BusinessDay 28 Mar 2018
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12<br />
Wednesday <strong>28</strong> <strong>Mar</strong>ch <strong>2018</strong><br />
BUSINESS DAY<br />
C002D5556<br />
EDITORIAL<br />
PUBLISHER/CEO<br />
Frank Aigbogun<br />
EDITOR-IN-CHIEF<br />
Prof. Onwuchekwa Jemie<br />
EDITOR<br />
Anthony Osae-Brown<br />
DEPUTY EDITORS<br />
John Osadolor, Abuja<br />
Bill Okonedo<br />
NEWS EDITOR<br />
Patrick Atuanya<br />
EXECUTIVE DIRECTOR,<br />
SALES AND MARKETING<br />
Kola Garuba<br />
EXECUTIVE DIRECTOR, OPERATIONS<br />
Fabian Akagha<br />
EXECUTIVE DIRECTOR, DIGITAL SERVICES<br />
Oghenevwoke Ighure<br />
ADVERT MANAGER<br />
Adeola Ajewole<br />
MANAGER, SYSTEMS & CONTROL<br />
Emeka Ifeanyi<br />
HEAD OF SALES, CONFERENCES<br />
Rerhe Idonije<br />
SUBSCRIPTIONS MANAGER<br />
Patrick Ijegbai<br />
CIRCULATION MANAGER<br />
John Okpaire<br />
GM, BUSINESS DEVELOPMENT (North)<br />
Bashir Ibrahim Hassan<br />
GM, BUSINESS DEVELOPMENT (South)<br />
Ignatius Chukwu<br />
HEAD, HUMAN RESOURCES<br />
Adeola Obisesan<br />
Avoiding a looming debt trap<br />
In August 2016, Nigeria and<br />
China spoke of a planned<br />
loan of $20bn from China to<br />
Nigeria. It was during the visit<br />
of President Muhammadu<br />
Buhari to China where he held<br />
meetings with Chinese President Xi<br />
Jinping. There was a caveat, though.<br />
The Chinese gave stringent conditions.<br />
They wanted to name their<br />
officials into the management of<br />
the fund and demanded articulated<br />
repayment plans, including terms<br />
and conditions. Nigerian officials<br />
were to discuss and agree with the<br />
China Ministry of Commerce.<br />
The Federal Government announced<br />
through the Minister of<br />
National Planning, Udoma Udo<br />
Udoma, that the Federal Government<br />
had put in place a team of<br />
experts that was working with the<br />
Chinese on the modalities. The<br />
China Eximbank was to fund the<br />
loan. The Federal Government<br />
has not said much subsequently<br />
on this considerable loan expected<br />
from China. Chinese president Xi<br />
Jinping had affirmed at the China<br />
follow-up conference on the implementation<br />
of the follow-up actions<br />
on the Johannesburg Summit of the<br />
Forum on China-Africa Cooperation<br />
(FOCAC) the determination of<br />
the Chinese to maintain cordial and<br />
supportive relations with Africa.<br />
It was the first time the Chinese<br />
were playing hardball with Nigeria<br />
over credit. The matter has been on<br />
hold since.<br />
Since 2015, Nigeria has increased<br />
the embrace of the Chinese that the<br />
government of Olusegun Obasanjo<br />
commenced. Before the stalemate<br />
on the $20b loan, Nigeria in April<br />
2016 spoke of a $6bn infrastructure<br />
projects loan from the Chinese. It was<br />
also to include a currency swap deal.<br />
There were neither details of the size<br />
of the swap nor any information to<br />
date. Federal officials spoke of inviting<br />
the Chinese to provide funding for<br />
local industries.<br />
There was a loan of $4.5bn for<br />
mechanisation of agriculture in April<br />
2017. Agriculture Minister Chief Audu<br />
Ogbeh alongside Governor Abdulazeez<br />
Yari of Zamafara State spoke<br />
of the credit after briefing President<br />
Buhari on the outcome of their visit<br />
to China.<br />
Ogbeh stated, “We signed an<br />
agreement which engages all the<br />
states including the Federal Capital<br />
Territory for the procurement of<br />
strategic machinery for rural development<br />
and agriculture. The Chinese<br />
were willing to supply us these things<br />
on a long-term basis, 20 years credit<br />
on an interest rate of one percent per<br />
annum.”<br />
Ogbeh articulated the basis for<br />
