Funds from the CBN loans used to offset interest or debts can be easily traced. CBN loans and how they are dispensed are in government records; many materials on this are actually available in the public space. Yet some soft-sell publications accept speculations from unserious writers, thus walking the fine edge of libel themselves. One shouldn’t think sharing of petty blames is what the nation needs at this time. Rather we should focus on hard-headed practical solutions to the revenue generation challenge which every administration must face.
The first half of this year has witnessed much attention given in the media to Ways and Means which is a loan taken by governments from the Central Bank of Nigeria in the past few years. Several comments are made in this regard. Some are objective, others sentimental, many partisan and the work of those who can’t separate politics from a serious national economic dilemma spurred by low revenue generation. The partisan group commented more loudly, ever prepared to seize an opportunity to denigrate any administration that came from the party they lost to in an election. People in this category are many and sometimes they find it difficult to even give some semblance of reasoning to their arguments in their sole quest to blindly attack.
No doubt this happens when people forget there’s election season and there’s time to engage in governance. This unenviable situation becomes even more significant at a time when the nation has serious economic challenges. The challenges have led to a situation where three consecutive governments from two different political parties have been compelled to resort to the use of Ways and Means to fund the basic activities of government. One comment of concern in this regard was from one Abdullahi D. Mohammed on April 4, 2024 published in Blueprint newspaper. His piece was essentially sharing blames and it should baffle that this was what the writer resorted to when all Nigerians should be contributing to the search for a way out of the nation’s economic and financial difficulties.
His piece is a complete misrepresentation of what the issues are regarding Ways and Means and how different governments, including the current one, have had to rely on it to keep the system running. His piece took attention away from the more important question of why governments took CBN loans in the first place. In the process he got his facts wrong. Everything in the piece is wrong-headed and this must necessarily be the case when commentators jettison reasoning, abandon facts, to dwell in the realm of fiction. It happens when the political biases of a writer makes them become myopic. There are so many of them in the public space. How this writer singled out one administration for blame out of the three since 2009 that had been accessing Ways and Means could only be explained by him. Add to it all manner of other insinuations he made, which could only have been from the figment of his imagination in his narrowly-focused presentation, and his negative objective becomes obvious.
We knew for a fact that the basis for Nigerian governments taking loans from the CBN was because the nation’s revenue declined. This was such that successive governments were compelled to approach the CBN as their lender of last resort. The unenviable low revenue situation of the nation was well known to the extent that reputable global institutions such as the International Monetary Fund and the World Bank had been issuing warnings over the possible impact for a long while. In 2009, for instance, when the Goodluck Jonathan Administration was in power, a report was prepared by a staff team of the IMF. This followed discussions that ended on July 29, 2009 with Nigerian officials regarding the nation’s economic developments and policies. The report stated in part that the global economic meltdown of the period “had a significant impact”.
It continued by stating that “lower oil prices have put pressure on the fiscal and external accounts and the banking system has been pressured by deteriorating asset quality. Reduced financing, lower public spending, and uncertainty will weigh on economic activity until well into 2010.” To the IMF staff team, “over time, a return to setting fiscal policy within a medium-term framework using the oil-price-based fiscal rule is essential to insulate the economy from the vagaries of the oil market.” Note that crude oil was identified as essential to any turnaround. But this was the same period when militant activities in the Niger-Delta had yet to be fully sorted and normalcy returned to the oil production sector.
That the IMF was, by implication, warning about the challenges the nation would face in the area of revenue generation was unmistakable here. Price of crude oil was high at one stage, but how that administration (now the opposition party) utilized oil revenue had continued to be questioned intensely every since. It’s instructive that the same Jonathan administration was still in office in 2014. That was when the then Finance Minister, Dr Ngozi Okonjo-Iweala (now Director-General, World Trade Organisation), announced that the country would need to take drastic measures if it was to be able to meet statutory demands such salary payments. The Jonathan Administration soon began to take Ways and Means from the CBN and it continued until it left office in May 2015.
The facts were obvious that the fundamental economic situations which led to what the Jonathan administration started continued under the succeeding governments. In the event loans were taken but the succeeding administration took steps to comply with the law guiding Ways and Means unlike the previous administration. The World Bank described the backdrop in its Nigeria Economic Report of November 2015. It went thus: “Given the high dependency of Nigeria on oil revenues, the recent sharp decline in oil prices has given rise to major challenges in the form of external imbalance, steep falls in government revenues, and slower economic growth. In contrast to the period of 2008-2009, Nigeria no longer has a large fiscal reserve to buffer government budgets from the revenue shortfalls. As a result, distributions to federal and state government budgets declined in nominal terms by 39 percent in the first half of 2015 relative to the same period of 2014. Federal and state governments have slashed capital spending, and a number of states have struggled just to pay salaries to civil servants and service domestic debt obligations. The pace of growth in Nigeria has slowed in light of lower foreign inflows from oil and the fiscal contraction.”
As any objective observer would have noticed, this outlook didn’t particularly improve from that period onwards. Price of crude oil remained volatile in the global market. Insecurity in the oil producing region of Nigeria, including kidnapping, affected production. Oil theft locally and illegal oil bunkering involving international ships (many seized by the military) contributed to lower revenue for the government in that sector. Challenges in the area of electricity generation and distribution saw the withdrawal of many manufacturing companies. Global economic climate had its effects on Nigeria’s oil revenue as well.
Several other factors contributed to making the revenue outlook remain largely the same until the current administration took office. And it’s worth noting that one of the things the new administration did in 2023 was engage in another round of securitization of the loans it began to take from the CBN. This is the backdrop to the Ways and Means matter for which some writers have now chosen to single out the President Muhammadu Buhari-led administration for blame. Meanwhile, we know that the practical way out of the Ways and Means dilemma is to raise the nation’s revenue profile to meets its mounting needs. But the matter is made worse by some who make insinuations regarding top officials under the Buhari administration.
Some insinuations are such that one should find them laughable considering that the utilization of loans from the CBN is highly regulated, backed by law. Use of these loans follows known channels and so it’s easy to follow the money. Funds utilized for the payment of salaries at both federal and state levels, as it was actually the case, could be traced by any serious writer who’s not given to myopic and arm-chair speculations.
Funds from the CBN loans used to offset interest or debts can be easily traced. CBN loans and how they are dispensed are in government records; many materials on this are actually available in the public space. Yet some soft-sell publications accept speculations from unserious writers, thus walking the fine edge of libel themselves. One shouldn’t think sharing of petty blames is what the nation needs at this time. Rather we should focus on hard-headed practical solutions to the revenue generation challenge which every administration must face.
Thomas is a university lecturer.