Nigerians are wary, skeptical and dread foreign loans for reasons that are not too far fetched.
Foreign loans apart from world bank have high interest rates and if not paid within the stipulated period, they balloon and eventually the interest some times surpass the principal loan. Secondly our past experience had taught us that our leaders take loans and corruptly enrich themselves without utilizing the loans for the purposes meant. Thirdly loans are used for projects that don’t grow the economy and more often than not, they are utilized for conspicuous consumption and unproductive ventures. Remember we took foreign loans from multilateral agencies in 1980s and 1990s which were not effectively utilized and they ballooned reaching $31b. We were lucky to have saved substantial funds during the second coming of OBJ occasioned by the phenomenal rise in prices of crude oil. These savings were used to off set the loans after we secured some concessions that reduced the total amount to be paid from $31b to $18b.
Foreign loans should be avoided unless it has become inevitable. It should be pointed out here however that foreign loans are not bad Per se provided that they are utilized to fast track the growth of the battered economy and when the economy becomes solvent, it can comfortable pay the loans.
Dubai experience suffices here. Some of you that have been to Dubai know that everything works in that desert. Despite being a desert without rich solid minerals or agricultural land and not even oil; just produces merely 400,0000 barrels per day. Without all these harsh economic realities that constituted what looked like insurmountable obstacles, yet they put their mental resources in to work. Apart from going for unique projects that are attractions to tourists thus making the place a tourist number one destination, they developed their first class infrastructures and social services with foreign loans. What they did was to tie the loans to certain companies not govt. Most of these first class facilities were developed with foreign loans to the tune of $66b and the companies since they are making money from such economic ventures, the projects are paying for the loans regularly.
This what is expected from our government. Let me give an example with Mambilla hydroelectric power project which unfortunately has been on drawing board for 30 years now! This is a project reputed to be the biggest in Africa and when completed will generate 3050 MW, almost three quarters of what is now available nationally. It’s really unfortunate that the project that could have costed us only $1.5b in 2007 is now $5.723b! We are simply crazy, deranged and unpatriotic bunch of people. All you need to do is a feasibility studies on the project, concession it to a a company with the wherewithal who will syndicate for a loan to complete the project, recoup their investment and within 10 years the entire completed project with a wonderful positive financial profile will be one of the biggest assets to Nigeria, posting fantastic profit and creating millions of direct and indirect jobs. Oh by God we are unbelievably heartless people that should be lined up to face firing squad as they do in China.