By Mike Uzendu
The Socio-Economic Rights and Accountability Project (SERAP) has written to President Muhammadu Buhari asking him to provide spending details of the overdrafts and loans obtained from the Central Bank of Nigeria (CBN) by the Federal Government since May 29, 2015.
SERAP also demanded for the total overdrafts, the projects on which the overdrafts had been spent; repayment of all overdrafts to date, as well as to clarify whether the $25 billion (N9.7 trillion) overdraft reportedly obtained from the CBN is within the five-percent limit of the actual revenue of the government for 2020.
The organization is also urging him to “provide details of spending of overdrafts and loans obtained from the CBN by successive governments between 1999 and 2015.”
The requests were made via a Freedom of Information (FoI) letter dated March 6, 2021 and signed by SERAP Deputy Director, Kolawole Oluwadare; copies of which were also sent to Mr. Abukabar Malami, Attorney General of the Federation and Minister of Justice; Mrs Zainab Ahmed, Minister of Finance, Budget and National Planning; Godwin Emefiele, the Governor of CBN; and Ms Patience Oniha, Director-General of the Debt Management Office.
The organization said: “Ensuring transparency and accountability in the spending of CBN overdrafts and loans would promote prudence in debt management, reduce any risks of corruption and mismanagement, and help the government to avoid the pitfalls of excessive debt.
“Disclosing details of CBN overdrafts and repayments would enable Nigerians to hold the government to account for its fiscal management and ensure that public funds are not diverted, thereby improving the ability of your government to effectively respond to the COVID-19 crisis. This means that the government would not have to choose between saving lives or making debt payments.”
According to the organisation: “The increasing level of public debt would threaten the ability of the government to invest in essential public goods and services, such as quality education, healthcare, and clean water. It is the primary responsibility of the government to ensure public access to these services in order to lift millions of Nigerians out of poverty and to achieve the Sustainable Development Goals by 2030.”
The FoI request continued: “The growing level of public debt would increase debt-servicing costs, which would mean that your government has less resources to spend on these critical public services.
“We would be grateful if the requested information is provided to us within 14 days of the receipt and/or publication of this letter. If we have not heard from you by then, the Incorporated Trustees of SERAP shall take all appropriate legal actions to compel your government to comply with our request.
“SERAP is concerned about the growing level of debts by the Federal Government, and the apparent lack of transparency and accountability in the spending of overdrafts and loans so far obtained from the CBN, as well as the repayments to date.
“Also, the recent overdraft of $25.6bn (about N9.7trn) obtained from the CBN would appear to be above the five-percent limit of the actual revenue of the Federal Government for 2020, that is, N3.9trn, prescribed by Section 38(2) of the CBN Act 2007. SERAP notes that five-percent of N3.9trn is N197bn.
“The CBN is prohibited from granting any further overdrafts until all outstanding overdrafts have been fully repaid. Under the CBN Act, ‘no repayment shall take the form of a promising note or such other promise to pay at a future date, treasury bills, bonds or other forms of security which is required to be underwritten by the Bank.
“Similarly, the Fiscal Responsibility Act provides in section 41 that government ‘shall only borrow for capital expenditure and human development.’ Under the Act, the government ‘shall’ ensure that the level of public debt as a proportion of national income is held at a sustainable level.
“Section 44 of the Act requires the government to specify the purpose of any borrowing, which must be applied towards capital expenditures, and to carry out cost-benefit analysis, including the economic and social benefits of any borrowing.
“SERAP has consistently recommended to the Federal Government to reduce its level of borrowing and to look at other options of how to finance its budget, such as reducing the costs of governance, and addressing systemic and widespread corruption in ministries, departments and agencies (MDAs) that have been documented by the Office of the Auditor-General of the Federation.
“According to our information, your government has reportedly recently obtained $25 billion from the CBN as overdrafts. The Federal Government has also reportedly decided to convert the overdrafts to long-term debt. This latest borrowing from the CBN is in addition to reported over $20 billion external debt, and N7 trillion domestic debt.”
