A good, no doubt patriotic, argument on the debt relief by Bolaji Aluko. With his plan of small installments spread over three decades, however, those of us who want to live to see Nigeria on the path to development may not see our dreams fulfilled, and will leave the earh wondering whether it will ever happen. According to President Clinton, in his numerous statements on the American economy during his regime, managing the national economy is no different from managing one's personal or family finances. The only difference is in the size of the national economy vis a vis its household counterpart. Imagine those times when there are huge debts on your credit card and suddenly a windfall emerges from nowhere or even from somewhere. You quickly write a big and final check on that debt, heave a sigh of relief, and almost immediately begin to think of and plan for a new project which had been dear to your heart but had been stalled because of your prior state of indebtedness.
I assume that all the things we have read about the debt relief is true. That is, Nigeria's debt to the Paris Club has been forgiven to the tune of $18 billion. Nigeria, in my opinion, will be best served to dip its hands into its foreign reserve and pay the remaining $12 billion dollars. A shock therapy approach, some may say. Since the end of the civil war, every Nigerian administration has blamed its developmental failures on the debt burden. It was President Obasanjo who rightly elevated to the arena of public discourse the idea of corruption as another major constraint to development. If Nigeria pays off the outstanding $12 billion debt, debt servicing to the Paris Club will end, and the debt burden will no longer be an excuse for developmental bottlenecks.
Aluko's plan of very gradual repayment will put Nigeria in more and more debt in the long term. Recall that the vocabulary or concept of multiplier effect has never existed nor does it presently exist in the consciousness of Nigerian politicians. A typical Nigerian politician-president, governor, minister, senator, assembly member, commissioner, councillor, senior bureaucrat and technocrat, sees government money as something to be distributed rather than be multiplied. That is why they are incapable of linking the shortcomings of the Nigerian socioeconomic environment to the multiplication of the country's economic resources. In a society where the consciousness of political leaders espouse distribution rather than multiplication, gradual repayment of the debt will increase the temptation for more borrowing in the future. Hence the country goes 'back to square one', as Nigerians always say. Aluko's plan asuumes an ideal world, that all the conditions he stipulated would be respected by the govering apparatus called the Nigerian state.
The speedy increase in Nigeria's foreign reserve to $24 billion dollars was facilitated by the continuing rise in oil prices. The government always proudly, with excitement, announces the increase in the foreign reserve. But hardly, to my recollection, has it announced that the cost of a bag of gari, rice, beans or millet, has decreased by a given unit of the naira. Or that the production of beef and fish has increased to help the teeming population of havenots to have something near to an adequate amount of protein in their diet. Or still that at least 60% of National Youth Service Corps (NYSC) graduates will step into employment the day after passing out. Afterall, there were times when Nigeria's foreign reserve was $7 billion and $12 billion. The human condition in Nigeria has not changed qualitatively for the better just because the foreign reserve is now $24 billion.
The increase in the oil prices will not last an eternity. Be assured that people in advanced countries who are hurt by the rising cost of fuel will not fold their arms and watch the increase till eternity. Certainly, they possess the technological capability to turn around the cost of oil. Do not be surprised, watching the evening news someday, to hear that some synthetic material, or something, has been perfected as a substitute for oil. Historians of technology have attested that this happened in the case of rubber during WWII. Rubber latex was in such short supply that it was about to hurt American effectiveness in the war, especially after the Japanese occupied Singapore and other parts of Asia housing nearly 80% of the world's rubber trees. President Truman issued what amounted to a decree challenging American scientists, engineers and corporations to come up with an alternative to latex. Corporations, scientists and engineers rose to the challenge. And synthetic rubber became an effective alternative to latex. Aluko himself is a notable scientist and engineer. He is aware, more than I am, that science and engineering feats will never cease to occur especially in the technologically advanced countries.
What is important in the current discourse on the debt relief is not how much Nigeria can save by gradual and extended instalmental repayments, but what it can do with debt servicing out of its way forever. Mine is a commonsense position. Economists may prospose some econometric equations and argue to the contrary. But I strongly believe in Clinton's idea, managing the national economy is not different from managing personal or household economic endeavors. Both demand creativity, commitment, dedication,determination, effort, and the same expectation of economic robustness. So pay off the remaining debt now, eliminate the debt-burden excuse, re-establish national political, economic and psychological freedom, and tackle the developmental endeavor with renewed energy.
May I also rest my case here, as Aluko earlier did.