Nigerian President Muhammadu Buhari. FILE PHOTO | SUNDAY AGHAEZE | AFP
Abuja
Nigerian
authorities have come under persistent fire over their management of
loans borrowed from China, which critics argue may burden the public for
the coming years.
While Abuja officially
says it borrows after planning, critics say China has been lumping
Nigeria with deep debt to target the west African country’s assets in
case of default in the future.
It started on
May 19, this year after Dr Bongo Adi, the Director of Centre for
Infrastructure Policy Regulation and Advancement (CIPRA) at the Lagos
Business School, warned that Nigieria “Nigeria lacks accountability,
transparency, and responsibility to refund its loans.”
Then
Mr Atiku Abubakar, Nigeria’s two-time Vice-President and later main
opposition to President Muhammadu Buhari in 2019 presidential election,
lashed the government for redirecting what he argued was lean resources
to debt servicing, a worrisome situation that the country may slide into
trouble waters of its creditors.
The fears
also prompted the House of Representatives to direct its committees to
investigate all China-Nigeria loan agreements from 2000 to date.
The intention is to ascertain the viability of
the facilities, the legislatve body said, and then regularise and have
them renengotiated, especially as the country is expected to slide into
recession this year due to effects of coronavirus.
Mr
Ben Igbakpa, a legislator, moved a motion on July 20, 2020 to review
and renegotiate existing China-Nigeria loan agreements in other to avert
falling into the pranks of China.
Although
there seems to be cause for concern as Nigeria’s economy is becoming
highly dominated by the China, officials say the status of the loans
from China, though high, is still within Nigeria’s ability to repay.
According
to the Debt Management Office (DMO), a government’s agency in-charge of
managing the nation’s loans, as at July 2, 2020, the total loan
agreement with China stood at $3.121 billion, although the Asian country
has disbursed $3.31250 billion. That represents 3.94 percent of
Nigeria’s domestic and external debt of $79.3 billion.
DMO said China accounts for 11 percent of Nigeria’s external debt. But China is still the biggest bilateral lender in Nigeria, with most loans being concessional.
Besides
China, Nigeria is indebted to the International Development Association
(IDA) to the tune of $9.68 billion, African Development Bank (AfDB),
$1.3 billion, and $10.86 billion from Eurobonds.
According to records, Nigeria has paid principal of $192.21 million leaving an outstanding of $3.121.29 billion which is repayable to China at most for 20 years with interest of $269.6 million.
Officials
say are no reasons to panic as the Chinese loans are properly utilised
for critical projects, many of which had been completed and others in
advanced stages of completion.
The projects
include the public security communication system, Idu-Kaduna railway
modernisation which had been completed as well as the ongoing Abuja
light rail project.
Others are ICT
Infrastructure Backbone, airport terminal expansion in Abuja, Kano, Port
Harcourt and Lagos, Zungeru Hydroelectric power project, 40 parboiled
rice processing plants, Lagos –Ibadan railway modernisation project and
upgrading of Abuja-Keffi-Makurdi road.
The
loans are also being used to service the supply of rolling stocks and
depot equipment for Abuja light rail project as well as greater Abuja
water supply project.
DMO reported that
borrowing from China is based on needs, and subject to the receipt of
requisite approvals, to finance capital projects, in order to promote
economic growth and development, as well as, job creation.
The
biggest question, however, is whether China’s loans agreements can be
available for scrutiny or if their conditionality can be listed in
public. Beijing often cites parties’ confidentiality to decline
revelations.
Nigeria though says it has
alternative access to credit such as the World Bank and the African
Development Bank, as well as, bilateral loans from various countries
such as France, Germany, Japan, India, and China.
“Prudent
management of the public debt implies that, the government should avail
[sic] itself of the opportunity to access concessional loans which
deliver twin benefits of being more cost efficient and supporting
infrastructural development,” DMO said in a bulletin recently.
“Loans
from Concessional Lenders have limits in terms of the amounts that they
can provide to each country. This makes it necessary for Nigeria to
have several sources for accessing concessional capital to increase the
total amount available and also, to avoid undue dependence on only a few
sources of concessional funds.’’
Still, Abuja says it has a perennial infrastructure deficit that only China has tried to plug.
Nigerian government officials have recently embarked on fighting off probes into debt management.
Transport
minister Rotimi Amechi warned on July 28 that investigations into loans
taken by the government could send wrong signal to the lenders.
Ameachi
made the observation at an investigative hearing organised by the House
of Representatives Committee on Treaties, Protocols and Agreements in
Abuja. He said that the investigation could cause foreign partners to
withdraw such loan facilities which have negative effect on Nigeria’s
infrastructural development.
Minister of
Information and Culture, Mr Lai Mohammed, also replied critics, that
Nigeria is confidently meeting its loan obligations.
The
minister explained that the debt service provisions is made in the
annual budgets including principal repayments, interest payments and all
other applicable charges.
He said based on
budgetary provision and the payments, the issue of creditors foreclosing
on Nigeria as predicted by naysayers, including Abubakar, did not
arise.
No comments :
Post a Comment