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If I borrow, I'm accountable to pay it back. Thus I am very careful when I take debt
If I am a CEO, and I borrow, it affects my Company profitability, thus I am responsible
If I borrow as an elected official, I am only responsible for a maximum of 8 years. important to note
If I am a CEO, and I borrow, it affects my Company profitability, thus I am responsible
If I borrow as an elected official, I am only responsible for a maximum of 8 years. important to note
Few nations do not borrow
Debt is simply upfront consumption. When you borrow, you are essentially saying you want to use future revenues today
Hence you create a vacuum of revenue in the future. The rationale is to borrow, create wealth today, cover future vacuum
Debt is simply upfront consumption. When you borrow, you are essentially saying you want to use future revenues today
Hence you create a vacuum of revenue in the future. The rationale is to borrow, create wealth today, cover future vacuum
Thus If you borrow today and invest in a non-income-generating activity, you leave that future income vacuum intact.
Hence the term ROI seeks to measure how much return any investment will accrue to cover future obligations
Hence the term ROI seeks to measure how much return any investment will accrue to cover future obligations
Let's get specific
If I create a scale of preference of 10 projects in Nigeria to borrow to fund....what will be my criteria?
If I create a scale of preference of 10 projects in Nigeria to borrow to fund....what will be my criteria?
Only 1....ability to cover that future income vacuum.
I simply rank projects in that order. eg
1. Coastal railway
2. Refinery
3. Tolled 4th Mainland bridge
4..etc
I simply rank projects in that order. eg
1. Coastal railway
2. Refinery
3. Tolled 4th Mainland bridge
4..etc
What about borrowing for Schools and Hospitals?
I won't borrow for that...why? because I earn taxes. i will deploy 100% of my taxes to cover Social Services and Development Goals because those are "non income" generating projects...aka zero-coupon investments.
I won't borrow for that...why? because I earn taxes. i will deploy 100% of my taxes to cover Social Services and Development Goals because those are "non income" generating projects...aka zero-coupon investments.
So where the project can fund itself and repay its future income vacuum, I borrow and lock in revenues to a sinking fund to repay.
Where the projects will not generate "returns" that are directly financial eg investing in a DNA lab, I use my tax revenues.
Simple
Where the projects will not generate "returns" that are directly financial eg investing in a DNA lab, I use my tax revenues.
Simple
Hence, apply this rationale to the list of projects proposed under the $30b loan
Will a Coastal Railway repay its future income vacuum? Yes
Will a digitized NTA repay its future income vacuum? we dont know..we dont even know anyone will watch TV in 20 years. Technology evolves
Will a Coastal Railway repay its future income vacuum? Yes
Will a digitized NTA repay its future income vacuum? we dont know..we dont even know anyone will watch TV in 20 years. Technology evolves
Thus would it be a great idea to only fund projects that can repay by that project itself?
Can we transfer that $500m from NTA to fund an inland port in Lokoja?
Trade and moving goods by ships on the water will never change.
I think it's worth a relook
Can we transfer that $500m from NTA to fund an inland port in Lokoja?
Trade and moving goods by ships on the water will never change.
I think it's worth a relook
Remember, when elected officials borrow, they don't repay...their children who take over power will repay that income vacuum.
Let's not burden our kids with loans that are going to be repaid from taxes.
Let's not burden our kids with loans that are going to be repaid from taxes.
Originally written Dec 2019
