investing in infrastructure, which is the infrastructure base that supports a lot of revenue that we expect. So we need to invest in infrastructure. And the stock of infrastructure in Nigeria is only 35 percent of our GDP. And just compared not to South Africa, as is 8 percent of the GDP. Many countries are 100 percent or more of their GDP. It helps you to tell you of the city of infrastructure. Now, you come to the second aspect, which is security. The security situation that we have in Nigeria is existential. If you do nothing, that's not an option. Because it would be publicly the headers, the terrorists, the bandits, and the kidnappers. They would take all of us out of a lot of these countries. Because as has happened in the world, this country again, it's not the package that was in the world, this country that has just come down. It's not an option at all. And the second challenge, which is COVID, is existential as well. Because COVID is a matter of life and death. And you couldn't do nothing. Do nothing is not an option. Because people are dying in thousands. And you can't sit back. Nobody does that. And even the promise from the international bodies that we're going to give us 20 percent of our population, which is 14 million percent. You haven't seen that. We've only got four million. So the government has to brace up to find money to buy COVID to save our population. Or is it the employment that they are going to say, oh no, we're not going to put the money in public works? Don't do that. And then you see all the young boys and girls who are on the same of our population, of our unemployment rates. You know, they will come out on the street and chase everybody out of the office. So some of these challenges are existential and we have to do something about it. You can't go and watch this money and sit back and say, let go and go back. It's not possible. Okay. Mr. Ken Ife, as of June 2021, Nigeria's external debts, you know, climbs to over 13 trillion Naira. And as of June 2021, Nigeria's domestic debts, you know, was over 21 trillion Naira as well. So would you say that the current state of Nigeria's infrastructure justifies our previous borrowing? Okay, let's look at the first two. Now, though before this administration, I'm not the sportsman of the administration, but because before they came in, what we had was all roads abandoned. In fact, because we are not getting paid, they all abandoned the roads. But when they came in, they didn't go to our fresh contracts. They just said, oh, everybody should get back to site and they start paying whatever they have. And of course, they have to borrow some of that money. So what you now have is that all highways everywhere in the country, there's somebody somewhere dead doing work. We haven't completed most of them at work. And far from it, the work is going on. And the people have been dead. They are not going on. Look at rail. The last investment in rail. Now, why rail? Rail is the cheapest and most efficient and effective means of transporting large goods across long distances. See, that is a start, just as a non-fight. Now, look at the impact of what has been, is a very expensive project to play in practice. Look at the ones that have been successful. Look at the impact of that. Everybody's happy about that. They look at Lagos, they bother. See, the impact is going, he's happy. And the thing is, there's no way you could be thinking about having building a big sea port, big big sea port. We are planning to have rail for big goods because the big sea port is more than the capacity of more than all the other ports put together. All the roller ports and the canapes and all of them put together. This is more than capacity. So for you to not plan for rail, for a bad question, means you are saying forget Lagos as an economic center. And that's not going to happen. And I remember when I was writing a bid for handling for Lagos to go back to Medjugorje, East Anglosal, at East Anglosal Rail, I remember that I did a plan. I showed that by 2035, we could generate one billion dollars of GDP in that coastal corridor, that in East Anglosal corridor. That gives you an idea of the kind of revenue that you could bring in in the country when you have the rail. I'll give you another example. If you're moving trains from anywhere in the north, at Sina or Kaby, if you're moving one ton of grains from there to Lagos, it costs you between 75,000 and 100,000 Naira per ton. And that's one of the reasons why you have this runway inflation when it comes to food. Now the thing is that if you are using rail, and some of the people that have gone back and done it in one day, spend three days on the road because of security challenges. If you are using rail to move back, it will cost up to 5,000 Naira. So the rail is so visible in the range of infrastructure. Of course, nobody would pay less money. Mr. Kenife, can you hear me? Yes, so when we talk about infrastructure, it seems that in the Nigerian situation because of the poor state of our roads, you seem to focus just on road and rail. But there's so much more to infrastructure, including aviation infrastructure, water infrastructure, waste management infrastructure, communications infrastructure, infrastructure regarding bridge, regarding power and energy. So when we look across all these types of infrastructure away from road and rail, even inclusive of road and rail, would you say that borrowing of to the terms of trillions of Naira and the government has been able to use all that money to invest in these different parts of the country for the betterment of Nigerians? You just mentioned power. 