logica: Dude, no sensible person can rationalize the economic sense in Okonjo's strategy. Firstly projects are not necessarily executed at once and they are also broken down into phases. With this in mind, you should realize we don't need to borrow when the money can be disbursed in phases along with the project phases. As well as the fact that projects can be prioritized. With that laid out, there is absolutely no need to borrow. The analogy being put up there which I responded to assumes that all the funds for the entire list of projects need to be provided all at the same time and at inception which doesn't make sense.

Mind you, it is apparent to the exposed that she's nothing but an Aunt Jemima for the powers that be.

What the fúck are you saying? So you can't borrow to develop a phase of a project?

J12:

What the fúck are you saying? So you can't borrow to develop a phase of a project?

As already pointed out, why borrow when you have enough in the bank to start off with?

logica: I suppose you missed the part where I said all the funds do not have to be available at the inception of the project and at the same time? Rather disbursement is spread over the life-cycle and phases? Did you read at all?

I didn't miss it. You are probably a layman in finance, so you won't understand the concept of the discounted cash flow that I said you should do. Simply, what I suggested to you is to estimate all future cash/earnings accruable to the FG for the next 5, 10, 20 yrs and determine how much those earnings would be worth today. Then compare the figure to how much those projects would cost today and you will see the gap that the loan should fund. Even if you scatter funding as you suggested, the funds available yearly would not extinguish all yearly demand for infrastructural spending.

logica: Oh OK, you are now quoting "Madam". The same Madam that was exposed as a liar and possibly incompetent during the subsidy probe early this year? If you are quick to forget, I haven't. Yes, indeed, that money we are saving guaranties the Western world access to funds to grow their economy; while we continue to be enslaved with various phantom debts of which the funds usually end up in private pockets.

How was she exposed precisely? And by who? Those legislators who do not know their rights from their left? How many of them were accomplished finance experts before they got to NASS?

Who told you the west needs our money? Nigeria does not even make what Apple as a company makes in a year and you are here deceiving yourself that the west needs our savings to grow. You are one of those who will not get over all the nonsense conspiracies tagged "western dictation" or "IMF"!

0lumide:

Oh god!!! You are soooooo wrong!!!

How about this: SWF used to build infrastructures like healthcare (Have people pay affordable amount for healthcare monthly. Remember not everyone falls sick every month), Roads(Toll roads both for profit and maintainace) etc... Infrastructures are not free. No one is saying Nigerians will use the infrastructures for free. They will pay for it. That way, profit is guaranteed and over time, the infrastructures will pay off not only improving our living standards but also putting more money in our reserves to be used for other things. But as the current arrangement is, SWF is used by wallstreet banks. Which means we are saving money in a foreign bank to be used and gambled with by foreigners and when their is a collapse in dollars, what happens to our SWF? Because saving money that will be used to for investments by foreign banks is a gamble, saving money while we lack basic infrastructure is an inferior policy compared to using the saved money to build infrastructures.

http://www.businessinsider.com/sovereign-wealth-funds-buying-up-the-world-2012-10#irelands-national-pension-reserves-fund-1

Please go through the nations in the above list of sovereign wealth funds and tell me if Nigeria is in same league with these nations in terms of infrastructure!

We need to put our house in order first!!! Doin this SWF thing right now is a bad economic policy!

You have shallow knowledge of the SWF. It is a guaranteed investment fund with returns being managed by those foreign banks and the beneficiaries are investors in our infrastructural development projects. What it is meant to achieve is to provide funds for interested investors in our country. What government has done by that is that rather than invest these funds by itself and achieve minimal results, government has shifted the risk of investment to private parties and has also obtained guarantee for the safety of the fund. And because it is an investment, government can still borrow against it.

I agree that the fund has intrinsic currency risk but everything in life is a risk. If you want to avoid risk, you can't make money or make progress. That is the simple truth.

X-factoria:


How was she exposed precisely? And by who? Those legislators who do not know their rights from their left? How many of them were accomplished finance experts before they got to NASS?

Who told you the west needs our money? Nigeria does not even make what Apple as a company makes in a year and you are here deceiving yourself that the west needs our savings to grow. You are one of those who will not get over all the nonsense conspiracies tagged "western dictation" or "IMF"!

