PEOPLE AND POLITICS BY MOHAMMED HARUNA

Rebasing Our GDP and the Lost Lesson of the Paris Club Debt Relief

ndajika@yahoo.com

 

When our economy was rebased on April 6 making it the largest in Africa, ahead of South Africa’s, the continent’s erstwhile Number One, there was celebration in Abuja, albeit not as loud as that nearly nine years ago over the Paris Club debt relief.

Then, President Olusegun Obasanjo made a special national broadcast on June 30th in which he expressed “great joy” at the announcement by the Paris Club of an “offer in principle” of relief from the debts the country owed it. At that time we were said to owe the club $30.515 billion. It said it would forgive $18 billion provided we paid $12, half in July 2002, the rest by the year’s end. In addition we were also expected to fulfil the terms of a supposedly autonomous Policy Support Instrument (PSI) but which, for all practical purposes, was the World Bank’s infamous Structural Adjustment Program (SAP) in all but name.

The next day all the national media hailed the announcement as one of the country’s greatest achievement, if not the greatest. Many Nigerians fell over themselves in congratulating the president for what they said was his historic achievement. Some even exceeded themselves by dubbing him the father of Nigeria’s new independence, after the first from our colonial masters in 1960. The president himself, apparently overjoyed by the deal, told representatives of the Organized Private Sector who went to the Presidential Villa to congratulate him that the relief “will remove the burden of debt on Nigerians today and in the future.”

Those who were sceptical that the announcement was truly a cause for “great joy” were dismissed as inconsequential spoilsports, even killjoys. In a reply to critics of the onerous conditionalities of the relief in a widely published article in July, an apparently angry Dr. Ngozi Okonjo-Iweala, the minister of finance who was central to securing the relief, said it was a fact and whether the “tiny minority (of sceptics) likes it or not, Nigeria will make use of this change.”

A less charitable Malam Sanusi Lamido Sanusi, the suspended governor of Central Bank of Nigeria, then the managing director of First Bank, writing in support of the minister said those unhappy with the terms of the relief were the much pilloried “Babangida Boys.” Nigeria, he said, should fulfil the terms of the relief “even it means emptying the reserve before the locusts return for a second helping.” His “locusts” were obviously the “Babangida Boys.”

 A more subdued Dr Mansur Mukhtar, then director general of the Debt Management Office (DMO) and a key player in securing the relief, writing in Thisday (July 30, 2005) also in support of the finance minister, said it made good economic sense to use our reserves to “secure a permanent exit from the debt trap.”

On October 25, 2005 President Obasanjo made another broadcast on the relief when it went from being a mere offer in principle to a virtual reality. His broadcast was against the background of the earlier loss of his wife, Stella, and an air crash which claimed many lives. Still, he said, Nigeria had cause to celebrate its freedom from its debt, even if the celebration was to be subdued.

Nearly nine years on it is now obvious that the heady official self-congratulations in 2005 over the Paris Club debt relief were not as justified as its enthusiasts tried to make it. Certainly the promise they said it held for the prospects of a brighter Nigerian economy has not been fulfilled. Instead we seem headed for another debt trap, possibly worse.

 That we are headed back into the debt trap is obvious from an interview with the director-general of the DMO, Dr. Abraham Nwankwo, published in the Nigerian Tribune of December 27, 2012. In that interview he said our debt stock as at September that year was $12.5 billion, $6.2 external, the rest internal. His projections for the external debts were $12.16 for 2013, $14.58 billion for 2014 and $17.76 billion for 2015. For the domestic debts he projected $7.12 for 2013, $7.79 for 2014 and $8.44 for 2015.

Both Dr Nwankwo and his boss, the finance minister, say there is no cause for concern that we will return to the old debt trap, on present reckoning. Indeed, our chief debt manager last year told Leadership (October 6, 2013) that the country “is under-borrowing.”