60% of the manufacturers in this country say that they provide power for themselves in 90% of the time. If you go to the website of man, 77% of the manufacturers say that their greatest challenge is power. Power accounts for 80% of the cost, transportation to 80%. This to a low is giving you 50% of the cost. It cannot be compensated going forward. And you talked about communication infrastructure. We have the highest electricity in Africa because of the huge investment from the on infrastructure. If we said, how is it aviation, it just built 500 million dollars to build five new terminals, international terminals in our international and that is a boost to aviation. And we're looking to concession codes. So the issue is this only 35% our stock of infrastructure is only 35% still so far away compared to our economies. So we have to invest in infrastructure. We should move the debate appropriateness of the investment and the equity of the investment and the sustainability of the investment. And here I will tell you that the law says we have to carry out cost benefit analysis on any debt. And you see that the government office tries to do that. And the issue about whether we are succeeding and voting with your feet. I'm not here to defend government. I just here to be facts down. And then we can have a useful discussion over this in financial ratios that the law describes. I have not actually been violated so far. Because there's only one financial ratio in the effort in 2007, which is fiscal receipt to GDP, which it wants to be kept a percent. It's gone over 3% about 3.6%. And the finance act has amended. And then now the whole act is now been amended by the Senate. So otherwise, this is certainly standard for the others. The benchmark for other debt to GDP is about 40%. That's the international benchmark for low income countries like ourselves. But for other advanced countries, 60%. The thing is, we are still around 30%. If you add everything, it's about 40%. And that is including, including the 10 trillion dollar central bank government, $5 billion as over that. Of course, that is now being put at a long-term loan every two years when I put them, which says that they are not going to start paying in the life of this particular climate. So that is this story. Now, what they have, I have to tell you, is that most countries in the world are violating those limits because they have infrastructure. And it's about 250% GDP issue. America is almost 100%. And all these other countries are between 80% and 100%. That is because they have infrastructure. Whereas we don't have it. That's why we have to invest and make sure that investment has to be economic projects that are people of repaying that loan and retiring the loan. If you invest it in anything like, you know, if you want to use it to put loans to the ministers home or whatever you own, they're supposed to collect up industrial and economic centers so that they would energize the economy and have a reasonable return on the investment. And one challenge we have is this. The second class of infrastructure, government has to build them before you bring in the private sector to run and manage those. That is one challenge that we have. In the health infrastructure, you still have to build those before you get the services and people to come and manage. Education the same. Luckily, we have private sector investing heavily in education, more invested than federal government. You still need to build the basic and then enable them. We can also go further with this. The picture that you've painted mostly, you know, it's almost a picture that seems like Nigeria is not making money. And so the only way that we can survive and continue to build infrastructure is to- You're losing your voice. I'm not here to hear you. I'm saying the picture that you've painted really is that Nigeria is not making any money. And so the only way that we can run the country and continue to build for what is to borrow, which may not be very, very true. And also, you know, it seems like we have completely ignored multiple ways with which Nigeria can save funds and use some of these funds for this same infrastructure that we are borrowing for. So I want you to speak on wastage of funds in Nigeria and also the social economic rights and accountability project has, of course, sued the government and acts that this loan not be approved until the government is able to show spending details of the trillions of Naira, you know, debt that we've gathered since 2015. Do you agree with Serap? To separate things there. Yes. Compatibility is what we all have to be pursuing. Legitimacy of the debt is something that we come across in question. The sustainability of the debt is key issues that we need to focus on. And I agree that the challenge is more around the ability to repay. But that is where the trouble lies. In a way, we don't have this in the law. The international benchmark is that your debt service for your government revenues should not really be more than 40 percent. Last year, we started with 91 percent in the first quarter and ended up 20 to 80 and 80 percent. This year, the government projected that the debt