By Rasheed Akinkuolie
The Nigerian government will be borrowing 21 billion USD to fund multiple projects in the country. This should not be a problem, only if the loan is applied judiciously to projects that will address the country’s critical socio-economic problems. The construction of more railway networks, enrollment of street children in schools , fighting malaria, mass housing, building of refineries, and human capacity development etc are just a few of the projects of equal importance, which are competing for attention.
Borrowing alone cannot meet all these needs. And as such, alternative sources of funding must be found from within the country to address them.
What comes to mind is an old primordial practice of Trade by Barter, which was introduced into Nigeria during the regime of President Ibrahim Babangida ( 1985-1993) The government bartered crude oil for projects, rather than cash payments, to build Nigerias’s Federal Capital in Abuja and other projects around the country.
Construction companies such as ; Julius Berger PLC , Strabag Construction company, and other multinational companies accepted crude oil as payment for the various projects executed for the government.
Barter trade with crude oil was also widely used to import beef, fish, chicken, sugar, vegetable oil in an emergency situation during the regime of President Obasanjo, when he was military Head of State of Nigeria from 1976-1979. This arrangement was a fast and easy way to solve a pressing problem, when cash was not readily available. It eliminated delays and read tapes to solve pressing problems.
President Umaru Yar’adua, Nigeria’s Head of State from 2007-2010 had a similar arrangement with the Chinese government. In this case, oil blocks was to be allocated to the Chinese government, and in return; China will build hospitals, refurbish the 4 government owned refineries, construct roads, build schools, dams, power plants, railway networks across Nigeria and other capital projects.
This deal was not sealed before President Umaru Yar’adua died in 2010. Mr Segun Adeniyi , spokesperson, and close confidant of President Umar Yar’adua in his book ‘ Power, Politics and Death ‘ explicitly narrated the details of how the barter trade was to be implemented
Unfortunately, successive administrations in Nigeria did not continue with the plan, which would have solved most of the country’s present challenges in; infrastructures development, importation of petroleum products
The deal with the Chinese was an opportunity missed. However, the plan can still be revived under the same conditions, but modified to suit the present circumstances of the country. It is better late, than never.
Another way of raising funds to finance projects in Nigeria is to increase the country’s oil production from the present 1.75 millions barrel per day, to 2.2 millions barrels a day or more. The earnings from the extra 500,000 barrels production@ 69 usd is 34.5 million USD, accumulated over 100 days ( 3.4 billion usd). These are simple, practical visionary ways of raising funds for national development, without taking loans and raising taxes.
Nigeria Economic Summit Group (NESG), and other respected organizations formulating Nigeria’s economic policies should consider the implementation of this strategy, which will extricate Nigeria from going deeper into the mire of foreign debts.
The 21 billion USD loan, when taken must be linked to projects that will make maximum impact on the society. The following areas of concern come to mind:
Health: build world class referral hospitals in Nigeria, a replica of; The London Clinic, Cromwell Hospital, which will cost about 500 million USD each to build and furnish. Hospitals of this class are needed in Nigeria for obvious reasons.
Secondly, Malaria takes over 300,000 lives a year in Nigeria, and one of the few countries in the world, where the deadly disease is still ravaging. The minister of health should design a mosquito eradication strategy with bio-fumigation, BTI/ BTS bacillus larvicides, which destroy mosquito larvae in their breeding habitats. This is the most efficient and cost effective way to eradicate mosquitoes. And ‘No Mosquitoes, No Malaria’. The production of the larvicides can be done locally at a maximum cost of 1 billion USD, which will include bio fumigation of the entire country.
Education : There are at least 15 million out of school children in Nigeria. This is indeed a huge problem, which successive governments have failed to address. In a study, that I did, 5 billion USD will be needed to build the infrastructures, that will put these children in school. So far, there is no indication, that the government is giving this dangerous problem the attention that it deserves. if these children are not taken out of the streets and enrolled in schools, there will be no peace in Nigeria.
Railways : Transportation, mainly by road accounts for over 30% of the cost of goods in Nigeria. This can significantly reduce, if the North to South, and East to West railway networks are constructed. The sum of 2.5 billion USD allocated to build the East to North railway line is a good start. But, a much bigger and more extensive railway project, that will cut across the country will require a different financial intervention, such as the oil swap for projects plan earlier mentioned.
Roads: Road constructions should essentially be more focused on opening up rural agricultural communities to markets in urban areas. A portion of the loan should be devoted to rural development, especially rural roads, rural electrification and potable water.
Dams: The construction of the withholding dam at Dasin Hausa in Adamawa state had been on the drawing board since 1982. Whereas, the dam is the most important solution to the floods that devastate communities in Nigeria, along the banks of Rivers Niger and Benue, when excess water is released from Lagdo dam in Northern Cameroon.
The jinx that stopped the building of the dam for the past 43 years must be broken. A portion of the loan should be allocated for the construction of the withholding dam, which today conservatively will cost about 2 billion USD. Alternatively, the Chinese government, if approached will build the dam for Nigeria on favorable terms
In conclusion, foreign loans should only be taken ‘ad extremis’ only after all other options of sourcing funds within the country have been exhausted. Always remember, those who go a- borrowing, go a- sorrowing. No debt is free. It must be repaid, with interests, and sometimes with unpalatable conditionalities.
*Ambassador Rasheed Akinkuolie was Director of Trade, Investment and policy , Ministry of Foreign Affairs, Abuja Nigeria, and former Delegate to World Expo and Economic Development Center in Paris.
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