News Column

U.S. $1 Billion Loan to Procure Weapons - Matters Arising

July 27, 2014

Dele Sobowale



"For this reason, I seek the concurrence of the National Assembly for external borrowing of not more than $1 billion.." President Jonathan in the letter to the Senate President, David Mark on July 15, 2014.

Although the President of Nigeria had pointed out the "urgent need" (underlining mine) to upgrade equipment to fight the Boko Haram insurgency, the Senate President and the National Assembly, controlled by the Peoples Democratic Party, PDP, still proceeded on their annual leave on schedule.

Obviously, Senator David Mark and the National Assembly don't share the President's sense of urgency. They will resume in September and at the rate Boko Haram is slaughtering people in the Northeast, close to 100 per day, about 4,000 Nigerians would have been sent to their graves. That to the NASS is not an urgent matter.

I must state quite clearly that President Jonathan is right to have described the matter as "urgent." In fact, urgent might be an understatement. The situation is near catastrophic as the Nigerian Armed Forces are being shown to be facing challenges for which they were not fully prepared. When one of the Service Chiefs, on his appointment a few months ago, proclaimed that Boko Haram would be defeated in three months or so, Nigerians knew we have, as our first line defenders, some people who were living in a world of fantasy.

Today, it is over three months since those appointments were made and Boko Haram has become more murderous. The situation had gone from bad to very bad, and now, to desperate. That explains the sense of urgency the President attaches to the matter. And, if indeed, the President nurses a second term ambition, he is aware that it would be an uphill task if the insurgency in the Northeast is not contained by the time Nigerians go to the polls next year.

For starters, certainly nobody would represent INEC in those areas controlled by Boko Haram. The Nigerian Armed Forces really need more and better weapons to prosecute this war - for the simple reason that what they have is not turning the tide of conflict in our favour.

But, having agreed that our armed forces need to be better equipped, there is still the need to address the President's request to borrow $1 billion from abroad. The first and most obvious, of course is: will $1 billion be sufficient, or will it constitute a first installment in a series of loans to fight the war? Second, the President, one hopes, would have provided the details supporting the $1 billion (N160 billion) loan - including the interests, terms of repayment, sources of the loan, etc.

While on the sources of the loan, it would appear to me to be a cardinal mistake for Nigeria to want to raise a loan for a mere N160 billion and not turn to Nigerian banks, first, to syndicate the loan and benefit from the interest instead of foreigners. Surely, Nigeria's top 10 banks can each provide N16 billion without going under.

Second, N160 billion to procure equipment, mostly weapons of destruction, which can and some of which will also be destroyed, is not an investment to promote growth. The returns on investment on this expenditure are totally negative. We are going to repay the loans from funds generated from other sources. That makes it important for us to ensure that the entire $1 billion is needed and there has been no inadvertent or deliberate inflation of the need.

Third, since some of the equipment would not be things that can be taken off the shelf and installed, one again hopes that our armed forces will be adequately trained to use them. Nigeria has for a long time become the graveyard of equipment and machines imported to serve particular needs but which had never been installed or used because nobody was trained to use them and no spare parts to maintain them when they failed.

For instance, the Lagos State inherited four giant incinerators from the military in 1979 which the government of Governor Jakande could not operate. They remain largely useless till today. Yet, a foreign loan was taken to install them. Most of the equipment and systems which Chief M.K.O. Abiola's ITT imported, in the 1970s, to upgrade Nigeria's telephone system, were never installed - among other reasons because nobody could operate them.

Perhaps the best argument in support of the request for the $1 billion loan is the cost/benefit analysis. Unquestionably, the longer the war persists, the more it will hurt the Nigerian economy. And, if Boko Haram succeeds in spreading its influence to other parts of Nigeria, then the damage will be immeasurable. Against such an eventuality, $1 billion appears to me like a small price to pay to prevent further damage to the economy, for the restoration of normalcy to a wide area of Nigerian territory and to bring peace to those directly involved.

In fact, the continuation of the conflict has prevented us from assessing the refugee situation, the damage done to people whose means of livelihood had been impaired or destroyed for ever and families that had been scattered never to re-group again. Everyday the conflict continues represents another day to add to the tragedies which the war has inflicted on millions of our countrymen and women.

I am aware of the crippling and endemic corruption with which our country had become known. Some would assume that the N160 billion constitutes another avenue for self-enrichment, for inflated contracts (over which we will argue later). That may be true. But, as I pointed out to one of my friends who took this position, using analogy borrowed from medicine, "The fact that a particular surgeon had performed two operations which resulted in death does not mean that he cannot perform the next one - if he is the Chief Surgeon."

Jonathan is our "Chief Surgeon", at the moment. Let us give him the support and the chance to perform his duty. The NASS should lead by example. They should approve the loan before going on leave.

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Source: AllAfrica


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