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Why Another Debt? By Mohammed Umar
I don’t know if you have been as worried as I have been since I heard the news that Nigeria is about to secure a USD1 billion loan from China to finance the rehabilitation of Nigerian railways. I am by no means unaware of the desirability and benefits that Nigeria stands to reap from a functional railways system or what the system had meant and contributed to Nigeria in the past. However, I became worried for a number of reasons. The first reason is that the federal government including the present administration has neglected the railways for a very long time and has refused to make the required investments. If the federal government sincerely believes in the importance and role of the railways in Nigeria, why has there been no meaningful investment in the sector or does a loan represent the most expedient way to rehabilitate the railways. Or have there been huge investments with little dividends to show for it, in which case we have another case for the EFCC. The actions of government so far only serve to betray its lack of faith and incompetence in handling the Nigerian railways. We are witnesses to the massive investments that the federal and in deed state governments have been making in electricity, albeit with little to show for it, while no such attention has been given to the railways.
Secondly, the media has not made a big case out of the issue of Nigeria seeking to obtain a new loan to the tune solicited from the Chinese immediately after we had just been forgiven part and paid off another part of a huge loan. The debt deal with the Paris Club was intended to free a lot of resources for us to invest in infrastructure and other begging sectors. And if that was the case, I dare ask why, if the rehabilitation of the railways was that desirable, we can’t invest our own resources for the rehabilitation instead of obtaining a loan knowing fully well that the loan would in some years to come become a problem for us.
Thirdly, I am worried because the Chinese have been associated with out railways for sometime now with little or no results to show for it. The Chinese have been associated with the rehabilitation of our railways since the times of General Sani Abacha. While I do not doubt the competence of the Chinese, I strongly feel that the Nigerian side of the rehabilitation deal has been plagued by the “Nigerian Factor”. In other words, we will never get a clear picture of how much has so far been spent by Nigeria in getting the Chinese to rehabilitate the railways before the loan was contemplated.
My forth worry is why in this era of privatization we can’t privatize the railways. Why do we have to obtain a loan to fix the railways and then probably privatize it when it becomes viable? Don’t argue that the railway is a public service and should not be privatized, because we are right now in the process of privatizing NITEL another public service company. Also, the federal government has demonstrated its lack off capacity to run potentially viable public companies when similar companies run by private individuals are making money. NITEL and Nigerian Airways are cases in point. While MTN, VMobile and Glo are declaring huge profits, NITEL remains the most underdeveloped of the GSM service providers in Nigeria. Thus, if government has no business in business, why should we borrow money to fix a business we should have no business with?
My fifth worry is that with a foreign reserve of about USD32 billion, over USD20 billion in saved excess crude earnings, about USD2 billion to be saved annually from our debt cancellation deal, and our regular earnings from crude oil sales (the price of which has reached an all time high in recent years), why do we have to secure a USD1 billion debt that would become USD5 or more billion in a couple of years. We are a potentially viable country and if the federal government sincerely believes in the railways we have resources to rehabilitate it.
My sixth reason is whether a rehabilitated railways system would be viable in present day Nigeria. With the high rate of crime in the country, who would sincerely contemplate traveling by rail? Who would risk traveling by a means of transport that would not be fast in Nigeria? If not for the recent spate of airline accidents and in spite of it, air travel remains the preferred means by Nigerians, especially those who could afford it. Perhaps, the transportation of good would be the most important service that the railways could offer. The question then is that, if the railway is genuinely viable why can’t the government invest or get the Chinese to invest and run it on some predetermined agreement.
Finally, my argument is not whether the rehabilitation of the railways is desirable or not, my personal view being that it is most desirable if it is done correctly and sincerely, it is whether government or the private sector should do it. And in the case that government decides to do it, there is no need to secure a loan to finance it. It seems that the decision of the federal government to borrow USD1 billion for the rehabilitation of Nigerian railways is borne out of its classic disregard for Nigerians or the greed of some its functionaries who may make personal gain, but certainly not in the best interest of Nigeria. The fact that we had made sacrifices to enable us close our books with the Paris Club and have in fact praised the Obasanjo administration for the effort, does not mean that we shall accept a return to old ways of stampeding us into loans we do not need only for us to pay later at great pains. If the USD1 billion loan from China is allowed to succeed it would only open the flood gates for the next government, if it wishes, to pile up more loans. It will also amount to a disservice by the Obasanjo administration to stoop us into loans again. In this context then all well meaning Nigerians including the media must reject the loan from China and other loans that would take us back. We must learn to cut our coat according to our cloth, knowing fully well what the burden debt has been doing to African countries. The National Assembly, which has recently thrown out the third term agenda, especially the Senate, must again save Nigeria and Nigerians from this executive excess. May I also seize this opportunity to plead with the President, Chief Olusegun Obasanjo not to take the loan from China and to save us from this burden. We don’t need it and we don’t deserve it.
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