Apparently you didn't watch the probe panel or you suffer from selective amnesia. Either way, it took ignorant folks from NASS to question your Madam to admit (live on TV) that she didn't know what she was talking about or simply that she cooked up figures. And what does Apple (an American company) have to do with Europe? And even then don't we also in this same country have individuals capable of paying off our debts? So you might as well say because we have such billionaires, Nigeria is rich. What's your point again?

X-factoria:


I didn't miss it. You are probably a layman in finance, so you won't understand the concept of the discounted cash flow that I said you should do. Simply, what I suggested to you is to estimate all future cash/earnings accruable to the FG for the next 5, 10, 20 yrs and determine how much those earnings would be worth today. Then compare the figure to how much those projects would cost today and you will see the gap that the loan should fund. Even if you scatter funding as you suggested, the funds available yearly would not extinguish all yearly demand for infrastructural spending.

Dude even if I am not into financial matters you can hardly bamboozle me with financial clap-trap. Every person with enough savvy in Math knows when you speak of forecasts/extrapolations you need a model. So what model are you going to use? You can provide us with one. For instance, will your model accurately predict whether or not our revenue from oil will increase or decrease; and accurately cater for all price flunctuations (meaning your model can even predict factors such as wars, strikes, disasters, etc)? How do you even model that over 5 years talk less of 20? Or maybe like madam just pull figures out of thin air?

PHIPEX: This is one of the major area of conflicts among great Economists all over the world. No prudent person will be happy to see his debt profile rising unnecessarily especially if it comes with high interest rate but on the other hand, there is no developing country/State that can do without debts finance. For instance, Lets compare Lagos State(one of the highest indebted States in Nigeria) and Anambra State(one of the least indebted states in Nigeria), while Lagos carries out most of its developmental projects through debt finance, Anambra State limits it's development strides to what the State can afford for now and it's left for us to decide who among the Governors is a better manager as far as development at the State level is concerned.

I seriously doubt if Nigeria can afford to limit its projects to the amount it has in its treasury especially now that we need to finance several critical social infrastructural projects. However, we should be more concerned with the prudent use of our borrowed funds.

I like ur analysis. Two things I wld like 2 say
1. Let us not compare Fed n State Govts because income sources are obviously different.
2. What have we done wt d recently recovered looted funds?

I think d FG should provide us wt reasonable explanations to d above

J12:

You are exaggerating and painting a gloomy picture of the whole scenario. Nothing is gonna happen.

wake up!


https://www.youtube.com/watch?v=Ldt064DWFBw

Nigeria is simply underfunded and overtly expensive.
Though there has to be a lot done to curb the cost of building and government, we simply can't sustain without borrowing. Simple.


Lagos has a 3 billion dollars budget for 20 million people. The government of Cameroon floated a 2013 budget of $6.5 billion with the same population as Lagos and Cameroon is extremely poor.

Unless nigerians are willing to pay double the tax they do today just to catch up to Cameroon, they must be willing to borrow.

Okonjo is right. Sanusi is being too idealistic.

you guys r spewing too much jargons here! Let's calculate cost of running this govt!
The pensioners(they nvr made a kobo for govt but got eerything subsidized in their time)
The cost of security(internal and external)
Infrastructure
Allocation for the 36 states
The cost of running the legislature
The bloated civilservant salaries(soon tobe pensioners.
The cost of paying fuel fraudsters so we can continue enjoyn subsidy.
Etc etc etc
All from one source which hasn't changed much since the 70s as compared to population growth n accruing expenditure eg pensions etc
We wanna eat our cakes n have it. When sanusi said they need to reduce the cost of govt ie downsize the govt ppl castigated him. The system has developed a legitimate medium of syphonin funds eg nnpc probes. Deregulation automatically implies capitalist takeover thus a reduction in govt participation n expenditure and less borrowing, but ofcos some ediots antagonised it. We need to downsize this govt

The issue with debt is a double-edged sword. My major concern with the debts we secure as a nation is that the projects for which they are secured are highly over-inflated. The interest may be low as 2% but the cost of the (over-inflated) projects cancels the benefits of the low interest.

However, Nigeria should learn from Greece and the USA :http://news.yahoo.com/us-national-debt-hits-16-trillion-republicans-blast-031301848.html (with a debt profile of about 16trillion dollars!!!!).