 The Nigerian Senate, to gross $2.6 billion extended forward request, sent to the National Assembly by President Mohamed Buhari. And the House have represented each the minority leader, Ndidi Elumelu, and the Speaker, Femi Bajabia-Mila, D-Fair, on the issue of facing the Minister of Communications and Digital Economy, Issa Pantami. Plus, politics starts now. I am Justin Akadone. Welcome back. A sum of $2.6 billion out of the $5.5 billion external borrowing requests sent to the National Assembly by President Mohamed Buhari in May 2020 has been approved by the Nigerian Senate. Of the total sum approved, $1.5 billion is to be sourced from the World Bank, 671 million euros from the Export-Import Bank of Brazil, and another 324 million euros from the Dosh Bank of Germany. The approved sum would be or would see 995 million euros go into finance priority project of the federal government, while $1.5 billion would be disbursed to the 36th state government, defining critical project. Now joining us to discuss this is Shego Shubito, a public affairs analyst and gospel Obelli economist. Let's start with you, Mr. Shobito. Many thanks for joining us on Plus Politics. The Senate has finally approved the request sent by President Mohamed Buhari, but let's just start this way. How does that really hit you, judging by the fact that the state governor was in the knees not too long ago saying that Nigeria is in dire strait when it comes to public debt? Is this what we need right now? So thanks for having me. I guess the first thing to look at in answering that question is to say what's the loan being borrowed for? What's the money being borrowed for? What are the terms of that borrowing? And then we can then begin to address whether it's in the best interest of the country at this time or not given where we are. We all know where we are right now, of our debt profile. Debt profile is not very encouraging, especially when you look at things from the perspective of your debt service obligations as a percentage of your revenue. It's really bad. We're talking of somewhere in the region of about 50% of our revenues of the federal government revenues, which is ranging about $4.5 trillion to $5 trillion every year in the last two to three years, about $2 trillion goes into debt services. So it would appear as though it's a poor decision to be making to go out and borrow more. All right. Okay. I just wanted to button here. You asked about the Wharton project. It will be used to finance, but according to the senators, Senator Odya yesterday, the project are the state fiscal transparency accountability and sustainability program to provide financial supports to state and COVID-19 action recovery and economic stimulus program. That's one of it all. Let's just talk about the SFTAs and COVID-19 action recovery and economic plan. Right now, we are almost out of the woods when it comes to COVID-19. We experienced a lockdown for almost six months last year, and of course, the economy is really bouncing back. So far now, are we actually matching the right funds to the right project? As far as using these funds, I really think we have to come to the understanding that our government simply does not generate enough revenues to meet its obligations in general. And then when you factor into that equation, the fact that its primary revenue source, which is forex income from oil sales and oil taxes, has been badly hit last year as well. So it's almost inevitable that they will have to prime some other way of financing all these obligations, whether it's COVID relief and COVID support projects, or it's just its general infrastructure, or even, you know, its overhead and salaries obligations. The government, apparently at this moment, might not really have a choice than to borrow. And I think that is where the conversation should be headed. Why do we generate so little revenues as a country? We simply don't generate enough to meet the developmental obligations that we have. And that is the issue that our government needs to focus its effort and its energies on over the next couple of years. All right, Mr. Shofito, we'll come back and talk more as per revenue generation. And of course, what we need to be doing as a country, you know, to boost growth and make sure that we are actually producing and making enough money to sustain the economy so we don't have to all these resources to borrow. But let me bring the economists to right now into this conversation. I'm Gospel Billy. Okay, I understand that he's not joined us yet. But let's stay with that right now. Also, the government says, or the Senate yesterday said that it's also going to be used to finance the federal government's green impurity project to enhance mechanization of agriculture and agro process in Nigeria to improve food security. We've had a lot of policies when it comes to a boosting agriculture in Nigeria. Mr. Shofito, I'm directing this to you right now. We've had a lot of that. We even have the CBN Uncle Borah's program. But right now, looking at the federal governments and border language, do you really think that these monies will be channeled to this project that they have talked about? Yeah, I don't think they have much of a choice, you know, because these monies will be coming from multilateral global multilateral agencies like the World Bank, the Deutsche Bank, you know, and the Brazil Exim. Now, all of those monies will come with inbuilt within them mechanisms to ensure appropriate utilization. Of course, anybody that wants to circumvent such mechanisms will always find a way, but it will be more difficult. So yes, I do believe that the monies were going to, you know, the projects that they were designed to fund. But the question is, what kind of impact can we expect from those projects? So for example, the 995 million euros that were taken from the Brazil Exim for the mechanization, agricultural mechanization project, you know, if you break that down, you know, it barely scratches the surface of our mechanization agricultural mechanization problem, you know, as Nigeria has one of the worst tractor per hectare numbers in the world. It has one of the worst in Africa. Our numbers are worse than Ghana and worse than Kenya, you know, and other countries that you might want to see as maybe our contemporaries, worse than South Africa, worse than Morocco. You know, so that problem is a deep problem that this loan would just barely begin to address. You know, so that that loan would also ensure that we resuscitate six CKD assembly plants across the country. You know, and again, the point is that these things are just simply not enough. Our government needs to be more creative in its approach to dealing with the problems we have. Government cannot solve these problems by itself. So we should stop mortgaging the future of our country