Loans Will Not Save Nigeria

Loans Will Not Save Nigeria: The Hidden Costs of Borrowing

President Muhammadu Buhari won many die-hard supporters purely because he refused to play the game of “begging bowl politics” at a time when Africa’s innumerable dictators were queuing up to take IMF / World Bank loans as global neoliberalism aggressively dictated. If Buhari had accepted the aggressively marketed neoliberal-induced loans, General Ibrahim Babangida might have never become president and Nigeria’s recent history different. Conversely, if Buhari had remained in office enduringly then with the “no loan” stance, Nigeria might be up there today with Botswana, a nation that rejected IMF / World Bank loans. However, Buhari, now a democratically elected president is actively courting loans from economic powers, the most recent being China. What happened? Egnahc?

For leaders of developing countries that seek loans from global economic powers, they have to as a requirement of procurement “kneel down” [Lin Down] to the donors in literal, intellectual, spiritual and emotional senses. It would not reflect well on powerful nations and donors that they force leaders of developing nations to ‘frog jump’ as a personal requirement to get a loan but such visual images, moving and static, will be leaked to the global public in future. It is just a way of showing Third World leaders who the boss is. Many leaders seeking loans even shed tears during or after the process. Since Buhari is too old and frail he might have to ‘pick pin’.

Before you dismiss this kneeling down [Lin Down] requirement for getting foreign loans as rubbish, ask yourself if you have ever tried to borrow or beg for money, or seek substantial favours from people who are/were better off than you in your life? Think hard and the memories of rejections, avoidances, insults, humiliation, runarounds, string-alongs, last-minute disappointments, heartaches and the like will rapidly flood the memories of many if not most, if not all. The question is why will such not happen on a higher scale where international relations are involved? International relations is a game of the toughest persons on the globe and those with the most power subdue weaklings ruthlessly. The foreign aid industry has perennially done exceedingly far worse to national leaders and whole countries than good.

A few insiders believe that such humiliation of leaders of developing nations is partly responsible for making them take the loans as personal property when successfully procured. The thinking is “I humiliated myself terribly to secure a loan for a nation that would not be grateful anyway, as I had to do that to get the loan it has to be disbursed on my very own terms”. Foreign aid is not transparent and we never know much about what presidents have to do to get it. Even the conditionalities attached to aid are often secret and only public relations “adjusted” forms of it are presented to the public.

Conditionalities are where ministers and other top-ranking bureaucrats do their kneeling down [Lin Down] later. According to authors like Ann Pettifor, a leading champion for debt forgiveness and against odious debt, middle-ranking civil servants working for the IMF / World Bank and other donor agencies can override the decisions of a minister or even a president regarding development projects due to conditionalities agreed. Imagine a 26-year-old employee of a donor agency overriding the decisions of a democratically elected president and his cabinet. That is thoroughly anti-democratic but is a cost of pursuing begging bowl politics. The governments of weak nations are routinely held hostage because of foreign debt. Nigeria is a fine example.

The amount of denialism and ruthlessness that goes into “foreign aid giving” necessarily makes it a clandestine technocrat-dominated industry. One does not have to read the majors on foreign aid [1] to know aid is an unsuccessful, ineffective, entrapping, heinous and self-interested approach to promoting development. Aid castrates nations such as those that depend on it perennially and the empirics demonstrate. Economic growth comes from within not aid dependency. Why is Buhari continuing down this route if he truly wants to take Nigeria forward? He knew much better in the past.

Remember it was Ann Pettifor through her Jubilee 2000 Campaign who brought to light that in 1972 Nigeria took out a $5 billion loan but as of the year 2000 Nigeria had paid back $16 billion on interest while the principal of $5 billion remained unpaid [off]. Just reckon the amount of usury that goes with the benevolent sounding word “Aid”. That was the genesis of Nigeria’s debt forgiveness but the begging bowl has to come out again with the kneeling down [Lin Down]. Leaders must chop! The masses must get poorer!

The cycle of debt that is fuelled by begging bowl politics can be summarised as, (A) leaders of nations waste and plunder national incomes because aid money is readily available to bail them out; (B) this creates incentives for leaders to divert national income and aid money away from activities that will create real economic and social growth, and better living standards for citizens to Swiss accounts and offshore tax havens; (C) the citizens are constrained to the point of helplessness and hopelessness which secures the power of the leaders at (A). Foreign aid supports this cycle robustly, thus depressing social rights (the freedom of access to social amenities), political rights (the freedom to participate in all political activities without fear or favour) and economic rights (the freedom to produce and consume economic goods and services) of the people. Anything that comprehensively depresses freedom cannot be good for Nigeria or any other nation, ask George Ayittey.

One wonders how much kneeling down [Lin Down] Buhari and his cabinet (and future governments) will have to do to get the loan, service it, reschedule it and fulfil its conditionalities. The $2 billion financings Buhari seeks from China should be questioned. How much of it will go to Chinese contractors and businessmen? How much of it will reach its intended destinations for infrastructure development? How much of it will benefit the common man, woman and child? How much of it will end up in foreign accounts and offshore tax havens? These questions are very important because other donors are ready to give Nigeria odious unpayable loans including vulture funds.

Do not forget the ‘Babangida Boogie‘ — one step forward, three steps back, a sidekick and a flip to land on a fat Swiss bank account. What will Buhari’s steps be?

[1] The Best Democracy Money Can Buy by Greg Palast; Globalisation and its Discontents by Joseph Stiglitz; Dead Aid by Dambisa Moyo; Africa Betrayed by George Ayittey; Economic Hitmen by John Perkins; and The Whiteman’s Burden by William Easterly.

Grimot Nane