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SERAP Advises Buhari to Suspend Fresh Borrowing | Business Post


By Adedapo Adesanya

The Socio-Economic Rights and Accountability Project (SERAP) has advised President Muhammadu Buhari to suspend fresh borrowing for now for the sake of Nigerians.

The group, in an open letter, said the immediate moratorium on borrowing should be obeyed by the federal government and the 36 states to address a systemic debt crisis, prevent retrogressive economic measures, and the disproportionately negative impact of unsustainable debt on Nigerians.

In the open letter dated December 18, 2021, and signed by SERAP deputy director, Mr Kolawole Oluwadare, the organisation explained that, “A moratorium on borrowing would create a temporary debt standstill, and free up fiscal space for investment in Nigerians’ needs, as well as ensure sustainable economic and social recovery from the COVID-19 pandemic.”

The request followed the recent approval by the National Assembly of President Buhari’s request for a $5.8 billion loan and grant of $10 million.

Previous approvals in 2021 alone included $8.3 billion; €490 million, and $6.1 billion. The foreign debt stock of the federal government, 36 states, and Federal Capital Territory reportedly stands at $38 billion.

SERAP warned that, “Without a moratorium on borrowing, your government and many of the 36 states may be caught in a process-driven mostly by creditors’ needs. This will result in an exorbitant social cost for the marginalized and vulnerable sectors of the population.”

“Long-term unsustainable debt can be a barrier to the government’s ability to mobilize resources for human rights and may lead to taxes and user fees that impact negatively on vulnerable and marginalised Nigerians,” pointed out.

The group expressed concerns that “the lack of transparency and accountability in the spending of the loans so far obtained, and opacity around the terms and conditions, including repayment details of these loans” could plunge the nation into crisis.

“While the National Assembly has asked for these details in future loan requests, it ought to have seen and assessed the terms and conditions of these loans before approving them, in line with its oversight responsibility under the Nigerian Constitution of 1999 [as amended].

“If not urgently addressed, the escalating borrowing and looming debt crisis would cripple the ability of both the federal government and the 36 states to deliver essential public services such as quality healthcare, education, and clean water to the most vulnerable and marginalised sectors of the population,” it added.

“Several of the 36 states are also facing a debt crisis and vicious debt cycles. According to the Debt Management Office, the foreign debt stock of the Federal Government, 36 state governments and the Federal Capital Territory presently stands at $37.9 billion.

“The loans from China alone amount to $3.59 billion. According to the UN Independent Expert on foreign debt and human rights, Nigeria faces debt service relative to tax revenues that exceed 20 per cent, with escalating social tensions linked to poverty and inequality.

“The growing level of borrowing by your government and the 36 states is clearly a human rights issue because when the entire country is burdened by unsustainable debts, there will be little money left to ensure access of poor and vulnerable Nigerians to basic public services,” it added.

SERAP advised the government “to conduct a human rights assessment of the borrowing by governments since 1999 to address the dire consequences of unsustainable debts on people and communities across the country and to ensure that borrowing at all levels of government considers the human rights impacts.

“Any such assessment should be conducted in harmony with existing safeguards and mechanisms in order to contribute to informed decision-making and to complement findings from a human rights perspective.”

It explained that, “A human rights impact analysis should serve to ascertain the debts that can be repaid, and the resources necessary to ensure compliance with the obligation of using the maximum available resources for the protection and fulfilment of human rights.”





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SERAP Advises Buhari to Suspend Fresh Borrowing | Business Post

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