By Ebere Onwudiwe
IF you are like the rest of us, chances are you have had problems with credit card addiction or what the American conservatives call 'borrow and spend' disease when attacking their political opponents, American "liberals," who in turn claim that "conservatives" suffer from the "spend and borrow" syndrome (in the USA, conservatism/liberalism can be a false dichotomy, but that's another story.)
I have a friend whose New Year resolution was to cut her credit cards after paying the huge balances off with end of year bonus. I am hoping she kept the resolution this year. Last year, I told her as firmly as only a true friend can that it makes no sense to pay off high interest loans only to whip up the card again and again on a down hill race to new indebtedness. That's common sense. For any debtor, a nation or a person, defaulting on a loan should be out of the question although in the case of a sovereign state, the right to balance conflicting objectives in the course of managing foreign debt obligations cannot be negotiable. It is in this sense that Nigeria's recent retirement of its international debt liabilities to the Paris Club makes sense.
But now that the country's credit rating should be up a notch or two, it will be a tragedy if we were to rush in again to borrow and spend. To build up another mountain of debt, even under the pain of intense pressure by foreign banks, should be considered treasonable. Turning around and blaming the lender does not cut it. Banks are in the business of trading money, buying low in the form of interests they pay for deposits and selling high in the form of interests they charge for loans. It is no surprise that they do pressure states and individuals to borrow and spend. In the United States for example, individuals including students in high schools are frequently inundated with offers of credit. States and the powerful men that run them are not spared this kind of aggressive marketing of loans.
President Olusegun Obasanjo should know. In a little known but very powerful book, African Perspectives (1987) the then retired head of state riding on his deserved reputation as an African statesman after wisely handing over power in 1979, addressed the prestigious Council on Foreign Relations in a marvellous speech that became the book. Buttressed by the moral courage of his democratic credentials earned by wisely handing over power in 1979 (please pardon the repetition), he defended Nigeria and Africa more strongly than any other African leader I have listened to or read.
He explained without mincing words, how as head of state, he was suckered by international bankers into accepting a $1 billion jumbo loan that the country hardly needed. The president argued that the international banks pressed the case that Nigeria was grossly under borrowed, especially for a nation with such "a visionary development programme." But as soon as Obasanjo handed over to a civilian government, the Shagari administration went crazy on international borrowing, and consequently made Nigeria a Third World debt peon. Obasnajo writes: "Unfortunately, our successors in government succumbed more readily to the bankers' siren song, which led to our current debt of $20 billion, assuring us membership in the distinguished club of insolvent Third World countries."
Our chorus after the Paris Club wealth haemorrhage should be 'never again!' By this, I do not mean a self-defeating call for default on loans contracted with our eyes open, but a determination to resist another borrowing binge. Nigeria should start now to translate her vast human and natural resources into real economic development. The opportunity to implement this is at hand. The government should invest much of the current external reserve of over $27 billion into the constructing of world class highways, air and rail networks, reliable telecommunication systems, dependable power supply, and world class education laboratories, and health services facilities.
Although reserves are built up for reasons other than capital accumulation, the provision of an adequate and nation-wide infrastructure should be more beneficial to the future of this country than the interests accruing to the reserve in foreign banks. At present, no Nigerian bank gets a kobo from the huge management fee that we are charged annually by the foreign financial houses that manage our external reserves. All that we have to lose temporarily is more and more unnecessary imports!
So why don't we reduce our appetite for import for now and invest first on infrastructure? Developed infrastructure and human capital will also make the country more attractive to foreign investors in sectors other than oil thereby helping in the much-needed diversification of the national economy, reducing dependence on oil. Given the industriousness and ingenuity of our entrepreneurs, there is no doubt that the return from a massive and comprehensive investment in infrastructure will be our own home grown big-push for economic development. Therefore, I vote for a $20 billion war against impoverishing infrastructure since I believe that oil prices will continue to head north.
When I broached this idea in a recent lecture a cynical Nigerian quipped: "And which governor should run it for us, Prof.? Your good friend, Alams?" No, sir. I shot back. I mean people like "Nuhu Ribadu, Dora Akunyili, Charles Soludo, Pat Utomi, Ayo Obe, Attahiru Jega, Julius Ihonvbere, Eghosa Osaghae, and many others in the private and public sectors of our country. We are not without our share of good and capable men and women in Nigeria, even among the state governors! All we need is an enabling infrastructure to unload their capabilities, and make our country shine.