SUNDAY MUSINGS: About Nigeria's External Debt
By
Mobolaji E. Aluko, Ph.D.
Burtonsville, MD, 20866
Sunday, May 20, 2001
INTRODUCTION
During the period May 17-18, 2001, a major international conference on
Sustainable Debt and Development Strategy was organized in Abuja, Nigeria, by
the new Debt Management Office (DMO Director-General: Dr. Akin Arikawe).
Leading up to the conference was a flurry of news items on Nigeria's debt, viz:
http://allafrica.com/stories/200105170545.html
Abuja to Seek Further Debt Reduction from Paris Club allAfrica.com May 17,
2001
http://allafrica.com/stories/200105150434.html
Nigeria Hosts International Conference On Debt Strategy Panafrican News Agency
(Dakar) May 15, 2001
http://nigeriaworld.com/news/source/2001/may/15/1.html
Tuesday, May 15 2001 U.S. bank faults Nigeria's debts
http://allafrica.com/stories/200105150035.html
External Debt Stands At $28b, Obasanjo Carpets Industrialised Nations Vanguard
(Lagos) May 15, 2001
http://allafrica.com/stories/200105150390.html
Nigeria Secures N330.7m Penalty Waivers From Creditors This Day (Lagos)
May 15, 2001
http://allafrica.com/stories/200105150324.html
Country's Debt Stock Now $28bn The Post Express (Lagos) May 15, 2001
http://allafrica.com/stories/200105110286.html
DMO to Take Over Local Debt Management, Says Dg This Day (Lagos) May 11, 2001
http://www.vanguardngr.com/07052001/f4110501.htm.
Germany to reschedule $3.39b Nigeria's debt VANGUARD Cover Story FRIDAY 11TH MAY
http://allafrica.com/stories/200105100311.html
We Were Deceived to Borrow - Obasanjo The Post Express (Lagos) May 10, 2001
http://www.vanguardngr.com/30042001/f2040501.htm
FG reschedules $21.4bn Paris Club debt VANGUARD Cover Story TUESDAY 1ST MAY 2001
http://www.vanguardngr.com/30042001/b6300401.htm
Nation's debt stock reduced further VANGUARD Business MONDAY 30TH APRIL 2001
http://www.vanguardngr.com/01042001/b11010401.htm
N500m slashed from Nigeria's external debt through DCP VANGUARD Business MONDAY
2nd APRIL 2001
From the titles of the above articles, apart from their contents, it is very
clear that Nigeria is not very happy about its debt situation while seeking all
means necessary to slash it. There are conflicts in the actual amount of debt
stock as well as their terms, and President Obasanjo goes as far as to assert
that we were "conned" into taking on some of the debts!
Although I had been officially invited (as a non-debt armchair expert :-)) to
participate in the DMO conference, for many private and professional reasons, I
was not be able to attend, despite my "academic" preparation to make a
presentation. Nevertheless, I was there in spirit.
However, in order to enable us to
be able to even begin to understand what ideas might have come out of the
conference, I will in several excerpts from various sources that I used in my
own preparation provide information about Nigeria's historical and present debt
situation. I shall annotate where necessary.
It will be clear from the excerpts that:
(1) the bulk of our debts from new loans was incurred in the period 1978 (during
the first Obasanjo regime) through the Shagari regime (when most of it was
really incurred in an outrageous manner) to the Buhari regime that ended in
December 1983. In the fact the first two so-called jumbo loans totaling
$1.75 billion dollars was incurred in 1978. During this 5-year period, of the
new 90 or so new loans, 22 were under Obasanjo, 59 under Shagari and 8 under
Buhari. One wonders whether any lessons have since been learnt.
(2) the bulk of total debts (new plus arrears plus particularly the
effects of rescheduling) was incurred during the SAP years (July 1986 - December
1992) of General Babangida (who took over from Buhari August 27, 1985 and
retained his head-of-state position till August 27, 1993)
See:
http://groups.yahoo.com/group/AlukoArchives/message/12
About Nigeria's External Debt - Part 1
Table 1: External Debt and Debt Services (1960 - 1989)
Table 2: Reconciling the Debts (1977 - 1999)
Table 3: Borrowing From International Capital Market By The Federal Government
of Nigeria as at 31st December, 1985 (Projects, Loan Amounts, Debts
Outstanding 1978 - 1985)
Table 4: World Bank Loans to Nigeria (1982-1988)
Table 5: Rescheduling of Nigeria's Debts (1983-89)
http://groups.yahoo.com/group/AlukoArchives/message/3
About Nigeria's External Debt - Part 2
TABLE 1: Average Terms of External Loan Commitments (Interest Rate, Maturity and
Grace Period) (1971-1989) TABLE 2 Selected Interest Rates (Percentages) of
Domestic Banks (1986-1999) AN EXCERPT Pages 38-40 of SB Falegan's
"Nigeria's External Debt Burden" (1992)
(3) The domestic debt situation is almost as bad as the external debt situation,
with 65 - 80% of domestic debt being owed to our own Central Bank of Nigeria!
