DMO to assist South Sudan in debt management; as Nwankwo explains Edo State’s World Bank loan saga

Director-General, Debt Management Officer (DMO), Dr Abraham Nwankwo, has assured that the Office will assist South Sudan in managing its huge debt profile and develop its bonds market. This is just as the DMO boss explained the reasons for turning down the Edo State government’s loan request.

Nwankwo, speaking, Tuesday, when he received a delegation from South Sudan which was on a study tour, stressed the need for cooperation among African countries.

He also assured the delegation that Nigeria would assist South Sudan to set up its own Debt Management Office.

“This visit has opened a new door for economic cooperation between Nigeria and Sudan, to share our knowledge, experience and also to learn from each other.

“We are happy that rather than going to European or industrialised Asian countries, you came to Nigeria. This shows the spirit of African solidarity,’’ he said.

Mr Philip Boldit, a member of the delegation and Director-General, Directorate of Macroeconomic Planning, South Sudan, said currently there were no records to establish the debt of his country. “The debt profile of South Sudan was incurred locally through the commercial banks and the Central Bank. This is because we could not borrow internationally due to the insecurity in the country.

“In fact, most of the borrowings were through the Central Bank. The Central Bank is supposed to be the last resort but we abused it. “This resulted in the apex bank printing more money, which meant more money in the market and it caused the devaluation of our currency. “So, we have a very high inflation which can only be brought down when we devise ways to manage our debts properly,’’ he said.

Boldit expressed optimism on the outcome of the study, adding that South Sudan could share from Nigeria’s experience. “We have high expectations. Nigeria and South Sudan have a lot of similarities. We have oil and insecurity as well. “Prior to the discovery of oil, agriculture was the back bone of our economy. But for no reason, we neglected that. Now that oil prices have dropped drastically we regret that decision.

“Nigeria has a lot of experience in this regard and because of these similarities, we hope to apply the Nigerian way to help us manage our debt,’’ he said. The delegation will visit the Central Bank of Nigeria and Ministry of Finance.

Nwankwo, had Monday, said that the controversial loan request of Edo State Government in the last administration was turned down because the state government wanted to borrow from banks in anticipation of loans from the World Bank.

According to the DG, Edo State Government wanted to take a bridging loan from commercial banks as it was waiting to get loans from the World Bank.

He said after due analysis of the application that was made to the Ministry of Finance which DMO was asked to assess, it was found that while the World Bank loan was being offered at concessionary interest rate, the state wanted to borrow from banks at commercial interest rate and would use the World Bank loan to off-set the loans obtained from banks.

Nwankwo said the state was duly advised that it was not economical for it to use loans obtained at very low interest rate to off-set loans it was planning to take from banks at higher interest rate, as it would cost the state more than what it got from the World Bank facility to liquidate the loans from the banks.

He said the state got the World Bank facility it was waiting for that had already been approved, adding that there was no political undertone to the issue.

Nwankwo said that Nigeria was currently near full unemployment of its resources and has a lot of room to play around with to grow the economy, explaining that while other developed economies were near full employment of their internal resources, Nigeria has a lot of human, natural and material resources that have idle and excess capacity, noting that if Nigerians were committed to developing the nation, the nation has the potential of overcoming its current challenges in three to four years.

He said that foreign investors who have waning sentiment on Nigeria markets were doing so because they did not understand the strength of the Nigerian economy, adding that there were a lot of idle resources that, when fully tapped, could jump start the economy.

He stressed that Nigerians should develop positive attitude toward everything Nigerian and change the wrong negative perception of the country’s investment climate by foreign investors. He said that the delisting of Nigeria from JPMorgan had no direct effect on Nigeria bond market as the market was already developed before the bonds were listed.