rather let us put policies in place that will attract local, sorry, private investment. That is what the focus of government should be, not consistent borrowing when even the loans that we currently have, we are struggling to service. All right, Mr. Ashokudo, let me just reel out some figures so you just give me some bit of an interpretation so we will understand much better now. According to the debt management office, Nigeria's total public debt as of December 31 last year was 32.915 trillion Naira representing a 20.13% rise from a 27.40 trillion Naira recorded in December of the previous year, that's 2019. It has put it in context and says 85 CKD out of every Naira, Nigeria earned last year or spent servicing loans. The increase in the country's total debt stock was mainly due to 40.82% rise in external debts to 12.71% trillion Naira. Just try and break this all down so we can begin to understand. If we are using 85 CKD out of every Naira and last year for servicing debts, what does it state about the future of Nigeria? What does it state about our infrastructure? And of course, where are we really headed? So what we're doing basically is that we're using almost all the money we're earning to pay our creditors. And then because we inevitably have to spend money on other things, we will then have to go borrow some more, making the problem worse. So we are stuck in a vicious cycle where the problem is going to get worse and worse. Yes, exactly. So it's like a debt trap and it's going to, the debt trap gets tighter and tighter and threatens to strangulate the life out of the system, except something drastic is done. So for me, the challenge is what this debt approach is, I always say, with all apologies to anybody that might be offended, is the lazy way out of solving our national developmental issues. It's the easiest way out. Anybody can go out and try to borrow money. It takes intellectual rigor to think about creative solutions, to generate revenues, or to attract the investment and the funds that you need to drive development. And I think that's what we need to continue to pressure our governments to do. We have to move away from this habit of borrowing. It's simply the easiest option for government officials to take. But to lock yourself up in a room, get some consultants together and brainstorm. If you have to brainstorm for one week or for two weeks or for one month, until you come up with walkable, actionable plans to bring in private money, we will not develop. We'll continue to run around in circles and continue to be stuck in this debt trap for as long as we continue to maintain this habit. So let's talk about policies of the, let's talk about policies now of the federal government and all that has been happening so far. You talked about getting policies that actually channel the federal government into making money for itself and of course for the country as against them borrowing from external sources. Over time, not so long ago, a VAT and order internally generated revenue was increased. So far, can we begin to harness that particular line or stream of income that is taxation, to get more out of maybe from the country and of course utilize it to improve on the infrastructural deficit in Nigeria? To be fair to the government, I think that's one area where there has been the right type of activity. So the ease of doing business effort, let me just call it that, the effort to make it easier for businesses to get captured in the formal systems is a step in the right direction. I don't think we're doing enough. I think there's still too much lip service. I think that the fundamental weaknesses within the public service framework, public service structure of Nigeria continues to frustrate those efforts but it's a move in the right direction. We need to make it easier for people to register their businesses, for people to access funding. Why? The more people you bring into the formal economy, the easier it is for government to then generate taxes and all governments all over the world fund their operations and their activities primarily from taxes. Right now, the percentage of both are private population, private individuals, talking about payee that goes to the state government or businesses operating in Nigeria, talking about the companies income tax and other taxes payable by companies. The percentage is simply too low. So government needs to widen the tax net systematically and as aggressively based on progressive carrot-driven policies rather than the stick-driven policies. Make it attractive. Make it such that it would only be a fool or an idiot that would not go register his business. So all of the barbers out there, if you aggregate the volume of business that is being done in the informal economy in Nigeria, it's multiple times the GDP that we're recording. So government needs to find a way to harness that, bring them into the formal sector where we can then tax them and geometrically increase the tax revenues of governments. That would be a very, very important first step. And then from those revenues, government then has enough money to invest in some infrastructure, some systems that will then encourage private investment to come in. So you see, it's all intertwined. There's a lot of dependencies in all of these policies and structures and things that need to be put in place by government. And right now, one can't quite see the coherence of all of that effort. So we're getting it right in some places. And in some other places, it looks as if it's just a miss and hit type of approach. So one would hope that as we go along, somehow governments' efforts would become more coherent and get better results for the good of the country. All right. Just hang on, Mr. Shukwita. Let us bring Gospel Obeli into this conversation right now. Many thanks for joining us, Mr. Obeli. I just want to get your candid opinion concerning the approval of the $2.6 billion external borrowing by the federal government at a time where Nigeria is actually using 80-couple-of-one-year earns-to-service debts. All right. So we have a long history of fiscal and discipline. So that must be stated and established. And then we keep moving in cycles of need to borrow more money and thereby increasing our debt servicing to GDP and to the budget expenditure and all that. So it's quite an unfortunate situation we find ourselves in. But then again, the conversation is not so much around why we are borrowing. It's more around what we are borrowing for. So even if we need to borrow, if we ask ourselves deeper questions around the structure of public expenditure and what government is spending the monies on, you know, that would be a more safer question, you know, and the perspective to look at it than why we are borrowing in the first place. So we do not have the right