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BUHARI’s External Loan Request, Our Concerns, By MAN

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The Manufacturers Association of Nigeria (MAN), had made there stand over the President Buhari’s request for Senate approval for $29.96 billion loan facilities, stating that it is not a bad idea because of the stated purposes. The concern of every stakeholder is the judicious utilization of the fund.
The Director General(DG)of MAN -Mr Segun Ajayi-Kadir who made this known in Lagos noted in a statement that the projects which President Muhammadu Buhari said the fund would be used to execute would address some of the challenges of the manufacturing sector and indeed the economy, especially infrastructure.
He also made it clear that he understood why the Senate and some other stakeholders are uncomfortable with the loan request.
Ajay-Kadri however said there are reasons to endorse the president’s proposal.

According to him:”A possible consolation remains that this loan is not programmed to fund consumption, but likely to improve our productivity”. This, he stressed, would however depend on the facility’s “strategic allocation, the governance of project execution and monitoring and management of its foreseen impact on subsisting government inflows and financial commitments”.
The MAN DG believed that the rejection of the proposed loan request by the Senate was because the President didn’t provide the required details, which included actalisation of projects in the power, agriculture, transport and mining sectors of the Nigerian economy. He insisted that the loan would be beneficial to the country if the right things are done.
According to him: “On the face of it and in my opinion, the 39 emergency projects in the Power, Agriculture, Transport & Mining sectors of the Nigerian economy alluded to by Mr. President should redress some of our infrastructure and sectoral performance/linkage deficits. To this extent, the projects are needful and their successful completion would boost the productive capacity of the Nigerian economy”.
Nonetheless, the MAN DG also have some reservations. In his word: “However, the rising debt profile of Nigeria continues to be a cause for concern, especially the capacity of Government to effectively service it and,at the same time, meet the bursting needs and aspiration of the citizenry going forward. Already, our budget projections for 2020 anticipates a debt service sum of ₦2.45trillion, an amount higher than the ₦2.14 trillion earmarked for capital expenditure”.

He added: “Also, our total external debt stands at $27.16 billion, while Domestic debt has climbed to $56.72 billion. Nigeria’s debt stock increased by 3.11% from $81.27 billion recorded in the first quarter of 2019 to $83.88 billion (N25.70 trillion) at the end of June 2019. This is almost 13% increase year-on-year from the $73.21 billion at the end of June 2018. And even though our debt-to-Gross Domestic Product (GDP) ratio, which currently stands at 28 per cent, is still below the average in Africa, our revenue-to-GDP ratio remains low”.
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