$6.9bn Chinese loan
President Muhammadu Buhari Last week sent a fresh request to the National Assembly
seeking approval for a $6.9 billion foreign loan, equivalent to N2.5
trillion. According to the President, the loan package was captured in
the 2016 - 2018 External Borrowing Rolling Plan, which implies its
association with the earlier request of $29 billion that failed to win
the approval of the National Assembly.
The President said the new loan request
is for the execution of key rail projects and the rehabilitation of the
country’s war ravaged North East region. Among the designated key rail
projects are the Coastal Railway Project (Lagos-Calabar segment),
Lagos-Kano Railway Modernisation Project (Lagos -Ibadan segment) and the
Lagos -Kano Modernisation Project (Kano- Kaduna Segment). In his letter
to the National Assembly, Buhari pressed for a speedy approval of the
loan request citing among other reasons, the competition for Chinese
loans among African countries that are to benefit on a first come first
served basis. China through the China Eximbank is providing the lion’s
share of 45.8 billion while the World Bank is providing the balance. Out
of the portion from the World Bank is an earlier approval of $575
million for rehabilitation of the North East and purchase of vaccines
for polio eradication efforts.
Much as the argument in President
Buhari’s appeal to the National Assembly may be compelling, the history
of the management of government debts, in particular foreign loans in
this country dictates the need for caution over approval of any fresh
ones. This situation is not helped by the dismal record of successive
administrations with respect to managing the country’s fiscal regime.
The present administration too handled its earlier loan request of $29bn
in a sloppy manner. The National Assembly had to insist on details for
which the loan was meant for, instead of the Executive Branch request to
approve a lump sum loan request. It proved to be difficult for the
Executive to answer that demand in a timely manner.
That is why public expectation from the
National Assembly with respect to this fresh loan request borders around
the provision of full disclosure and transparency in all transactions
surrounding it. Nigerians expect the scrutiny of the loan request by the
National Assembly to clarify the full gamut of specific derivables and
conditionalities to the last details. For in the absence of such details
the loan remains toxic as other earlier loans that the country is
presently hard pressed to resolve.
Beyond the public misgiving over the
ability of the administration to administer the debt whose repayment
terms may enslave Nigerians for decades after the tenure of the present
administration, lies the issue of doubt over the country’s prospects for
coming out of the present recession with so much dependence on foreign
loans that usually come with outsourcing of local jobs to the lending
countries. The Chinese who are seemingly benevolent in the eyes of this
administration are no fools and look forward to the strategic leverage
which their largesse will earn for them over the sovereignty and economy
of this country.
While resort to foreign loans may seem
incontestable to the managers of Nigeria’s economy, the fact that the
generality of the citizenry see things from a different perspective
should be taken into consideration. A pointer to this direction is the
Economic Recovery and Growth Plan (ERGP) which was recently launched by
the administration, and which has as its lynchpin the stimulation of
home grown productivity. The conditionalities attached to humongous
foreign loans with scant safety nets for local industries should give
our economic policy managers reason to pause and ponder, lest they
plunge us into another round of debt slavery.
POSTED BY:OPUOMONI PRIYE
DATE:05/11/2017
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