SUNDAY MUSINGS: About Nigeria's External Debt 

By

Mobolaji E. Aluko, Ph.D.

Burtonsville, MD, 20866

Sunday, May 20, 2001

maluko@scs.howard.edu



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
-------------------------

http://allafrica.com/stories/200101260264.html
Debt Service Payment Fell To $223m In 2000, Says Martins Kuye This Day (Lagos)  January 26, 2001

http://www.postexpresswired.com/postexpress.nsf/24c35a000fe63779852569
1a0076c2cb/7d0174b83b596a28852568f100437a88 PostExpress Category: News Date of Article: 06/02/2000 Topic: Hope Dims on Cancellation of Nigeria's Debt

http://www.postexpresswired.com/postexpress.nsf/24c35a000fe63779852569
1a0076c2cb/e42a0eb9a2c1b3a7852568ea00505fd2 PostExpress Category: News Date of Article: 05/26/2000 Topic: Nigeria Wont Get Debt Reprieve, Says World Bank Chief

http://nigeriaworld.com/feature/publication/maluko/loot_hearing.html
Debt Relief, Loot Recovery and Constitutional Reform in Nigeria- Mobolaji E. Aluko Friday, May 26, 2000

http://www.postexpresswired.com/postexpress.nsf/24c35a000fe63779852569
1a0076c2cb/d554cff2c1979fca852567e8003638e8 PostExpress Category: News Date of Article: 09/10/99 Topic: Nigeria Loses N7.5 Trillion .Through ignorance of IMF ways

http://www.postexpresswired.com/postexpress.nsf/24c35a000fe63779852569
1a0076c2cb/735ba061b1bb6f438525658d0047532d PostExpress Category: News  Date of Article: 01/15/98 Topic: World Bank Team Expected in Nigeria over External Debt .To reconcile figures with government

http://www.postexpresswired.com/postexpress.nsf/24c35a000fe63779852569
1a0076c2cb/575e6d696957cf318525658600451409 PostExpress Category: News Date of Article: 01/08/98 Topic: FG Earmarks $2 Billion for Debt Servicing

http://www.postexpresswired.com/postexpress.nsf/24c35a000fe63779852569
1a0076c2cb/4a4215c03706416885256519005a7c70 PostExpress Category: News Date of 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