By Oluwatosin Fabiyi
Dr. Obadiah Mailafia, a former Deputy Governor of the Central Bank of Nigeria, on Thursday, October 27th delivered a lecture at the FRCN Annual Lecture series entitled, “Fighting Corruption and Growing a Sustainable Nigerian Economy”. He stated that in this period of economic contraction, Nigeria cannot restore the confidence of the private sector and re-boot the growth of its economy without pursuing monetary and fiscal policies that are “within the framework of a coherent and credible development strategy.” This claim by Mailafia, when juxtaposed alongside similar recent statements on the way forward for the Nigerian economy by the International Monetary Fund (IMF) and the World Bank, demonstrates that a credible blueprint for Nigeria’s economy must be developed by the executive to detail how it intends to combat our financial straits.
As we face our worst recession in over 20 years, on Tuesday, November 1st, the Senate, at a plenary session presided over by the Senate President, Dr. Abubakar Bukola Saraki, considered an Executive Communication from President Muhammadu Buhari. The Executive Communication, which arrived at the Senate a few weeks after its September 27th passage of a 20-point plan to end the economic recession, requested to borrow $29.96 billion to execute key infrastructural projects across the country between 2016 and 2018.
However, in a move that has generated much conversation amongst analysts, the President’s loan request was rejected by the Senate due to what the Senate Leader, Ali Ndume, described as “technical issues.”
Some of the technical issues in question, when analysed from a perspective of transparency and accountability, show that the Senate’s refusal of the executive’s borrowing request, was borne from a mindset of obligatory frugality and compulsory caution in these tough economic times. To put this in basic terms, no loan officer in any bank would approve a customer’s request for a loan without the necessary business plan to prove that the customer has a plan to pay back the loan at a later date.
In a similar regard, very few banks — if any, would legitimately approve a customer’s request for ‘anticipatory lending.’ In the same way, the legislature, by the powers conferred on it by the Nigerian Constitution, does not have the power to approve anticipatory lending requests by the executive without full details on the terms and conditions of the loan.
The Leader of the Senate, Senator Ali Ndume, addressing reporters shortly after the debate, explained the Senate’s rationale for standing down the President’s request. Ndume further stated that the President’s loan request was not approved because of the absence of a detailed proposal. Ndume also drew the attention of newsmen to the fact that the executive’s loan request claimed to have an attached draft of a plan, although no such attachment was included in the Executive Communication.
Realising that it had erred by not including details of the proposed loan with its request, a few hours after the Senate’s decision on the nearly $30 billion loan, the Presidency, through the Senior Special Assistant to President Buhari on National Assembly Matters, Ita Enang, concurred with the rationale of the Senators, stating that it would not dispute the decision of the senators, but would work on resubmitting its request to the National Assembly with additional information that would help the legislators make a more informed decision.
Moving forward, it is important for the Nigerian public to understand that the Senate approving a plan without details, would have amounted to a disservice to the Nigerian public that they serve. This is because the Senate would have been derelict in the performance of both its oversight and appropriation powers by approving a borrowing request that is the equivalent of two national budgets (N13.6 trillion). In this regard, it goes without saying that the current members of the legislative branch, must be prudent, and push for as much clarity as they can on the terms of the request.
At the same time, both branches of government, must know that such a loan, if eventually approved, would have repayment terms that would outlive the current federal political tenures. Meaning that borrowing requests of any sort would have long-term implications for the future of Nigeria and its domestic economy. Hence, decisions like the loan request must be weighed and scrutinised with utmost attention.
In this regard, the calls by the IMF and World Bank for a Nigerian economic blueprint must also be heeded by the executive. In addition to this, the provisions of the Senate plan to end to economic recession, including the enforcement of the Fiscal Responsibility Act to encourage States and Local Governments to be more prudent and accountable in their revenue and expenditure agreements should be effected for more accountability.
Finally, in addition to the aforementioned, leadership-level engagement between the executive branch and private sector —to boost market confidence must be put in place to ensure that the government and the business community are working in-sync to get Nigeria out of this recession.
With these recommendations in place, any borrowing requests by the executive would surely be appraised by the legislature through the lens of a coherent, compelling and constructive economic plan.
Oluwatosin Fabiyi writes from Lagos