institutional enablers to ensure that these monies are properly channeled into capital investments. All right. Even if you're saying you want to resuscitate the economy or enable these bonds back from the corona pandemic, there are questions around the design and the framework of executing that initiative. All right. Then again, you have the cost of governance issue and the high recurrent expenditure side. So it's a portfolio of fiscal and discipline. And this also speaks to the reasons why the central bank is trying to play in waters that do not primarily speaks to its core. So it's like I mentioned, it's a vicious circle. And we keep moving back and forth on these lines primarily because we are not ready to deal with the structural issues around the political landscape and lack of institutional capacity to a large extent. Well, the political landscape, a good thing you mentioned that a couple of migrants believe that most times when these monies are borrowed at the end of the day, they're not channeled to, you know, the project. For instance, these particular monies are to be spent on the post-COVID-19 effect on the economy and of course, the federal government green initiative. But let's just stay away from that for one minute and talk about what Mr. Shukiton mentioned. He talked about how we can begin to, you know, widen the nations and tax net and find a way of bringing the informal sector into the formal sector. So my question right now would be just how do we begin to make sure that Nigeria, you know, does not really get choked in all of this and dead and then ensure that our economy really works for us. Okay, there are many factors to look at in terms of how can we get the migrant economy back thriving and working, all right? And to a very large extent, these issues are more structural than policies. Policies are only enablers, all right? If we do not have the right concrete structural things in place, all right? The policies only look like round specks in square pegs or square pegs in round holes. And yeah, and this is the first to mention that the structural issues, all right? Not just diversifying the economy, but enabling the non-oil sector and positioning that sector for competitiveness, especially around infrastructure, education, and that institutional enablers. So these are the critical things I would look at, you know, lack of structural structures in place. The major reasons why we have inflation going high are the major reason why CBN is coming on board to close gaps where it primarily doesn't really, really, it's not expected to play in as a monetary institution and all that. So structural issues first, we need to fix that and ensure that competitiveness is in view for the non-oil sector. Then we can begin to talk about policies and begin to talk about economic prosperity and how do we bounce back from the pandemic and all of the challenges we have as a nation. Okay, one final question for you, Gospel, before we'll let you go now. The Nigerian economy no doubt is in dire straits. Oil prices heat over $60 per barrel, but the country is expanding or expanding its market gains on petrol subsidy, which gops about $120 billion naira every month. What does this really tell about Nigeria? It shows that the issues are deeply structural. You know, one of the reasons why we have that level of dynamics is because you're producing the commodity, sorry, you have the commodity in the petrol material form here locally, and then you sell, you export, and you import the finished goods. So back again to the structural questions until the refineries are fixed for the oil sector and then the infrastructure are in place by enabling the non-oil sector. You know, I heard you talking about bringing the informal economy to the formal space. There are a lot of questions around that. Government institutions have been positioned to be more revenue-facing than business-enabling facing. What are the support structures we are building, not just revenue structures we are building to onboard more SMEs into the semi-formal to the formal space? What are the structural things that are in place to ensure that the country's resources are more positioned for competitiveness and local production? Scaling that local production in quality and in quantity to meet local demand. So onto these different pockets of challenges, are pulled together and fixed from a long-term and sustainable perspective. I do not think that be the oil or the non-oil sector Nigeria will thrive in the meet a long-term. All right, thank you so much, Amu Gospel, Obeli. Mr. Shabu Shokwito, if you are still there, I just want to get your final thought on this particular these costs of visa, what's happening with the price of oil in the international market and of course the petrol subsidy in Nigeria? So I always like to say that Nigeria is a country of contradiction. That's the only way, that's the only reason why you would have a situation where an event or yes, an event that is supposed to be good news is both good news and bad news. So with the increase in oil prices, we're supposed to be earning more as a country, but at the same time, our fund prices keep going higher or subsidy increases one way or the other. Why? Because we don't produce locally, because we don't refine locally just like Gospel said. So it's a contradiction. We simply have this habit of putting the cut consistently before the horse. Before we talk about the regulation or whether you're subsidizing or not subsidizing, we have to devote political will and determination to the fixing the issue of local refining for a product that is a major consumer of our foreign exchange earnings as it stands today. The simple reduction in the upward pressures on our exchange rates that will be fixed by us refining enough of this product locally for us to use can only be imagined. So the contradictions that we have within the system around how we manage production versus refining and how that impacts our revenues and how that impacts our foreign exchange rates and foreign exchange earnings is simply, it's bad and it's confusion. There's simply no coherence in how we're putting all of this and that's the problem. So these things are not rocket science. Arguments just need to be a bit more sincere and walking away from playing to the winds and caprices of certain interests. All right, thank you so much. Indeed Nigeria has to put a policy framework in place to ensure that we don't go back and forth having a policy or some sort in the country. Thank you so much. Shagu Shukritan, of course, Gospu Obele for joining on this particular discourse. Thank you for having me. Yeah. All right, we'll take a short break and when we return the House of Representatives seems divided on the issue of the resignation of Minister Issa Pantami. Over right back, stay with us.