Perhaps so. But then this was precisely what we were told the first time we were dragged, kicking and screaming, into taking our first jumbo loan under General Obasanjo as military head of state in the late seventies. Look where it eventually landed us.

More importantly, the lot of the vast majority Nigerians has only got progressively worse since 2005, not better. This much is obvious from the figures from our National Bureau of Statistics which showed that the country’s poverty incidence worsened from 54.4% in 2004 to 71.5% in 2011. In absolute numbers this was from 69 million to 120 million. More likely than not matters have only got worse since then, considering the pervasive insecurity in the land alone.

The obvious big lesson in all this is that our government, like most governments the world over - but more so in our case - has become more concerned with public relations than with substance. In other words our government had become more concerned with pleasing and impressing outsiders and a charmed circle of a few insiders than in making the ordinary Nigerian happy and satisfied.

The official response to the rebasing of our economy last month clearly shows that this lesson has not been learnt. From the president and the finance minister down to supporters of the administration it seems to have been celebrations galore, albeit more subdued than those of the debt relief.

In a short statement on his Facebook wall the day after the rebasing, our president, for example, called it a “feat” collectively achieved by Nigerians which should be celebrated. The revision of the size of our economy may not be mere trickery, as The Economist said in an editorial in its edition of April 12. But it truly beggars belief that our president, who holds a doctorate degree in a science subject, would call a mere statistical recalculation to get the true size of our economy an economic feat worth celebrating by Nigerians, if not by himself personally.

“While this calls for celebration,” the president said on his Facebook wall, “I personally cannot celebrate until all Nigerians can feel the positive impact of our growth. There are still too many of our citizens living in poverty.”

That his reason for personally abjuring any celebrations was not sincere soon became evident when he rejected the latest World Bank report which classified Nigeria as an extremely poor country, along with China, India, Bangladesh and the Democratic Republic of Congo.

This was during his speech at this year’s Workers’ Day parade on May 1st at Eagle Square in Abuja. Nigeria, he said, was not poor because it has produced Alhaji Aliko Dangote, Africa’s richest man, and it could also boast of the largest number of Africans with private jets! Clearly this was a sharp contradiction of his Facebook statement that there were too many poor Nigerians for him celebrate the country’s new Number One status on the continent.

Our finance minister, Dr. Okonjo-Iweala, must have been thoroughly embarrassed by her boss’s incredible definition of poverty as a development economist. She had, indeed, agreed with her erstwhile employers – she’s been on sabbatical of sorts from her job as managing director of the World Bank – when she said “Most middle-income countries including Brazil have large numbers of poor people. That is the reality of today and Nigeria is no exception.”

Even then she seemed to share in a not-so-obvious way the president’s belief that the rebasing of our economy is worth celebrating. The rebasing, she said at a workshop on “A Reflection of Nigeria GDP Rebasing: Issues, Facts and Fiction” organised by Kukah Centre in collaboration with her ministry in Abuja, “was neither done for optimism nor for pessimism nor cynicism and I find it quite astonishing that people are commenting on this.”

Her full remarks left no one in doubt that she was unhappy with widespread cynicism about the exercise. Yet she should know that if many people read politics into the exercise her boss, more than anyone, was to blame because of the not-too-subtle way he tried to make political mileage out of it.

Nigeria may have overtaken South Africa as the continent’s Number One economy. But as The Economist editorial in question said, it still has a lot to do if it is not to remain a giant with feet of clay. Nigeria, the magazine said, has to, among other things, tackle corruption, produce more electricity, transform the country’s dilapidated infrastructure and, above all, tackle unemployment.

The record of this administration on all these counts remains abysmal. So far it has not demonstrated any will to put that record behind it. Instead it seems determined to rely on ethnic and religious emotions to return to power in 2015.

Rebasing the country’s Gross Domestic Production will not make any difference to the country’s status as a poor country if President Jonathan succeeds in returning to power by appealing to emotions rather than by proving to Nigerians that his transformation agenda is no longer the mere sloganeering that it has been since 2011.