Nigeria: Bonding with debts

Civil Societies should rise up and say enough of further endangering Nigeria by its leaders bonding mindset with bond floating

Victor C. Ariole

“The yield on government bonds is the cornerstone of equity valuation models… For 30-odd years yields around the world have been falling … with high inflation… they aren’t any more…”

– Merryn Somerset in FT

Those regulating financial activities in this world, not local CBNs, know the equity value or contribution of each nation in the global economy and as they give it a value of about $62 trillion, they know how to price Nigeria’s bond to, further, push Nigeria to debt.

READ ALSO: Nigeria, 7 African countries in debt distress – IMF

It is even worse now that Nigeria’s Stock Exchange does not rank among the Africa’s top 5. Like Somerset mentioned above, when the leading economies of the world were experiencing almost zero inflation rate, floating bonds by developing or emerging economies was attractive as the yield could be less damaging for such economies but, now, it is no more. So, one wonders why Nigeria’s debt managers see this moment as time to float further bonds with already about $72 billion debt to contend with.

The current Finance Minister who replaced Mrs. Adeosun does not seem to understand the import of claiming that the debt stock is below 20% of GDP, hence the need to borrow more. While Adeosun was aiming to borrow to change the cutlass and hoe agriculture process to more mechanized and more conservation process, the current situation is that the Silos are even discarded to allow more decay of farm products towards more loss of harvest; so, how would Nigeria pay its mature yields when there are no assets, current or fixed, to guarantee such payment. Even the oil Nigeria depends on has been valued as greatly depleted and, what is more, the youths that ought to be developed to take up wealth creating process have been declared by the highest authorities as lazy and not capable of productive activities.

With such attitude, valuation of Nigeria’s equity to the global economy is not viewed as capable of adding more to the current capitalist driven world.

Somerset also mentioned that the investors are not patient for the great risk they see in those emerging or Nigeria – type economies, hence they prefer to operate “cash and carry” investment portfolio like the hedge fund managers do. Mrs Adeosun knows them very well as she once claimed that they move with smart funds and they shy away from delayed yield paying process. Note that she had once been in their employ.

French people have a better name for hedge fund managers that populate, currently, the Nigeria’s space. They are called “vulture funds” managers. It is not that they are vultures but that they are experts in managing financial funeral ceremonies because ceremonies meant for the living financial items are not their interest. That type of mindset finds reversal when emerging economies or developing nations claim they have a sovereign wealth to be managed by such hedge fund managers.

READ ALSO: Nigeria’s $3.9bn Sovereign Wealth Fund lowest among OPEC countries – NEITI

Nigeria’s dichotomy is that it has claims to sovereign wealth as well as claims to great level of trust to float sovereign bond. Gaddafi tried it and he is neither alive to witness the gains nor Libya so buoyant to talk of both political and economic sovereignty. And like the column of Ijeoma once stated about sexed-up figures, when you claim a $500billion or $400 billion GDP so as to earn trust to borrow more money, it could only be a temporary deceit process that would further land you in poverty when your known assets are valued and made valueless, or priced at discount rate, in the current knowledge driven dispensation that sees Nigeria having 13 million children out of school.

The 13 million that are expected to pay your debts that are to mature in the odd 30 years coming. When traditional banking process asks you to make projections so as to know where you are headed for their own sustenance, it has human capital connotation; and if 13 million Nigerians are out of school now and they must at best come out alive in 30 years, either in full or partially decimated by hunger, they could still remain a remnant of Boko Haram that could threaten the credit value of Nigeria like it has been for Congo Democratic Republic or to some countries in South America.

Civil Societies should rise up and say enough of further endangering Nigeria by its leaders bonding mindset with bond floating as it has never helped the nation for the known odd 30 years the military leaders had initiated it.

People like Olu Falaye, Idika Kalu, Chu-Okongwu, Kuforiji-Olubi, all of them experts in “No Alternative to Structural Adjustment programme” known as “TINA” which only one voice, that of Prof. Samuel Aluko, fought against without success, like fighting the current omnibus TSA, should call a conference and start making their mea culpa on where and how the rain started beating Nigeria.

Nigeria’s equity value or contribution to the world economy, as currently constituted, makes it an elephant project economy, big, agreed; but it is still chewing shrubs, the base feed of the food chain. NO premium value!