Debt Promises

The Minister of Finance and "Coordinating Minister for the Economy", Dr. Ngozi Okonjo-Iweala says the amount of money the Federal Government borrows from domestic sources each year will drop to ₦500 billion by 2015. The exchange rate for $1.00 varies between ₦150.00 and ₦160.00, so think of ₦500 billion as being a little over $3 billion. She says domestic borrowing this year is ₦744 billion (just under $5 billion), down from ₦852 billion (around $5.5 billion) last year.

First off, note that she is only referencing domestic borrowing, no foreign borrowing.That said, I do not believe her projection for domestic borrowing (or any borrowing) in 2015. Mind you, it is not her fault that I don't believe her.

Seven years ago, back in 2005, Dr. Okonjo-Iweala negotiated the famous debt cancellation deal. It cost us a lump sum of $12 billion, but that is besides the point. The point is she made a lot of promises about what would happen now that we were debt free, a lot of assurances about how much we would be saving over a 20 year period, and a lot of promises about what the alleged debt savings would be used to do.

None of what she promised has happened as she promised it, and, again, I will very quickly point out that it is not necessarily her fault. Not too long after the debt cancellation deal, then-President Olusegun Obasanjo moved her out of the Finance Ministry and into the Foreign Affairs Ministry. Shortly thereafter, she left the cabinet and returned to the World Bank, so she ceased being in charge of our fiscal health shortly after the debt cancellation deal was finalized.

Be that as it may, between 2005 and 2011, the Nigerian Federal Government amassed an additional $28 billion in domestic debt. Think about it. We paid $12 billion of $30 billion, had $18 billion cancelled, and then in the space of less than 6 years, we borrowed $28 billion of cumulative new debt (added to $11.8 billion of domestic debt we already held in 2005). For all intents and purposes, we paid out $12 billion for the privilege of being exactly where we were before we paid out $12 billion.

I did not agree with the debt cancellation deal. I think I was probably the only one on Earth who didn't. Dr. Okonjo-Iweala and President Obasanjo were lauded and hailed for it worldwide. But I wrote an essay, which is still floating around somewhere on the internet, questioning whether it was or was not a good deal.But, again, that is not the point. And again, I don't necessarily blame Mrs Okonjo-Iweala. Its not that I support her, I just don't think it is directly her fault.

Dr. Okonjo-Iweala has no real political influence. She has no party, no faction, no political machinery. There is no pro-Iweala parliamentary caucus, no pro-Iweala bloc of governors. She is simply not a political "player" and has no political "big stick" to wield. She has no political constituency to trade. Frankly, if she wants something to happen, and the real power-players in Nigerian politics want something else to happen, then something else will happen and there is NOTHING she can do about it.

I don't know what she would have done if she had been Finance Minister consistently from 2003 till today, and had had the full force of the Presidency behind her in that time. Maybe everything would be different and we would not have $28 billion in extra domestic debt. Maybe everything would be the same.

At the time of her first removal from the Finance Ministry, some commentators felt President Obasanjo had moved her from the Finance Ministry because he was jealous of her renown following the debt cancellation deal. But that is not what happened. In reality, by 2006, President Obasanjo was already looking forward to the 2007 "Do Or Die" Elections. He would need to spend (or rather "waste") billions of dollars in federal government funds to influence the results. He would either buy himself a Third Term, or if that failed, he would buy the 2007 "Do Or Die" Elections for his political proteges, and for the Peoples Democratic Party.

Obasanjo figured Dr.. Okonjo-Iweala wouldn't go for that, or migh insist on some "transparency" in terms of how much was being spent and on what ... so he moved her to where she would not be in charge of the money.  And there was nothing she could do about it. When she realized she was powerless as Foreign Minister, and was just there because Obasanjo was concerned about what the outside world would think if he just sacked her, Dr. Okonjo-Iweala resigned and went back to the World Bank.

So, what does this have to do with her predictions on 2015?

President Goodluck Jonathan reappointed Dr. Okonjo-Iweala as Finance Minister after the 2011 Elections. You see, he needed her name recognition in his cabinet, but only after the election, get it? He put her in charge of the money after the 2011 elections for the same reason Obasanjo removed her from control of the money before the 2007 elections.

You see where I am going with this, don't you?
 
There will be another Election in 2015. President Jonathan will seek reelection in an atmosphere in which a substantial chunk of the country thinks he shouldn't have had a first term to begin with. And bear in mind we will be facing the additional political headache of some Big Men saying it will be "the turn" of "the Southeast" after Jonathan's second term, while other Big Men insist that it is "the turn" of "the Northwest" to complete the five or six years they missed out on because of late President Yar'Adua's untimely death. In other words, President Jonathan is going to want, sorry, is going to need to spend a lot of federal government money in order to buy his way to a second term.

She may be grandiosely titled "Coordinating Minister for the Economy", but if Dr. Okonjo-Iweala does not go along with the need to buy the 2015 election, President Jonathan will move her out of the Finance Ministry and put her somewhere where she will not be an impediment to what he needs to do. He might make her Education Minister or Ambassador to Gambia. And there is nothing she will be able to do about it. You know I am telling the truth.

Whatever happens with our domestic and foreign borrowing  in 2012 and 2013 (it might continue to go down) will have no bearing on the inevitable increase in borrowing when electioneering wuru-wuru begins in 2014 and 2015. If anything, because of the many conflicts, political and otherwise, that are in play, it might just be the most expensive political wuru-wuru in Nigerian electoral history.  At the end of the day, our domestic and likely foreign borrowing in 2015 will be higher than Dr. Okonjo-Iweala predicts.

And by the way, all of the above references only federal debts. As you well know, our 36 states have been on an unchecked borrowing spree since 1999.