service would be around $6.8 percent. But as I, if you saw the initial part yesterday, it is the headline of the Chairman of Business and Advisory Council, Economic Advisory Council, Dr. Salami, said that it was 98 percent. As for the first quarter, first half of the year, it was 98 percent. That is the debt service GDP. That looked alarming. But I had to come back in some of the interviews I had yesterday. Now, the issue is this. Do we do nothing? And I've told you, I gave you three examples, where doing nothing is not an option. So the thing is now, how do we raise more revenue? Nigeria is, our government revenue to GDP is 6 to 7 percent. The lowest in Africa could increase that. How do you increase that? Are you going to increase that by simply doubling the tax on existing footprint? You can't do that. And I can tell you the reason why you can't do that. We do more by widening the tax days and bringing more people into the tax net. Two, you block bleak edges. These rules have a $8 billion a year on EDC transfers. Block bleak edges and the government is aware and they're doing something about that. We also recon that, I remember when I went to speak to the Senate Committee on Finance, two extremists ago, they were saying, the chairman there was saying that the money was spent on tax waivers for some of the mantra currents and also new cases in the system are actually higher than revenue that government is getting. So I can now see government trying to reduce that exposure and doing more. And we also saw that this whole necessity has pushed government to sign the PIA as the Economic Industry Act, which has been going on for over 20 years. And they are at a good at the good act. So it's a starting point in playing with this substance in a petition. Just as it has been asked, I'm going to let them in here and say that next year expecting the public area revenue that they will be over 10 billion. And which means that the likelihood of this whole revenue doubling next year is there. That means there is less fiscal stress. It's the aspect of fiscal stress. So there are many things. Now yesterday again, the central bank announced that they are paying out to raise 15 billion for the infrastructure company. Now, infrastructure PLC has been capitalized at 1 billion by 2020. And that's the private sector on the page. And the impact of that is that they are going to grow an area of 15 billion. And now offload all these projects that government is spending so much money, putting so much on the private sector will roll and roll with these projects. So that's a free federal government. But all of this is for the infrastructure. I want you to please talk about what you think Nigeria's strategy for repayment is. You've mentioned that about two times now. So with all this borrowed, what's our strategy for repayment? How do you think our debt profile might affect our economy? And lastly, the People's Democratic Party has been saying that the APC is simply accumulating debts and just high spending. Wrecking Nigeria. That's what the PDP has said. How do you respond to that? I'm not interested in what the politicians are saying because I'm a technocrat and I also have to figure out some facts and in that medium as I can. But I have a blade for you. A measure that I have seen that I'm taking place, including the government industry act that is now going to give us more comfort measures. You've seen sub-national levels have also been pulling their weight in revenue generation. And that technology has come in. If you see in your state, I've been putting and pulling their revenue because our technology to drive the ITR and meaning most states are going, it's a metal. And if you look at federal government in fighting leakage, I have to think in ITIS, which is the aerial software and can chief mix. And I also heard about the single account, how it has continued to shrink the breaker of both ITIS that are eating our money. So, and you've seen when they run DVM over the ITIS, you can see some systems and have 44 accounts, 45 accounts, a lot of accounts. So all of these are technologies, but you also invest in those technologies. And if you help fight corruption, that's the thing. Technology is going to do a lot more for us in helping us to help you out and investing in those. So there are many ways the government is looking to improve our revenue and bring more comfort operation in terms of how I have placed all the key elements. If you are telling me that you're going to shut down, you're not going to bury anything, you don't have any savings. And I've said you must be looking because it's going to get all the home people out on the street. And it's not an option. All right, Kenny, I think we can wrap it up here. Thank you very much for joining us and for your analysis this morning. Thank you. We wish you a very interesting weekend ahead. Thanks once again. Thank you very much. Absolutely. And this is where we will be wrapping up the conversation this morning. Thanks so much for being with us all through the week. Remember where you can catch up on any of the conversations you may have missed this week. It's simply on our social media platform at plus TV Africa on Facebook and Instagram. And thank you very much for being a part of our week. It's the final edition for this week in the month of September. And do have a great weekend. I am Annetta Felix. And I am Usaugi Ogbama.