Economy

FG’s mounting debt, counterproductive to economic growth- NECA

Written by Maritime First

…As FAAN Boss says new airports terminals cost effective***

The Nigeria Employers’ Consultative Association (NECA) on Tuesday warned that Nigeria’s increasing debt burden could be counterproductive, to the nation’s developmental capacity and economic growth.

The NECA Director General, Mr Timothy Olawale gave the warning at a forum in Lagos pleading that the present uncontrollable appetite for debt as hobby was worrisome and needed to be checked.

Olawale specifically expressed concern, stressing that a situation where about 25 percent of the 2019 budget size of N8.8 trillion amounting to N2.140 trillion was going into servicing of debts burden should be worrisome.

He also said that the Federal Government’s continued borrowing within the domestic market was limiting the real sector from accessing funding for expansion and growth.

“’The real sector should be able to access funds which should ultimately lead to increased employment opportunities within the economy.

“’Latest figures released by the Debt Management Office (DMO), showed that government’s domestic debt profile rose to N15.814 trillion in September, 2018 from N15.629 trillion in June, 2018 (1.19% increase),” Olawale said.

He said that the amount proposed for debt serving in the 2019 budget could have a negative effect on the developmental capacity in spite of government’s financial managers’ argument that the rate of increase was within a manageable limit.

Olawale cautioned that while the effect of the increasing debt might not be immediate in totality, it could be catastrophic in the long term with a chunk of revenue consumed by debt servicing to the detriment of infrastructure development.

He urged the federal and state governments to take steps aimed at cutting the cost of governance and recurrent expenditure

But while the NECA Boss was pleading against further debt in Lagos, the Managing Director, Federal Airports Authority of Nigeria (FAAN), Mr Saleh Dunoma was praising the Government vision, over the four new international terminals in Abuja, saying that the Lagos, Kano and Port Harcourt airports were cost effective.

Dunoma told newsmen in Abuja on Tuesday, that while the four terminals were built with 600 million dollars, Kotoka International Airport Terminal 3 alone in Ghana, was built at 275 million dollars.

He explained that the four projects were being funded through 500 million dollars loan from the Export-Import Bank of China (China Exim Bank) with counterpart funding of 100 million dollars from the Nigerian government.

He explained that the newly built Kotoka International Airport terminal 3 with a handling capacity of 5 million passengers annually, is still lower in capacity to the Port Harcourt terminal which will handle 7million annually.

“When the Kotoka Airport terminal was commissioned in September 2018, a lot of ill-informed Nigerians went on social media to lambast their father land.

“At the cost of 600 million dollars joint funding for the four terminals in Nigeria, it is comparatively more cost-effective than the single terminal in Accra at a cost of 275 million dollars,” he said.

Dunoma said that with the commencement of operations by ASKY Airlines from the Nnamdi Azikiwe International Airport, Abuja; and Lufthansa set to commence from Port Harcourt International Airport, two of the four terminals were being utilised.

He said with the facilities on ground at both the Port Harcourt and Abuja airports, more airlines were expected to indicate interest in flying to those airports.

The FAAN boss said with the commissioning of two of the four terminals, new employment opportunities had been created for deserving Nigerians.

On speculations that the new terminals would be run by the Chinese, Dunoma explained that the China Eximbank only gave Nigeria a repayable loan to build the facilities.

He said: “Arrangements were made in the agreement we signed that as soon as the buildings start operations, they will give us a gestation period, and then we will start paying back the loan.’’

He further explained that as was the usual practice, the engineers and technicians of the Chinese firm, China Civil Engineering Construction Corporation that did the job, would be around throughout the Defect

Liability Period of one year.

“They will help us train our engineers and maintain the facility for one year until the defect liability period is over and our people get used to these facilities as quickly as possible.

“We have started the training even before the commissioning of the building, but this is a purely technical area.

“Their engineers and technicians will remain with our technicians and engineers over this defect liability period so that they will hands off after that.

“The Chinese are not going to run the terminals, we have started in Abuja and you can see that our people are running it,” Dunoma said.

The new terminals in Port Harcourt and Abuja, it would be recalled, were inaugurated in October and December 2018 respectively, while those in Lagos and Kano are expected to be completed in 2019.

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Maritime First