the romance with China. He said, “Of<br />
all the partners we have, the Chinese<br />
have shown the willingness to see us<br />
out of our problems because about 30<br />
years ago they were in the same crisis.<br />
They see us as people in the same circumstances<br />
they were then, and they<br />
are willing to help us get out of it, and<br />
we appreciate it. The president does.”<br />
Channel noise around his visit<br />
beclouded assimilation and discussion<br />
of the message of immediate<br />
past American Secretary of State Mr<br />
Rex Tillerson. As he travelled to five<br />
African countries including Nigeria,<br />
Mr Tillerson raised the concerns of<br />
the United States on the increasing<br />
debt profile of African nations. He was<br />
worried about the fact that majority<br />
of the loans were with China and the<br />
terms of engagement were not clear.<br />
The unfortunate injection of geopolitics<br />
in Mr Tillerson’s concern<br />
robbed it of its credibility, urgency and<br />
importance. The situation is doubly<br />
regrettable as the sack of the foreign<br />
secretary from his elevated position on<br />
his way back from Nigeria prevented a<br />
proper engagement of the issue.<br />
Citizens need to pay closer attention<br />
to the debt matter and task the<br />
Government over it.<br />
The Debt Management Office<br />
recently reported a 79.25 percent<br />
increment in the nation’s debt stock<br />
within 330 months, moving up from<br />
N22.2tn in June 2015 to N21.73tn in<br />
December 2017. External debt rose<br />
to 26.64 percent of the portfolio from<br />
its previous share of 20.04 percent.<br />
The reliefs are that the debt manager<br />
assures that the loans are still<br />
within manageable limits while the<br />
external component rose by deliberate<br />
action of the restructuring of the<br />
debt portfolio. DMO chose to increase<br />
our foreign against domestic debts to<br />
reduce exposure to the high-interest<br />
rates of local liabilities.<br />
The reassurances of the Debt Management<br />
Office would ordinarily be<br />
comforting but for history. Nigeria got<br />
into a debt bind in the 1980s despite<br />
similar assurances. It was not until<br />
the Obasanjo presidency that we were<br />
able to negotiate a costly reprieve to<br />
pay off the debts.<br />
There are claims and counterclaims<br />
in the states about the deployment<br />
of non-utilisation of borrowed<br />
funds, many of them from China. We<br />
are not keeping to the terms of many<br />
of the projects. The Lagos light rail<br />
project has overshot both its time<br />
and cost, for instance, compared to a<br />
similar project in Addis Ababa, Ethiopia<br />
that cost less and covered a longer<br />
distance. The Chinese funded both.<br />
We call for a proper accounting<br />
for all the loans Nigeria has borrowed<br />
from China. How much is at stake?<br />
What projects served as justification?<br />
What is the status of those projects?<br />
More importantly, what were the<br />
terms of the loans? This accounting<br />
should cover Federal and State Government<br />
loans. A national conversation<br />
on the loans should follow. We<br />
must avoid going down the same ugly<br />
road of the 1980s.<br />
EDITORIAL ADVISORY BOARD<br />
Dick Kramer - Chairman<br />
Imo Itsueli<br />
Mohammed Hayatudeen<br />
Albert Alos<br />
Funke Osibodu<br />
Afolabi Oladele<br />
Dayo Lawuyi<br />
Vincent Maduka<br />
Wole Obayomi<br />
Maneesh Garg<br />
Keith Richards<br />
Opeyemi Agbaje<br />
Amina Oyagbola<br />
Bolanle Onagoruwa<br />
Fola Laoye<br />
Chuka Mordi<br />
Sim Shagaya<br />
Mezuo Nwuneli<br />
Emeka Emuwa<br />
Charles Anudu<br />
Tunji Adegbesan<br />
Eyo Ekpo<br />
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