It's time for a Nigerian peoples’ bailout

Another “bailout” released from central government to governors of the federating states of Nigeria: US$663m, or whatever N244bn balance of Paris-club refund translates to in USD today. This follows N516bn (US$2.2bn at that time) earlier shared, which had followed a treble of “intervention funds”: US$4bn in debt restructuring, and N90bn and N300bn.  

Today, Nigeria’s debt stands at US$57bn. And it is set to increase by US$124m per week in more borrowing (N2.35 trillion) to fund the central government’s 2017 budget. Despite our mind-staggering debt figures, Nigeria’s states’ and central government fall behind on basic salary obligation, let alone deliver much needed public services: water, housing, electricity, schools, hospitals, roads, hi-speed internet, hi-speed railways and security. 

A government is driven by priorities of persons elected to lead the orchestra, who produce melody soothing ears of the voting public in hope that their political party gets re-elected at the next elections. Although in some cases this seems an afterthought as appears to be in Nigeria. As ever, this latest “bailout” to the governors will be spent on priorities that the voting public don’t share, while tacking on the nation’s debt profile.

It should be borne in mind that there’s no such thing as “government debt”. In reality, the debt is repaid by the citizenry in taxes and unprovided public services. A governor or president who signs off on a debt will be in office maximum 8 years. While taxpayers and the upcoming generation will be left shouldering that debt burden, which they’ll pay with their pension scheme, sale of national assets and meagre investment in their public services as funds will be diverted to debt repayments. For example, Lagos state’s government’s debt is already N200bn higher than its revenue capacity. The loans have been spent, yet, poor public services - traffic congestion, inadequate housing, dilapidated schools, nonexistent primary healthcare, electricity blackout and more inadequacies - is daily reality of Lagos taxpayers.

Debt isn’t always negative. It is ideal for a nation to take on debt to fund public services that’ll improve quality of life of its citizens and their productivity. Such that, overtime, continuous economic growth thereby created will reduce the original debt to a tiny fraction of the nation’s revenue capacity. 

Nigeria’s debt to GDP ratio is today 18.6%. Comparatively to South Africa where debt nears 50% of GDP, it is low. National debt in China and Japan stands over 200% of their GDP, but their citizens capacity for production is continually increasing. United States debt is over 100% of GDP. And debt averages 85% of GDP across EU countries. Of developed nations, Russia’s national debt to GDP is significantly lowest at 12%. 

However, unlike Nigeria, a sizeable chunk of these countries debts are actually household debts: credit cards, electronic gadgets, automobiles, home mortgages, business and student loans. Thus, expenses made directly by citizens on their self-improvement priorities, underwritten by their government. It’ll seem these foreign governments understand making citizens happy will get them re-elected, and that’s their priority. Unlike in Nigeria, where the voting public has to find upfront cash for their self-improvement or remain under-productive. And yet, he or she is responsible for “government debt” that the politicians accrue with no commensurate public services delivered. 

The Nigerian voting public is now disenchanted with their government, and instinctively distrusting of what seems like an unaccountable structure. Voters turnout is low at elections and the politicians seemingly get away with having spending priorities that are different from that of voters.

This is why I argue that it’s time for a Nigerian peoples’ bailout. It’s time the Nigerian government recognises that it loses legitimacy each time buy-in of the people it allegedly governs drops. Such a bailout for the people, perhaps call it “stimulus package” as was called in the United States following the 2008 financial crash, will not only lend the Nigerian government legitimacy, but resultant growth in consumer spending will revitalise the economy, yielding higher government tax collection to spend on public services like basic bin collection that Nigerian cities struggle with.

The Nigerian government must encourage banks to release unsecured loans to the public: overdrafts and credit cards guaranteed by states and central government. The people can spend this on own priorities, rather than watch in gloom as endless government borrowings end up in back pockets of a few politicians and their bridges and airports they commission with fanfare that neither grows the economy nor optimally improves life quality of Nigerians.  

It’s high time Nigerians were trusted to spend their money (income and debt) wisely and not left dissatisfied with humongous government borrowing for vainglorious spending priorities they don’t share. Thankfully, every Nigerian bank account holder is now traceable via enforced Bank Verification Number (BVN). This reduces issue of risk that may be raised by those against the idea of facilitating unsecured loans to the public.

Also, rather than central government releasing risible sums to our tertiary schools, we can use student loans as an indirect way to fund universities adequately. Each Nigerian undergraduate, like their Ghanaian, English and American counterparts, should be awarded a lump sum (student loan) toward their tuition and upkeep throughout their studies (averagely £50,000 in England), which will follow them to any Nigerian university of their choice. This will have a triple effect of improved teaching quality, competitive universities and boom in local economy around campuses: rent, feeding, clothing, entertainment and more. 

For employees with a bank balance of, say, N10,000 for a period of 6 continuous months, they should, easily, get a N10K credit card. And an entrepreneur should qualify for N100,000 business credit card if their business bank balance is over N100,000 for same period. This will increase entrepreneurial productivity and create jobs as study of You Win! programme shows.  

I’m mindful that such a programme like a Nigerian peoples’ bailout may yet be money going down the drain, especially as TraderMoni has made a mockery of such. But I’m comforted that if properly managed, as observed by Nobel Peace Prize winner, Muhammad Yunus, in his book Banker to the poor, the poor form habit of repaying debt: “The poor know this credit is their only opportunity to break out of poverty ... If they fall afoul of this one loan, they will have lost their one and only chance to get out of the rut.” Paradoxically, it is the rich who form habit of not repaying debt in Nigeria.

Increasing money in pockets of Nigerians will reduce social angst as citizens become engaged in productive activities and in leisure. This will mean less crime and a dignified citizenry. Increased GDP from resultant economic expansion will assure corporations of profit-making, and attract higher foreign direct investments, and create more jobs, higher bank revenues and increased government taxes to complete a win-win cycle. It’ll seem a Nigerian peoples’ bailout at this time is a no-brainer.