Nigeria’s mounting debt is at the center of the storm rocking the nation at the moment. The International Monetary Fund (IMF) kicked up the storm in 2019 when it warned that Nigeria’s debt was no longer sustainable. The IMF warning was followed by a similar red flag on debt from the World Bank.
Ironically even after warning that Nigeria’s debt was no longer sustainable, the IMF was the first to rush to Nigeria’s aid with a jumbo loan of $3.4 billion in April 2020 when COVID-19 pandemic forced oil price below $20.
Even the World Bank that joined the IMF to warn about Nigeria’s mounting debts is packaging another jumbo loan to tackle Nigeria’s eternal darkness. Those who raised the red flag about Nigeria’s unsustainable debts are only helping it to accumulate more debts.
The warnings from the IMF and World Bank has kicked up intensive domestic protests over the debt crisis.
Last week a band of youth took to the streets in various parts of the country to among other things demand an end to the acquisition of foreign debts.
The House of Representatives is particular about Nigeria’s indebtedness to China. While western nations have tactically declared Nigeria a pariah state in terms of advancing soft loans to it, the Chinese are very willing to fund Nigeria’s infrastructure deficit for obvious reasons.
China knows Nigeria as a high risk borrower. However, like Tony Blair, Britain’s onetime prime minister once noted, China is doing in Africa, what Britain did about 150 years ago. China is clandestinely recolonizing Africa with massive debts at treacherous repayment terms.
The Chinese hold the debtor nations hostage by listing strategic infrastructure as collaterals that would be seized in the event of default.
The rulers of Zambia are writhing in pains as the Chinese are poised to take the nation’s power monopoly as collateral for a debt that went awry.
The Chinese are not interested in politically colonizing defaulting debtor African nations.
The trick is to list strategic infrastructure as collateral for the loans and acquire them in the event of default. That gives the creditor absolute control of the debtor’s economy. It is more grievous than colonisation.
That is one of the reasons China is generously advancing loans to impoverished African nations ruled by corrupt politicians.
Job creation for its teeming population at home is another reason why the Chinese are wooing impoverished African nations with infrastructure development loans as bait.
The projects funded with loans from China are executed by Chinese firms. They ferry in their technicians and unskilled labourers in the guise of experts and create jobs for them at 1, 000 per cent the amount they would earn at home.
The federal government is not batting an eyelid over Nigeria’s debts. It has obtained approval from a rubber stamp senate to raise a record $22 billion for infrastructure development.
Two weeks ago, Rotimi Amechi, Nigeria’s minister of transportation asked the House of Representatives to give government the option for funding infrastructure development if the lawmakers are not comfortable with Chinese loans.
The house was silent on the options to the Chinese loans.
The minster warned that the probe initiated by the house was sending wrong signals to Beijing and that it might inhibit the flow of funds for on-going projects and the ones still being negotiated.
Amechi’s fears are not well founded. The Chinese are the major beneficiaries from their treacherous loans to Nigeria. They cannot cancel them.
The current storm over Nigeria’s debt is not really about how much Nigeria owes but about what is done with the debts. By world standards, Nigeria’s debt is very modest. It is a scant 27 per cent of its gross domestic product (GDP). The threshold in emerging markets is around 53 per cent of GDP.
The only problem with Nigeria’s debt is the high cost of servicing. That problem emanates from the country’s abysmally low revenue which is inflicted by endemic corruption.
China has this fact but it is not deterred by it. It considers Nigeria credit worthy even if it has to service its debt with 105 per cent of its revenue.
Nigerians on the other hand are worried about what the federal government does with the mounting debts. There is practically nothing to show for it.
A large chunk of the $500 million raised from China to refurbish some of the airports when Stellar Odua was minister of aviation ended up buying armoured BMW limousines for government officials at twice the showroom prices. The airports are still dilapidated.
The $400 million raised to fund the provision of close circuit televisions (CCTV) in Abuja simply disappeared into thin air.
The railway rehabilitation project is agonisingly slow. No one knows when the Lagos-Ibadan leg of the project would be completed.
The House of Representatives is probably more worried about the cost of the projects than the terms of repayment. Everyone is worried about how money is spent in Nigeria. The treasury looting is horrendous.
Developments in the Niger Delta Development Commission (NDDC) point to unfettered looting of the nation’s treasury by government officials. The interim management of the commission spent N83.2 billion in six months and could not explain what it did with the money.
Even the Economic and Financial Crimes Commission (EFCC) is no longer going to equity with clean hands. The probe of the commission tends to suggest that loots recovered from corrupt politicians were being re-looted. With the level of sleaze in the anti-graft agency, one wonders where righteous men could be found in Nigeria if the thief catchers themselves are thieves.
Everyone is worried that a huge chunk of the mountain of debts the federal government is chalking up would end up in the pockets of government officials. That is why Lagos-Abeokuta, Lagos-Badagry and other federal roads remain impassable. The fear of diversion is responsible for the Babel of voices demanding an embargo on loans acquisition.
The complaint emanates from dearth of confidence on government. It is not really about how much is owed. The complaints would disappear when government is able to point to projects executed with the mountain of debts chalked up in the last five years.