The IMF Boss's Visit To Nigeria
Maybe the IMF can help us fast-track the identification and repatriation of our stolen funds hidden overseas. Since the credit power has moved from Wall Street banks to now Chinese government controlled banks, the power to dictate that was earlier fully controlled by the IMF acting on behalf of western lenders' interests is now in Chinese hands.
This truth is being reinforced by the emergence of the China-led Asian Infrastructure Investment Bank (AIIB), which currently having over 57 members including South Africa as the only African member.
Since this is where the future of infrastructure financing lies, it is highly advisable that Buhari administration begins to give Nigeria's membership of AIIB the serious consideration it needs.
Without expecting IMF loans, the Fund's assessments of Nigeria's will only remain mostly neutral while it's advise to our government will never be mandatory.
Countries like China where most of the borrowings by the Nigerian government will take place already have their own independent assessment tools as well as lending conditions quite different from IMF's.
China, for example, is almost always interested in--and insistent on--loans having projects attached to them, projects that are wholly or a major portion executed by Chinese firms.
With our debt-to-GDP ratio at about 12%, against our peers' more than 60%, we are so creditworthy that we can comfortably borrow as high as $270bn during the next four years without being debt trapped so long as going forward all our debts are for project-driven, particularly infrastructure based loans that by reducing our current infrastructure deficit, reduces the present high cost of doing business and high interest rate causing high arbitrage.
Regarding IMF's promised technical support, I strongly believe that Nigeria has all the technical expertise in the country to address all our current economic challenges, including the ongoing efforts to block leakages in revenue and wastages in expenditure.
Because modernizing tax policies to increase its coverage in ways that increases this year's tax-to-budget ratio, I think, since it isn't a rocket science, we can have no need for foreign hands, especially the IMF, which has never run any economy, not to mention ones like ours.
That explains why I strongly believe that we do not have the kind of luxury of time to begin this kind of having to wait for ready made solutions that even if have worked elsewhere may not necessarily work for us given our economic and cultural differences. Of course these so-called western technocrats should be the least to have understanding of our complex economic realities.
Home grown solutions, as far as I'm concerned, are always better because not only they enjoy a lot of wider national input but of course by enjoying wider acceptance and easily and better implemented by learning from field mistakes helps constant fine-tuning.
President Buhari made us proud not only the way he well received the IMF boss but also for making it clear to her that should we need the Fund's help in dealing with our macroeconomic challenges, definitely we would be the ones contacting them. But that as it stands, we have what it takes to address our present problems.
Where I think her advice was misleading is her insistence that Nigeria should not borrow again. I was instead expecting her to insist on government justifying borrowing by borrowing purely for investment rather than for consumption driven by big government which was rampantly the case during the Jonathan administrations when Nigeria was running year-in-year-out fiscal austerity while maintaining bloated recurrent spending.
Therefore, I was expecting Ms Lagarde to be applauding the Buhari administration for its bold efforts to drastically increase investment in capital projects which he couldn't do without have to borrow. Even though a lawyer not an economist, her experience as someone who as a former French minister finance would have guided her advice in a way to agree that there's no other way Nigeria should expect to solve huge infrastructure deficit head-on than to engage in massive borrowing, especially at a time when it's main source of revenue, oil, is witnessing unprecedented plunge.
Or isn't it hypocritical of her to be advising us not to borrow given our debt-to-GDP ratio which at about 12 percent is by far the lowest among our peers? Or, why are the rich nations also the most indebted nations in the world? In other words, how many times has she advised against Japan's debt-to-GDP ratio which currently stands at 224%, Italy's at 128.50%, US's at 107%, her France's at 95%, UK's at 89.80%? What about Nigeria's peer countries like South Africa with debt-to-GDP at about 44%, India's 66.10%, Brazil's 60.8%, Kenya's 50%, Ghana's 67.50%, and so it goes?
Is she fair to Nigeria that with its over $350bn infrastructure deficit it is okay for us to remain in a league of nations with some of lowest debt-to-GDP ratios like Algeria's 8%, Kuwait's 7%, Afghanistan's 6.6%, Libya's 6.10%, Saudi Arabia's 1.60%, etc?
Notwithstanding her hypocrisy on debt, I liked how she carried herself and particularly her expression of immense trust in the Buhari administration and by making it clear that Nigeria does not need any money from the Fund given the ongoing restructuring and reengineering of the Nigeria's economy taking place right now.