Monday, July 9, 2018

MONDAY, JULY 9, 2018 www.punchng.com
Abacha’s repatriated loot: Matters arising
Economic Renaissance by
lesleba@lesleba.com 08052201997
The actual amount stolen from Nigeria’s treasury between
1993 and 1998 by former military dictator, Sani Abacha,
may never be known. Nonetheless, Amnesty International, for
example, has suggested that over $5bn of Abacha’s loot had
been identified, even when speculations still persist that the
audacious ‘shop-lift’ by the late Head-of-State and his associates
is probably close to $10bn. There is no concise record of the
recovered loot, unfortunately. However, Nigeria’s treasury may
have been boosted with the return of well over $3bn since former
President Olusegun Obasanjo initiated the international pursuit
of Abacha’s loot in September 1999.
Notably, Liechtenstein returned $227m in 2014, while
Jersey reportedly released €149m by November 2003, with
another tranche of €315m scheduled for December 2014; The
Luxembourg authorities also announced that $630m was
identified as part of the loot and frozen in eight bank accounts.
Furthermore, the United States’ authorities had in August 2014
also announced the seizure and return of $480m to Nigeria. With
Finance Minister, Kemi Adeosun’s confirmation, in April 11 2018,
Switzerland will have fulfilled its pledge to return another $322m,
in addition to the first tranche of $700m already confirmed as
fully repatriated by December 2012.
The Swiss authorities were obviously unhappy with the
‘hazy manner’ the $700m loot, earlier repatriated, was spent.
Consequently, the major pre-condition for drawing down the
second tranche of $322m was that “it will be used to finance
projects that will strengthen social security for the poorest
sections of the Nigerian population”.
Already, there are grumblings that the choice of beneficiaries
of the loot will ultimately be arbitrary, sectional or inequitable.
Besides, the wasteful manner in which such funds were applied,
in the past, to uncoordinated, freewheeling and populist
interventions, will certainly not inspire much hope that the
repatriation of another sum of $322m will have a meaningful
or enduring social impact.
Furthermore, the process of repatriating the latest $322m
Swiss loot may have, in fact, actually commenced in 2014 with
the implicit pre-condition, according to a BBC December 5 2017
report, that “the money will be paid in instalments, specifically
to finance National social safety net projects, which have been
agreed with the Nigerian Government and executed with regular
audits under World Bank supervision.”
According to the Head of the Swiss delegation, Ambassador
Roberto Balzarretti, in the BBC report on the Agreement with
Nigeria said, “If the first instalment is not properly accounted
for, subsequent payments will be halted. This is to prevent the
funds from being stolen again!” This means that, although the
Nigerian Government appears to celebrate the reported return of
the $322m, the modus operandi for disbursement was projected
as payment in instalments. Although in May 2014 the Swiss
authorities actually indicated that a total of N380m would be
returned by July 2018, just over $322m was confirmed as actual
net inflow. The difference of about $60m may have been incurred
as “repatriation and management fees” to both Nigerian and
foreign lawyers and the agents, who supervised the process.
Expression
Federer, Serena
target progress at
Wimbledon
Henry Boyo
However, if the Abacha loot was, conversely and diligently
applied to create critical education, health and transport
infrastructure since 2003, social welfare would probably
have improved. Regrettably, also, the looted funds had been
impounded in foreign custody for possibly more than 20 years
without even a kobo interest payment. Consequently, we may
speculate that the Swiss and other International financial
outfits, which harboured funds
stolen from Nigeria, may have
also circuitously become
Nigeria’s creditors from our
government’s forays into the
International debt market to
finance fiscal deficits.
The question, nonetheless, is
whether or not the application
of the repatriated loot has
any enduring or meaningful
social impact on the challenge
of reducing the number of
87million Nigerians who,
according to a recent report
from the Washington based,
Brookings Institution, live in
abject poverty(See “At last a
world ‘trophy’ for Nigeria!” at
www.betternigerianow.com).
Instructively, if the payments from the $322m Swiss loot have
already been made between 2014 and 2018, then, once again,
the social impact of such cash injections has clearly not been
noticeable.
