News
Obi faults Tinubu, NASS over securitisation of N7.3tn CBN debt
The Presidential Candidate of the Labour Party (LP) in the 2023 general elections, Peter Obi, on Monday criticised President Bola Tinubu over his recent securitisation of the N7.3 trillion ‘ways and means’ facility from the Central Bank of Nigeria (CBN), describing it as illegal.
Securitisation of a loan means converting the debt to an asset that can later be offered to investors in the form of bonds. If a loan is securitized, it is pooled with other similar loans and sold by the original lender, in this case (CBN) to other investors. So, CBN having securitised the loan can later decide to offer the loan as bond to investors to invest in, that way, CBN recoup its money.
Speaking further on the issue, Obi recalled that barely 26 days to the end of its eight-year tenure, the Buhari administration got the Senate to approve a N22.7 trillion ways and means borrowing from the CBN.
He lamented that in seven years, CBN lending to the Buhari government had climbed 2700 per cent in flagrant violation of the CBN Act.
He stated that the National Assembly still approved the new Tinubu administration’s request for a N7.3 trillion securitisation of the existing ways and means facility just before considering the 2024 budget proposals in flagrant indifference to the illegality of the excessive ways and means borrowing.
READ ALSO: N15bn allocation for VP residence, shocking, disheartening –Peter Obi
More surprisingly, Obi stated that on December 30, 2023, the last working day of the year 2023, Tinubu requested the National Assembly to approve the securitisation of the N7.3 trillion being the outstanding debt owed to the CBN.
Almost at the same time as the “illegal” securitisation was approved by parliament, the president, Obi said, also sought and secured National Assembly approval to borrow another $7.8 billion and €100 million.
“No questions asked. No explanations were sought as to the precise purpose of these borrowings all within the seven-month tenure of this government.
“Ordinarily, minimum public accountability should require that the president and his administration offer more specific explanations about the purpose of these borrowings. But so far, all we have been told is that these borrowings are meant to fund ‘capital’ expenditure.
“Specifically, the continuous securitisation of ways and means borrowing from the CBN is against the law and against the CBN act which stipulates the limit of the federal government’s borrowing from the CBN not to exceed 5 percent of the previous year’s revenue. The law also requires the liquidation of the outstanding borrowing before any new advancement can be made,” he stated.
The businessman cum politician said the CBN Act expressly states that all borrowings under ways and means cannot be converted to debt or securitised if the CBN is the underwriter.
READ ALSO: FG targets concessionary loans, climate financing to fund 2024 budget
He pointed out that the idea of securitisation of illegal borrowings from the CBN and transferring the same into Nigeria’s debt stock portends danger to the future of the Nigerian economy and increases the debt burden of the nation.
“It is even more worrisome because these accumulations of debts are not being transparently and productively utilised or accounted for.
“While this new debt of N7.3 trillion has been hurriedly approved without scrutiny by the National Assembly, the immediate public accountability question is: can the federal government, which holds the trust of the people, tell us what they used the N7.3 trillion to do?
“We have always been told that all borrowings are for ‘capital’ projects, can we know the capital or productive projects this huge borrowing is being applied to? “ he queried.
Obi explained that what is emerging is a disturbing pattern of huge borrowing and profligate spending on nonessential procurements which are being termed ‘capital’ expenditure and are being funded with an accumulation of debts.
“For instance, a good number of these so-called ‘capital’ expenditure items as contained in the 2024 budget are more procurement and luxury projects. This trend of lavish spending backed only by equally lavish borrowing is unsustainable and would wreck the economy in due course. It needs to be halted.
“Unless this trend is halted, the nation runs the greater risk of running into more turbulent economic waters in the near future. This is to add my concerned voice to those of many other troubled Nigerians,” Obi added.
The former governor advised that it was time to go beyond politics and partisan grandstanding to address the fundamental issues of what he described as rational economic management.
“I am afraid that the current administration is not paying sufficient attention to issues of rational economic management.
“Instead, an unsustainable level of debt is being piled upon the economy thereby further burdening our already distressed populace who are bearing the burden of harsh economic policies not backed by compassionate cushioning policies,” he stressed.