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Debt relief the way forward

by Business News Report

By Omoh Gabreil, Business Editor
President Olusegun Obasanjo said recently in Abuja that Nigeria can not meet the 2015 target date set by the United Nations for poverty eradication otherwise called the Millennium Development Goal, MDG without debt forgiveness from creditor nations to which Nigeria is indebted. Official figures say that about 54.6 per cent of Nigeria population, 65.4 million out of the 150 million Nigerians live below N134 per day, one dollar per day. This means that 65.4 million Nigerians on daily basis spend N134 on food, clothing, shelter, education and transportation whereas it is estimated that Nigeria pay out about $9 (N1,206) per head on debt service. The figure are damning showing Nigeria in the face of plenty as a very poor country.
Nigeria at the moment with a population of 150 million people is owing about $32.9 billion both principal, interest and penalties for not paying on time. Nigeria’s debt is of three categories, that owed to multilateral institutions, foreign governments and private institutions. Debt cancellation as it stands now can only come from the first two. The bulk of Nigeria debt is from private institutions which government of the countries involved can not cancel on their own. If Nigera is considered for debt relief it may be a temporary relief. Nigeria debt stock as it stands has 83.2 per cent owed to Paris club, 9.4 per cent multilateral and 4.38 per cent London club. Since coming into office, the Obasanjo administration has traveled to most of these countries to plead Nigeria’s case for debt forgiveness. Just last week what seemed all along as a huge joke is materialising as the finance ministers of G8 announced a 100 per cent debt cancellation for 18 most highly indebted poor Nations. Indications emerging from the group showed that 20 other countries will benefit from the debt cancellation programme of the G8 for which the minster of Finance Dr. Okonjo-Iweala said Nigeria may be under a special deal.
The world Bank and the IMF had evolved HIPC poverty reduction programme for which every country in the group was asked to articulate and submit poverty reduction programme for the World Bank and IMF to approve and support. Nigeria in its usual ways developed the NEEDS document under President Obasanjo which has received the approval of the World Bank and the IMF.
President Obasanjo has been consistent on the drive for debt relief and his effort is commendable.

Debt relief is being considered for poor countries to enable them break the shackles of underdevelopment, support sustainable infra structural development, consolidate the gains of reform agenda, deepen the structure and practice of democracy and accountability, and further enhance the struggle against poverty.
This would require that money realised from debt relief is invested in pro people policies and programme. The debt overhang is a direct obstacle to peace and development and erodes the gains of democratic practice.
The government in order to further convince the international community of its commitment to investing the gains from debt relief must draw up programmes and projects for which such mony will be channelled. The government must also show further courage of dealing with corruption by identifing those who took most of these loans and did not use them for the purpose for which they were contracted. The government should also set in motion machinery to check over invoicing of goods coming into the country and under invoicing of products coming into the country.
It is equally important that the federal government should attempt to verify some of these claims on Nigeria. In the distant past the Federal military regime through the CBN made a glib attempt at verifying the nation’s indebtedness by contracting Chase Mahattan Bank. The exercise led to the discovery of some spurious claims on Nigeria to the tune of $2billion which the government repudiated. The need for debt reconciliation is more so considering the fact that various debt figures exist between the CBN, IMF, federal ministry of Finance ETC
President Obasanjo recently found a grand alliance with Prime Minister Tony Blair in the campaign for debt relief for Nigeria and other African countries as expressed through the report of the UK Commission for Africa”.
We urge the President not to relent in his effort and friend of Nigeria and Africa to continue to support debt relief efforts, advocate for Nigeria, campaign for debt relief as well as intensify their investment processes in Nigeria.

Editorial 13/06/05

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