The Director-General of the Debt Management Office (DMO), Dr. Mansur Mukhtar, has described as “disappointing,” the report of the Transparency International (TI), which ranked Nigeria as the world third most corrupt nation, saying that the report would make it more difficult for the nation to secure debt relief from her creditors.
Speaking in an interview in Abuja at the weekend, Dr. Mukhtar said it would now take him and his team at the DMO more efforts to convince Nigeria’s creditors to grant debt relief at the face of the report, which he said would negatively impact on Nigeria’s image in the comity of nations.
His words, “I must say that I am very disappointed at the report and I think that the methodology Ais mainly backward looking. It attaches a lot of importance to past history of a country and does not take into account sufficient evidence of current initiatives. It takes a while for these to manifest.
“This is an issue I can confirm to you that even in T I itself, there has been some debates about the subject and even some of the initiators of the body are now asking for the review of some of its methodology.
“To the extent that government is making concerted efforts to address this problem. We have come a long way. To understand that corruption, mismanagement is something that has been going on for several years before this government came into power and it becomes basic and endemic to the system.
“It has become a structural problem. It has become systemic, if you like. So even if you have new instit-utions in place, it will take a while for things to start happening. This is a thing that affects our value system. But I think that the efforts that are being made, the institutions that are being put in place, the legislation, the procedures, the Due Process, for example, the EFCC, the ICPC, although I know many people are saying it is not what it should be yet.
“It is like introducing a foreign body in your system. The first reaction is rejection. It takes a while to acclimatize and adapt to the situation. Given what has happened, the extent of decay, it is not really going to be an easy task to transform Nigeria but the signal is clear-that things are happening. The budget, the reforms, the public expenditure management and the transparency that have taken place in the last year.
“For the first time, we had a budget published and the details available to every-body and we have a monitoring and tracking system and for the first time, gove-rnment has not gone to Ways and Means to get money to spend in terms of deficit. And we have managed to save excess crude oil money and it is there for everyone to see. Come on, these are signif-icant and symbolic issues that cannot be ignored in the context of Nigeria. Anybody who says we are not doing anything, no changes in Nigeria, I think it is an unfair characterization”.
The D-G also explained that the second federal gove-rnment bond floatation wh-ich should have been unde-rtaken in the second quarter of the year was shelved due to the N25 billion capital base requirement of deposit money for banks set by the Central Bank of Nigeria.
According to him, consi-dering the fact that banks were the highest investors in the 2003 exercise, it was considered unwise to go to the capital market at a time when the banks where strug-gling to raise funds from the capital market to meet the new minimum capital requirement.
“There were concerns that at the time, it was not the best time to float federal government’s bonds in the market. Many banks felt that their boards would not be able to consider this-to the extent that they were major subscribers (in the first exercise last year).
“The other consideration was that some of them would be going back to the market to raise funds and we had to be cautious to make sure we didn’t go and crowd out the market or heat up the system in terms of interest rates because the more demand you have there, the more it reflects in terms of how much the market rate would be.
“Having said that, I would like to make it clear that this is not an agenda that we are downgrading or aban-doning. We will continue to explore ways to make government bonds major securities in the capital market. The other point I would like to explain on why we did not return to the market at the time was that there was no compelling need because government was able to keep its deficit low and was loo-king at bridging the deficit with funds from other sources, such as the looted funds.
“It is still however in our work programme to return to the capital market. Even if we are not going to raise money to finance deficit, we feel that the government maintains a presence in the market even if it is for a small amount, so that we can foster the development of the capital market. You know the countries that have succeeded in developing their capital markets and allowed the private sector to take over the fina-ncing, the government had had to play a lead role by going in first and testing the market, showing this works and setting benchmarks for other issuers of bonds.”
Dr. Mukhtar gave an insight into the fate of local cont-ractors, some of whom have had their money tied down by the federal government as far back as General Ibrahim Babangida’s administration, as he said that some of the debts would have to be re-verified and negotiated tow-ards securing discounts. “One strategy which the government is considering is that once we have the verific-ation/reconciliation comp-leted, to identify some of the small creditors that could be paid off. For the big creditors, we will try to sit around the table to negotiate some arrangements towards disco-unting some of these debts and then to issue securitised instruments so that they become liquid trade instruments and then those that really want to go and get some liquidity can go and trade the securities.
“This would be done so that the maturities of the securities could match with resource availability and given the amount involved, we could be talking of tenures of anywhere from five years upwards. We could have different tenures and ask them to take a mix of them. But this is something that has to be worked out and obviously, you have to sit around the table with the contractors to make them understand that this is the most realistic solution.
“We feel we have to resolve this in order to restore the confidence of the private sector in government that you would work and get paid. Two, it is also important in order to re-build the financial risk in the economy. We know that a lot of money was taken from the banking system and is causing serious problems for the banks in terms of the qualities of their portfolios.
“We also know that we have to get this settled quickly because many of these businesses, especially the construction firms, also employ much labour and they drive the growth processes and linkages in other parts of the economy. So we want to make sure that they continue to operate. Instead of folding up but to continue to recruit people,” he said.
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