By joshua 
*Says petrol price will reduce
Ayo Ola
A former Kwara State governorship aspirant, Engineer Pastor Sunday Adebayo Babalola, has said he is opposed to the federal government accessing $800m loan from the World Bank for distribution to the poor.
The former Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, had said the $800m loan will be part of post-subsidy palliative plans which would be distributed in cash transfers to 50 million vulnerable Nigerians in 10 million households.
Babalola, a retired deputy Director of the now-defunct Department of Petroleum Resources, (DPR); said such a plan will create room for corruption and that many of the poor people will end up not getting the fund.
He also said the money which may translate to about N5,000 or N7,500 was too meagre to be used for any business venture.
He added that with the current high inflation, it will also not serve any tangible needs for those who may receive it.
Babalola said, “We should ask certain questions. What are the conditions for this offer from the World Bank? Once you see the conditions, we have settled one. And if the conditions are tenable to us, we have settled the second decision. Remember the days of the Structural Adjustment Programme (SAP), they gave the government loan on the condition that they must do SAP, which brought the naira to be devalued. The devaluation of the naira to the level it is today started at that time.
“After settling the issues for the conditions of the World Bank loan, you now come to the issue of what the money will be used for. You can not just collect money and start thinking of what you will use it for. If I am going to approach a bank to give me a loan, I already know what I am going to use that money for. When I collect the money before thinking or knowing what I am going to use it for, that money will be wasted.
“You can not do without taking loans but let us know the conditions that the loan is offered for. Let us be sure that those conditions are not going to put more hardship on the country or on the people. Let us know what we are going to do with the money and pluck the money directly into those things and not divert the money at all, and some big people embezzle the money because they are in the position.”
He added, “How does giving N5,000 to 10 million households for six months as a palliative for removing the petrol subsidy? make any sense? You give N5,000! N5,000 is how much to dollars? At the Central Bank of Nigeria’s rate of N450/$1, it is less than $12. At the black market rate of about N740/$1, it is less than $7. You see we are pursuing what we should not be pursuing. You collect such money and you will not be giving people N5,000 each for what? To do what? What business can you do with N5,000 in Nigeria now? That is why I said we should know what they will use the money for before they collect it ooh!!
“If the $800m from the World Bank they want to collect is to be given to as peanut to the poor, I do not support it. It does not make any sense in reality. How will that alleviate poverty? Are they going to divide the money among the poor? If they are sharing it, the story of this country is the person who will be sharing it will take three-quarters of it. So they should not take us through that path. They should leave thing the way it is now and everything will take good course in due time. Moreover, the so-called percentage of poor people were the ones that were bearing the brunt of the petrol subsidy. They live in far-flung places like villages. In the village where I grew up, I do not know when they ever sold petrol at a controlled price. It has not happened in the last 20 years. And those people are already used to it. When you were buying it for N145 per litre in Lagos, we were buying it for N300 and more there. So which poverty are they alleviating? They should not just collect any loan for this purpose. They should not.”
He stated that there was nothing fundamentally wrong with accessing a loan if it is for production rather than consumption. He said loans should be collected for projects that can generate money to repay the loan.
Babalola said, “It can be an argument for and against. If you want to use your own money to do business, if you are going to use it to do something concrete that we all see, I do not think it is a bad idea to collect the loan. But if you are just going to collect and pay people N5,000 and the remaining ones, they share it among themselves, and life continues, that is unacceptable. It is a sad situation. Sincerely, nobody does business with their own money. People who use only their money for business may not expand. Taking a loan is not bad but the loan itself should be able to pay back by itself. When you are taking a loan and you are distributing it where you can not get the capital back not to talk of the interest, what are we talking about? How many people will you give N5,000 today in Nigeria who will use it for any business? What business will they use N5,000 to do? But if you use it for something that will help people, that is acceptable. There are many things that you can do that will help people and enhance their well-being.
“The World Bank Country Director is right in saying that the facility’s rate is considerate compared to the domestic money market and Eurobond. That Nigeria already has a N10.78trn budget deficit and the nation’s revenue is low, so taking loans to service the budget is inevitable. That the World Bank facility rate is more reasonable.
“I said before that you need money to be able to make money. If they are going to use the loan right, nothing is wrong in taking any loan. But we are not even sure that they will use the money for something that will pay back the money. FG said part of the money will be used to distribute N5,000 to the vulnerable poor. How does N5,000 to individuals correct and ameliorate deficits in individuals? It does not make any sense. If they are going to use the money to create businesses, to teach people how to fish instead of them collecting fish, then it is going to be okay. There is no country that is not indebted in today’s world including the Almighty United States of America. They are indebted but what did they choose to use their money to do? Politicians all over the world are looking for an easy way of pacifying the people. For instance, giving them N5,000 every month. But when they finish the N5,000 what will happen? Is N5,000 equivalent to employment that will give somebody N100,000 or N50,000 monthly? The N5.000 with our exchange rate is next to nothing.”