Senate has approved President Muhammadu Buhari’s fresh External borrowing of $16.230 billion and €1.020 billion (Euros), under the 2018-2020 External Borrowing plan of the Federal government. Also approved was a grant component of $125 million (USD), and the request to the Bank of Industries for the issuance of €500 million (Euros) but not more than €750 million Eurobond in the International Capital Market. A close look at the details of what was approved however revealed that what the federal lawmakers signed off for Buhari to borrow is different and higher than what the President himself requested in September contained in the addendum to the 2018-2020 Borrowing Plan submitted to the Senate.
The Senate in approving the request of President Buhari had to increase the figure from the $4,054,476,863 earlier requested to $16.230billion. After an extensive deliberation, the Senate approved external borrowing in the sum of $16,230,077,718 billion €1,020,000,000 and a grant component of $125,000,000 million for Buhari. Buhari had in that communication in September requested for the Senate’s approval for $4,054,476,863, €710,000,000 and a grant of $125,000,000 for the implementation of various projects. The approval by the Senate happened even when Senators admitted not having any knowledge of the terms and conditions of the loans. Amidst speculations that the terms and conditions are written in Mandarin (Chinese) language; the Senate added a proviso to the approval given that the terms and conditions of the loan from the funding agencies be forwarded to it for proper scrutiny and documentation.
Approval of the loan requests was however accompanied by a resolution that the terms and conditions of the loan from the funding agencies, be forwarded to the National Assembly prior to its execution for approval and proper documentation. Senate’s approval was sequel to the consideration of Senator Clifford Ordia, led Senate Committee on Local and Foreign Debt on the proposed 2018-2020 External Borrowing (Rolling) Plan. In his presentation, Senator Ordia while explaining the reason for the increase, said that the committee had in the course of working on the request by the President noticed that out of all the previous loan requests (totalling $22.8billion) approved by the National Assembly/for Buhari, only $2.8 billion representing 10℅ has been made available to Nigeria. He said, “The Committee therefore notes that the great pressure placed on the human and financial resources of the National Assembly to approve loans under the Medium Term External Borrowing Plans is unnecessary”. Ordia said that President Buhari’s request was in compliance with the provisions of the Debt Management Office (Establishment) Act 2003 and the Fiscal Responsibility Act 2007.
President Muhammadu Buhari had on 6th May, 2021 requested Senate approval for $36,837,281,256 billion plus €910,000,000 and grant component of $10,000,000. According to Ordia, the provisions of the statutes enjoins the President to seek and obtain the approval of the National Assembly in respect of the External Borrowing Programme of the Federation and States. He explained that out of the total amount approved by the National Assembly, the sum of $3,529,300,000 billion would be sourced from the World Bank; $5,078,441,252 billion from China EximBank; $3,902,267,260 billion from Industrial & Commercial Bank of China; $2,893,693,930 billion from China Development Bank; and $698,500,000 billion from the Africa Development Bank (AfDB). Ordia further stated that €345,000,000 million euros is expected to be sourced from the French Development Agency (AFD); €175,000,000 million euros from the European Investment Bank; $190,255,276 million USD from European ECA/KfW/IPEX/AFC; €500,000,000 euros from the International Capital Market; and $62,120,000 USD from Standard Chartered Bank/SINOCURE.
He explained that the Committee in reaching its resolutions, noted the serious concerns of Nigerians about the level and sustainability of the country’s borrowing in the last decade, adding that Nigeria’s debt figures which continue to increase, reached an all-time high of around 95 percent of retained revenue and 35 percent of its annual expenditure.
Ordia expressed concern that the development constitutes a drain on the nation’s economy and limits resources available for national development, adding that Nigeria plans to spend the loan to boost its agriculture, power supply, digital economy, education, environment and the health sector.
Underscoring the need for a more proactive approach to revenue enhancement, the Senator observed that “there are noticeable improvements in our revenues but the growth is not sufficient or rapid enough to catch up with the pace of development required for our nation.”
He said that out of the sum of over $22.8 billion approved by the National Assembly under the 2016-2018 External Borrowing Plan, only $2.8 billion – an amount representing ten percent – has been disbursed to Nigeria.
