Saturday, February 27, 2021
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Saturday, February 27, 2021

Borrowing for consumption, worst form of corruption –Peter Obi

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The vice-presidential candidate of the Peoples Democratic Party in the 2019 election and former Governor of Anambra State, Mr Peter Obi, speaks with OLUSOLA FABIYI and MUDIAGA AFFE on the economic effects of the COVID-19 pandemic, the 2023 elections and other issues

How would you assess the way the Federal Government has handled the COVID-19 pandemic?

The COVID-19 situation has brought to the fore the cumulative effects of bad leadership over the years in the area of poor health infrastructure, inequality and so many other ills in the country. We have poor health infrastructure that was not created overnight. It also showed where we are in terms of development and that we are performing below expectations.

Who is to blame for this?

I have said that it is (to be blamed on) the cumulative effects of leadership failures over the years. All of us that have been leaders over the years should share in that blame. You cannot pick who exactly to blame, but if you look at the measure of development that is universally accepted which is the Human Development Indices, among which is life expectancy that bothers on health; while globally it is 75 years, in Nigeria, it is 54 and this means that we are 21 years below. If you look at our infant mortality and health infrastructure, we are not there. The second is education and the third is per-capita (income). So, looking at all these indices, you cannot tie the blame to one person or the other.

How do we address these critical challenges?

We need to sit back and appraise the situation. Where are we today? If that is clearly stated, then we would define where we hope to get to and how we got there. So, everybody-the populace who are the passengers in this vehicle-must know that destination and know that the drivers, who are the leaders, are driving to that destination. If you look at the clearest measure of human development (HDI), we are number 157. It is categorised in three ways: high, medium, and low. The question we should ask ourselves is where are we in this categorisation? We are placed low, if not very low. So, if my target is to be at the medium level in the next few years, then we should start, for instance, to address the issues of poor budgeting in health and poor infrastructure. In the past 10 years, our total budget for health is about N2.7tn, and using the various exchange rates, it came to about $9bn. Last year alone, the second biggest economy in the continent, South Africa, had $17.1bn as budget for health. So, what we have spent in 10 years is just about 50 per cent of what the second biggest economy is spending in one year. That budget of $17.1bn, when divided with the population of South Africa came to about $308 per person. Let me again bring you home to the second biggest economy in West Africa, which is Ghana. Last year, the budget of Ghana for health was $1.2bn, which came to about $41 per person. Nigeria’s budget for health in 2019 was $1.2bn, which is $6 per head. So, in South Africa which is the second biggest economy, per head in the health sector is about $300, while in West Africa, the second biggest economy is about $40 per person. It is clear where our problem is coming from. It is left for us to decide which way to go.

Are we doing well in the area of education?

Again, the situation in this sector is unacceptable. Let me take you beyond Africa and compare us with other countries with the same population. In Indonesia, which is the highest Muslim-populated country in the world, the country’s education budget for 2019 was $48bn for a population of 250 million people. Nigeria has about 200 million people and our budget for education is about $2bn. So, you can see the crisis that we are facing. We can go on and on and you will see that there are gaps all over the place. Every other country that we are competing with has four per cent of their Gross Domestic Product as the education budget, while ours is not even up to one per cent.

But recall that we borrow to augment the funding of our budget. If we have huge budgets for all these sectors, how do we fund them?

I am not against borrowing, but I am against borrowing for consumption. Budgets are funded globally through borrowing. There is nothing wrong with that because nobody prints money on its own. If we borrow for investment, there is nothing wrong with that. It is morally irresponsible, the worst form of corruption, for you to borrow and consume and leave the payment for the future generation. This is because you have impoverished them. But if you are going to borrow to invest, it is allowed globally, because the more you invest from borrowing, the better your economy.

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Which areas are the best for the investment of borrowed money?

It is proved that the biggest return on investment today is education. The more educated your people are, the better your development. The second one is health, because the more educated and healthy your people are, the stronger your economy. There is nothing wrong with borrowing. What we need to do is to put a law in place that if we must borrow, it must strictly be for investment in areas of growth. These areas are education, health, and support for businesses, especially micro, small, and medium enterprises. Countries that have done that have a robust economy. Examples are Ghana, Kenya, Vietnam, among others. In 2010, Nigeria’s overall debt was less than 10 per cent of our GDP. Our GDP then was $370bn, and our per-capita income, which is a critical aspect of HDI, was $2,325. In 2019, our borrowing has moved from below 10 per cent of our GDP to near 30 per cent of our GDP, which means that we had tripled the debts. Our GDP now is somewhere within the region of $390bn or $400bn, while the per-capita income is now below $2,000.

What does that show?

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