Debt Relief, Implementation of NEEDS, and the Attainment of the Millennium Development Goals (MDGs).

The link between debt-relief-induced resource availability for the improvement of economic and social infrastructure such as access to health, education and water on one hand and the attainment of the Millennium Development Goals (MDGs) in 2015 on the other is a natural one.

The MDGs are:
1. To eradicate extreme poverty and hunger
2. To achieve universal primary education
3. To promote gender equality and empower women
4. To reduce child mortality
5. To improve maternal health
6. To combat HIV/AIDS, malaria and other infectious diseases
7. To ensure environmental sustainability; and
8. To develop a global partnership for development

The National Economic Empowerment and Development Strategy (NEEDS) was instituted by the government in March 2004 as a working framework for the reform of the Nigerian socio-political and economic structure. Its aims are to promote macroeconomic stability through transparent, rule-based and sound fiscal, monetary and foreign exchange policies, improve public sector efficiency and transparency and promote private sector development by upgrading infrastructure, privatize hitherto unviable state enterprises, and to reform the financial sector.

As indicated earlier Nigeria’s case for debt relief was strengthened by the introduction of NEEDS. Since its inception, NEEDS implementation has been monitored quarterly by the IMF on the invitation of the government in order to give the international community an objective assessment. Progress recorded under NEEDS in the areas of anti-corruption, due process, transparency, and prudence in overall government fiscal activities has been instrumental to a reversal of the nation’s image problems abroad. Under NEEDS, reforms are being implemented to mobilize additional domestic resources and improve the efficiency of public spending to achieve the MDGs.

As part of its efforts in helping Nigeria achieve the MDGs, the World Bank in December 2004, undertook an assessment of Nigeria’s financing needs and options for achieving the MDGs. In a report titled “Nigeria’s opportunity of a generation: meeting the MDGs, reducing indebtedness” the Bank observed that Nigeria “faces three challenges: how to use oil and gas resources better; how to rejuvenate the non-oil economy and ensure its sustained growth; and how to finance the MDGs while lowering sovereign indebtedness.” The report further indicated that even with outstanding future economic performance and sustained good luck in the form of high oil prices, it was going to be virtually impossible for Nigeria to meet the MDGs and simultaneously lower its indebtedness to manageable levels. In an ominous tone, the report warned that the possible event of an oil shock could quickly trigger a debt and macroeconomic crisis that could deal a setback to the gains of current reforms.

Although an estimated US$3bn in annual debt relief and new aid was, according to that report, required to fully implement NEEDS and put Nigeria on course to achieve the MDGs, the report did not at that material time, envisage any likelihood of a debt relief by Nigeria’s major creditors. In fact it unequivocally stated that “unfortunately, there are no avenues for Nigeria to reduce its external debt through internationally agreed frameworks“. That Nigeria is now in the process of reducing its external debt by a whopping US$18 billion, is indeed the real opportunity of a generation. Not supporting the debt relief efforts will mean in very simple terms, a continuation of huge debt servicing and this will put on hold or even reverse the minimal gains already made towards MDGs from ongoing public sector reforms.

The debt relief that Nigeria is obtaining is a key component of the challenge of meeting the MDGs in Nigeria. One of the key benefits is the elimination of unsustainable annual debt service payments to external creditors. The additional US$1 billion that the FGN will save every year for the next 20 or more years will now be spent on providing primary education, primary health care, rural infrastructure, electrification, water supply and other key poverty reducing sectors. For this reason, the Presidency has set up a new office, the MDG office, to ensure procedures are put in place to effectively use the proceeds of debt relief for these purposes.