Financial Analyst, Dr Samuel Nzekwe, has urged the National Assembly to boost infrastructure development and economic growth by reviewing the 2019 budgetary allocation for debt servicing.
Nzekwe, a past President of the Association of National Accountants of Nigeria (ANAN), made the call in an interview with journalists in Lagos on Sunday while reacting to 2019 Appropriation Bill.
He said that the amount earmarked for debt servicing, put at N2.14 trillion, was higher than the proposed capital expenditure of N2.03 trillion.
The Accountant explained that the figures should have been vice-versa, pointing out that the existing arrangement placed the country at a disadvantage.
Nzekwe said the Federal Government should also ensure the vote for capital expenditure is higher than that of debt servicing.
The Accountant said that the projected revenue, especially from the oil sector was realistic because of price instability at the international oil market.
He further said that a fall in revenue might affect the servicing of the loans and the infrastructure development in the country.
Nzekwe said: “The amount for servicing of the debt is on the high side. It is almost the same with the capital expenditure budget.
“It is not good that such a huge money will be dedicated to debts. The government has to work assiduously to reduce the debts which the government continues incurring.
“Sometime when you look at these dedicated loans for the building of airports, rail project and others, you will see that there is nothing wrong with taking the loan from China..
“However, what is wrong is that China, also as the contractor will bring all the materials and even labour which they call experts.’’
“They (Chinese) will also bring plants and machinery which are so powerful that within one month, they will do the job of more 10,000 people.’’
According to him, everything about the coaches, the rail, tools and nuts to be used are imported from China.
“The only local content we have in terms of labour is so negligible and that is why we are not having the expected impact.
“At the end, you see that you end up paying the cost of the contracts,’’ he said.
Nigeria received funds from China to execute $3.4 billion worth of projects, now at various stages of completion.
These include the upgrading of airport terminals, the Lagos-Kano rail line, the Zungeru hydroelectric power project and fibre cables for the country’s internet infrastructure.
Nigeria also signed an additional $1billion loan from China for additional rolling stock for the newly-constructed rail lines as well as road rehabilitation and water supply projects.
The China Railway Construction Company (CRCC) in June announced that Nigeria contracted it to work on a rail line that connects Lagos and Kano.
Nzekwe noted that the Chinese company awarded the rail contract usually bring all the necessary machinery and workforce for the projects, thereby reducing local participation to a negligible size.
He suggested that at least there should be 40 per cent local participation in terms of labour used for the rail project.
“The Federal Government has to look at this area very well in order to have an impact on the economy.
“I am not happy with the amount the government will be using to service loan.
“In taking further loan, the government needs to take critical look at the agreement to ensure the nation’s loan does not continue to accumulate,” the Accountant said.
According to him, the recurrent expenditure is still high, so government has to reduce the cost of governance.
President Muhammadu Buhari on Dec. 19, presented a budget proposal of N8.83 trillion to the National Assembly.
The budget estimate indicated that recurrent expenditure would be N4.04 trillion and N2.14trillion for debt servicing.
On the state of infrastructure in the country, Nzekwe said: There is no road in Anambra State.
“ Enugu to Onitsha Road is all gullies.
“Such a major road should not be allowed by the Federal Government to depreciate to that level.
“I am not happy with the state of Federal roads in Anambra. The roads are dehumanising