See Table 3 of
http://groups.yahoo.com/group/AlukoArchives/message/4
About Nigeria's External Debt - Part 3
Why can we not ask our own CBN to CANCEL our own domestic debt if we are asking
foreign banks and creditor nations to do the same?
(4) No new debts were incurred under the Abacha years (November 1993 - June
1998) due to a combination of international unfriendliness and apparently
internal fiscal and monetary policy discipline, nor was there any rescheduling,
but our total debt situation did not change by much.
(5) In any case, we have long arrived at a situation where our ability to
service our debts appears way beyond our export earnings or government revenue,
and needs to be managed carefully from here on:
See:
http://groups.yahoo.com/group/AlukoArchives/message/4
About Nigeria's External Debt - Part 3
TABLE 1: EXTERNAL NATIONAL DEBT (1984-1999)
TABLE 2: EXTERNAL DEBT SERVICE PAYMENTS (1992 - 1999)
TABLE 3: COMPARISON OF DOMESTIC AND EXTERNAL DEBTS (1992-1999)
http://groups.yahoo.com/group/AlukoArchives/message/5
About Nigeria's External Debt - Part 4
TABLE 1: STRUCTURE OF LOANS (1980, 1990-199)
TABLE 2: STRUCTURE OF DEBTS (1980, 1990-1999)
TABLE 3: GNP, EXTERNAL DEBT AND DEBT SERVICE RATIOS (1998)
http://groups.yahoo.com/group/AlukoArchives/message/5
About Nigeria's External Debt - Part 5
TABLE 1: Comparison of GDP, Revenue and External Debt (1980, 1990-1999)
TABLE 2: Comparison of Exports and Imports of Goods and Nonfactor
Services (1980, 1990-1999)
http://groups.yahoo.com/group/AlukoArchives/message/9
About Nigeria's External Debt - Part 6
Table 7.4 Total External Debt Outstanding and Disbursed (1986 - 1992)
Table 7.5 Net Transfers (1986 to 1992)
Such a management requires us to DETERMINE once and for all what mix of debt
problem indicators that we wish to cap ourselves under in terms of numbers: that
is what debt service ratio, interest service ratio, debt stock per GDP, etc., we
can sustain, and hence what fiscal and monetary policies and project management
regimes should be employed to enable us to stick to them.
(6) A major problem has been that past government-commissioned reports warning
about the problems inherent in our project financing and debt management have
been ignored:
See:
http://groups.yahoo.com/group/AlukoArchives/message/11
About Nigeria's External Debt - Part 7 Excerpt Summaries of The
Onosode Report of June 1984
Finally, our government needs to demonstrate a strong commitment to fiscal
discipline if it is to be taken seriously in its debt relief campaigns.
Bourgeoning salaries of public officials, enlarging domestic debts,
multi-billion-dollar stadiums (for example as approved for Abuja by executive
fiat) and purchase of executive jets do not assist us in this direction.
Happy reading - I think!
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Suggested Further reading
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Date of Article: 01/15/98 Topic: World Bank Team Expected in Nigeria over
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Article: 01/08/98 Topic: FG Earmarks $2 Billion for Debt Servicing
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Article: 09/20/97 Topic: FG Reduces External Debt by N328b
http://www.postexpresswired.com/postexpress.nsf/24c35a000fe63779852569
1a0076c2cb/6dce04ced19a1ad58525649100729efa PostExpress Category: News Date of
Article: 05/09/97 Topic: Nigeria's External Debt Put at $28b
http://allafrica.com/stories/200004030269.html
$5b Debt Buy Back Fraud Obasanjo Freezes Babangida's Accounts P.M. News (Lagos)
April 3, 2000
http://allafrica.com/stories/200004100236.html
Tracking The Fashanu Report The News (Lagos) April 10, 2000
http://www.gamji.com/NEWS69.htm
NIGERIAN DEMOCRATIC MOVEMENT NDM INFORMATION RELEASE The Fashanu Report &
The Nigeria Debt Buy-Back Scam Issue Come to the US April 28, 2000
http://allafrica.com/stories/200005170219.html
Out To Recover IBB's Loot
The News (Lagos) May 17, 2000
http://allafrica.com/stories/200005310253.html
I'm Ready For Probe -IBB Vanguard (Lagos) May 31, 2000
http://allafrica.com/stories/200007030192.html
Central Bank Linked with Greenland Holdings of Panama This Day (Lagos)
July 2, 2000
http://allafrica.com/stories/200007030508.html
Senate backs debt buy-back to reduce external debts Vanguard (Lagos) July
2, 2000
http://allafrica.com/stories/200007240400.html
$6 Billion Debt Buy-back Becoming Scandal The News (Lagos) July 24, 2000