In essence, the agreement between the Swiss authorities and
the Nigerian Government appears to have been rather predicated
on the notion that occasional cash hand-outs to the poor would
reduce poverty and provide social safety nets for almost 200
million Nigerians. Arguably, the surest social safety net against
deepening poverty anywhere still remains an opportunity for
gainful employment with a realistic income. Invariably, with
deepening poverty
and a huge army of unemployed citizens, the repatriated
Abacha loot may have failed so far to improve social security.
The failure of public expectation from such ‘charitable’ cash
injections is because, as long as the underlying monetary
indices in the economy remain counterproductive and out of
gear, quantum increases to government expenditure will not
automatically propel economic growth or reduce poverty. For
example, the obtuse model of annually increasing government
spending when inflation is already well above best practice and
rates below three per cent will not reduce poverty. It is equally
implicit that, since it is not rational for anyone to lend money
below the prevailing rate of inflation, the cost of borrowing to local
industrialists and businesses will predictably remain higher than
the inflation rate and therefore, increase the cost of production
and make local output uncompetitive against cheaper imports.
•A trader with a baby strapped on her back struggling to make ends meet in a traffic jam on the Lagos-Ibadan
Expressway ... on Sunday. Photo: Olatunji Obasa
P. 63
Furthermore, higher inflation rates, driven by excess naira
supply, will inevitably reduce consumer demand and compel
industrial and business contraction, with serious consequences
for employment and national income. Regrettably, therefore,
the re-injection of Abacha’s loot and other similar fiscal and
extra budgetary cash interventions to purportedly alleviate
poverty may have ‘also inadvertently’ expanded money supply
to fuel double-digit inflationary rates. Instructively, best practice
implies that you do not quench the fire of inflation by pumping
more money into a market, which the monetary authorities
themselves readily characterise as persistently challenged by a
burden of excess naira supply.
Inexplicably, all administrations since 1999 have consistently
projected annual fiscal deficits, which were usually funded by
additional debt accumulation even when the accommodation
of fortuitous cash interjections, such as the $322m Abacha loot,
would have eliminated or possibly reduced the need to borrow
at such oppressive rates for government debt.
Curiously, however, over the years the approval of the National
Assembly was never sought, as constitutionally mandated, before
such returned loot and indeed, other accruals from the ‘illegal
contraption’ of the “Excess Crude Account” were shared without
regard to reducing the fiscal deficit by the Federal Executive and
state governors.
Nonetheless, it is deducible that the oppressive burden of
surplus naira, spiraling inflation, dysfunctional economy and
deepening mass poverty are clearly instigated by the Central
Bank of Nigeria’s unusual direct substitution of naira allocations
for all forex revenue, including repatriated loot, before sharing
to the three tiers of government. Regrettably, the CBN’s sleight
of hand goes unnoticed when it directly substitutes the naira,
at its own unilaterally determined rate, for all foreign exchange
denominated government income, including proceeds from
crude oil sales.
Here is the crux of the matter; invariably, if the CBN’s creation
of fresh naira values for distributable foreign exchange inevitably
increases the naira liquidity surplus that drives inflation, it
follows, therefore, that the higher the foreign receipts, the higher
will be the challenge of naira surplus liquidity and a serious
abiding inflationary threat.
Now the farcical part of this macabre drama is that the same
CBN would, in response to the liquidity surfeit it created and the
threat of an inflation spiral, step up and pay lenders, primarily
money deposit banks, double-digit interest rates to borrow from
them and sterilise the excess funds in order to reduce the systemic
liquidity surplus and the inflationary threat, not minding that
this will raise the cost of borrowing and domestic production and
also, crowd out the expansion of the real sector.
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“It is only through restructuring that we can have
equity and justice. Restructuring is the solution to all
the challenges in this country, including corruption.
Without restructuring, you are wasting time if you
say you are fighting corruption”
– Deputy National Publicity Secretary of Ohanaeze Ndigbo,
Chuks Ibegbu
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