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ECONOMYPOLITICS

How World Bank Creates Debt Burden In Nigeria

“$800 million at best is equivalent to about N360 billion and when you divide this by the targeted 10 million Abacha Death: He Didn’t Die After Eating Apples From Prostitutes – Al-Mustapha Reveals How Abacha Died, that amounts to approximately N36,000. What significant or tangible effect would this have on anyone, irrespective of status?” – Wale-Smatt Ojerinde, Director General, NECA

The Nigeria Employers

Consultative Association, NECA, D-G did a great job in explaining why the $800 million loan by the World Bank to Nigeria to help fund the fuel subsidy palliative was at best of limited value; and might not solve the problem. I would go further to accuse the World Bank of actually colluding with the Federal Government to defraud Nigerians by granting a loan which, ab initio, we know will most likely be misappropriated; given the verdict of Nigerian history.

However, before going forward to address the issue under reference, it needs to be stated that I am probably one of few Nigerians, being an economist, who is very supportive of the role the bank has played in our disgraceful economic history. The bank had got it right most of the time; about 90 per cent in my own opinion. But, it has created a monumental mess when it is wrong.

Every Nigerian economist, with whom I have discussed this issue, are of the opinion that the $800m loan granted, at the last hour to the FG, was too late, too little and will create more problems than it solves.

Let me explain by starting off where Ojerinde stopped. Giving N36,000 to a family, assumed to include five individuals, by the FG, means N7,200 grant per person. The poverty threshold has been globally fixed at spending $2 (two dollars) per day or N920 per day or N27,600 per month, every month.

What purpose will N7,200, one off, donation serve when it just about takes the poor through one week? What happens next, when the crushing impact of subsidy removal will last at least two years before the benefits begin to show?

Nigerians know, even if the World Bank pretends not to, that corruption has already crept into the programme. It started with the clandestine manner in which the 10 million “families” were selected.

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Adekunle Adekoya, Deputy Editor of VANGUARD, on April 7, 2023, in an article titled “The magic of scamsidy”, after observing that the Minister of Finance, Hajiya Zainab Ahmed… claimed that government already has a register of the 10 million households [which would benefit] from the scam asked the following pertinent questions. “How were the 10 million households selected? Using what parameters? Did my household qualify? Or yours? If not, why?”

Again, let me take off where Adekoya stopped to inform the World Bank that it might have inadvertently lent itself as an accomplice to a grand fraud perpetrated on Nigerians by a government on its way out of office. The figure 10 million has become a recurring figure for the Buhari regime; and almost invariably applied to deceive Nigerians. It has occurred at least three times.

First, on May 29, 2015, during his inauguration address, Buhari promised to lift 10 million Nigerians out of poverty. To achieve this self-deceptive goal he launched the now discredited Social Investment Programme, SIP —which remains the biggest scam in history because no account has been given of the nearly N1.4 trillion expenditure devoted to this day dream.

Second, in 2019, after his re-election, Buhari promised to lift 100 million Nigerians out of poverty in ten years; or 10 million per annum. That means that, by now, nearly 40 million people should have moved above the poverty line. Unfortunately, Buhari leads the least quantitative team of officials in our history.

On October 1, 2022, he made a broadcast to the world; in which he announced that he had lifted 10 million out of poverty by giving N5,000 per month to 5 million families. For good measure, the President of Nigeria also told his listeners that a register of the lucky 10 million individuals was ready for inspection. Because real facts always trump the most stubborn illusions, two revelations from Federal Government officials exposed the presidential fib.

Two weeks after Buhari spoke so confidently about the register, the newly-appointed official in charge of the register was asked by reporters to let them have a look at it. The man broke down and confessed that it was only just being compiled and they don’t have all the names and addresses yet.

A few weeks after, the National Bureau of Statistics, NBS, issued a report saying 133 million Nigerians are now living in poverty. When Nigeria became the poverty capital of the world in 2018, according to World Poverty Clock, less than 99 million were classified as poor.

I have gone to great lengths to warn anybody, particularly the World Bank officials, about believing Hajiya Zainab Ahmed that register containing 10 million verifiable names exists anywhere. Given the track record of this government, it will probably be loaded with ghost entries. I want to challenge the Minister to publish the names of those in Lagos Island who are on the list. We will verify if they exist at all. Our Island is so small we can cover all of it in a week.

“Habit is stronger than reason.” Professor Robert Dorfman, 1916-2002

The late Harvard Professor of Political Economy made a great contribution to studies in economics, marketing and consumer behaviour by pointing out to us that most human spending decisions, even as leaders of organisations or government are influenced mostly by our ingrained habits. US Supreme Court Justice Oliver Wendell Holmes, Jr, 1841-1935, said that “every human being has a stream of tendencies”.

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We all behave in habitual ways when confronted with important decisions. Buhari’s habit with respect to funding programmes has always been “borrow and spend”. Thus, as he planned his exit and decided to eliminate fuel subsidy he naturally went with the beggar’s bowl in hand to the World Bank to request for $800 million loan – which was granted.

Handing Buhari $800 million in the last three months of his regime is akin to someone lending his addict or drunkard friend loan to buy “one for the road,” long after the man is totally soaked in alcohol or drugs. The loan will certainly be counter-productive. Buhari was aware, right from May 29, 2015, that subsidy removal was a tough decision to make. It requires a leader with two stainless steel balls.

Buhari had none. So, he kicked the can down the line for eight years; before setting a date for June 2023 for subsidy removal. By then, he would be in Daura and the next President will be holding the high explosive. It would still have been reprehensible if he had left the $800 million for the unfortunate successor to spend as he will deem fit.

He has formulated a palliatives plan which will not work. His managers would have embezzled as much as they can, as they did on School Children Feeding Programme. The successor and his team will inherit the problem; but, not a dime to help solve it.

The current Country Manager of the World Bank, who must have agreed to the disbursement of the loan, might be an excellent economist. But, he is certainly not knowledgeable enough about the Nigerian political economic history. We know that a lot of the $800 million will not reach intended targets.

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