$12bn cash payment to service foreign debt in 2005 was a wrong move – Fashola

Nigeria’s Works and Housing Minister, Babatunde Fashola, has criticized the decision of the 2005 Olusegun Obasanjo led government to pay $12 billion in cash to Nigeria’s creditors, out of the $30 billion sovereign debt in 2005.

According to Fashola as at the time tackling infrastructure was the smarter move and he would have vehemently opposed the action if he was a member of the Federal Executive Council then. He argued that such a huge chunk of cash was better channelled into strategic investment in infrastructure, which would have been used to repay the debt later on.

Fashola, who spoke at a town hall meeting organised by Business Hallmark themed; “Nigeria’s infrastructure revolution; Road to a New Future”, maintained that tackling infrastructure decay was a higher priority than the repayment of the nation’s debt when the decision was taken.

“Our government in 2005 as a matter of policy decided to go and pay debt of $12 billion cash but our house was in very dire need. That was a policy choice. I would have opposed that decision if I was in government because we needed to invest urgently at that time.” Fashola, said at a town hall meeting organized by Business Hallmark themed; “Nigeria’s infrastructure revolution; Road to a New Future”

“If we had invested, the results of those investments would have earned us more revenues, much more income and would put us in a better position to service those debts. Fast forward to 2015, after paying $12 billion, we are now owing $32 billion.

“We look for the resources, invest them in infrastructure and use the returns to pay back this loan.”

The Minister, however, said that the Buhari administration has taken infrastructure to be a priority and that the government was currently implementing 896 road and bridges contracts covering over 13,000km in all the states of the federation.