Editorial: Amaechi’s obnoxious threat over Chinese loans probe

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The ridiculous threat by Transportation Minister, Rotimi Amaechi, warning the House Committee on Treaties and Protocols to halt its probe of a $500 million loan from the Chinese government is cheap blackmail and certainly not in the public interest. Appearing during an investigative hearing of the committee on Wednesday, Amaechi warned lawmakers that probing loans the government is seeking for the completion of the Lagos-Ibadan and Kano rail projects could send the signal of a disagreement between the executive and the legislative arms of government and may lead to the cancelation of the loan. He suggested that the investigations should be shifted to December when the loan would have been acquired. In a constitution-anchored representative democracy, wherein the government derives its powers and authority from the sovereignty of the people, asking the peoples’ elected representatives to abdicate their responsibility of oversight over the executive arm of government is not only arrogant and disdainful; it is irresponsible and unacceptable.

 

Quite predictably, Amaechi’s remarks sparked outrage and attracted a hailstorm of condemnation from lawmakers; with the chairman of the committee, Nicholas Ossai (PDP-Delta) saying the committee is empowered to conduct oversight before, during or after loan facilities are acquired. Ossai insisted the committee will review all bilateral loan agreements to ensure Nigerians are not shortchanged. The other loan in contention is a $400 million loan from the Export-Import (Exim) Bank of China for Galaxy Backbone, the federal government’s information and communication technology (ICT) agency, in 2018. Ossai said there are clauses in the agreements where Nigeria’s sovereignty will be breached in case of default. Notably, Art. 8(1) of the loan agreement states inter alia that: “The borrower (Nigeria) hereby irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets.”

 

It is just as well that the committee has summoned Isa Pantami, Communications Minister; Zainab Ahmed, Finance Minister, and Patience Oniha, Director-General of the Debt Management Office (DMO), to appear before it on August 17. That action is in the public interest, as these loans seems to have become a slush fund for public officials despite all the noise about zero-tolerance for corruption. There is indeed no sense in borrowing huge amounts of money ostensibly to finance projects that end up being embezzled; leaving future generations of Nigerians to pick up the bill for uncompleted projects with no positive result for the nation. It is indeed unfortunate that Nigerians have been subjected to suffer the harrowing problems associated with out-of-controlled borrowing by the administration of President Muhammadu Buhari, which has more than doubled the nation’s national debt with virtually nothing to show on the ground in terms of infrastructural development. This is the crux of the matter.

 

The APC promised the people of Nigeria in its manifesto, that it would “prevent abuse of executive, legislative and public offices through greater accountability, transparency and strict enforcement of anti-corruption laws while strengthening the EFCC and the ICPC.” The non-completion syndrome plaguing the railway revamping project clearly underscores shoddiness in execution of development projects in the country. It is therefore not surprising that the railway revamping campaign has not recorded any major success over 20 years after the government began the multi-billion naira projects nationwide. The question is when would the railway revamping misadventure end for Nigerians to reap the benefits of a rejuvenated transportation sub-sector? No fewer than four ministers have handled this portfolio since 2000 when the idea of rehabilitating the comatose railway system was first floated, yet it has been the same old story from one administration to the other.

 

Besides the much publicized Abuja-Kaduna rail line which was inaugurated in July 2016 with much fanfare, what else is there to show for the billions spent on railway projects so far? Against the backdrop of the size of Africa’s most populous nation and its expansive railway transportation demand, the Abuja-Kaduna rail line is insignificant. Worse even, the Nigeria Railway Corporation (NRC) claims the Abuja-Kaduna rail line, which is not a modern system anyway, has been operating at a loss; generating over N100 million monthly, which it spends on fuel, security and on cleaners, while the federal government pays for track maintenance, staff salaries and others. This is not how to run a modern railway system. The true figures generated by the NRC from its operations on the Abuja-Kaduna axis have always been shrouded in secrecy. With this scenario, the repayment of the $500 million Chinese loan used to construct the rail tracks may take generations.

 

Despite the public grandstanding by Amaechi, the Lagos-Kano and Lagos-Ibadan railway lines have remained pipeline dreams. The Lagos-Ibadan axis was advertised before the 2019 election. Since then, there has been only one test-run that generated only heat without fire. This in itself is reason enough to proceed with an abundance of caution when it comes to borrowing money from China to finance these railway projects. Indeed, the charge has been laid that China’s loan strategy amounts to a debt trap for vulnerable African countries, fueling corruption and dictatorship – the second Silk Road. Nigerians have witnessed the breathtaking increase in the range and scope of Chinese influence in Nigeria, especially in the execution of infrastructure projects. President Buhari at the FOCAC summit said: “Nigeria had gained from China with the execution of $5 billion worth of infrastructure projects in the last three years of his administration.” He went further: “These vital infrastructure projects synchronize perfectly with our Economic Recovery and Growth Plan and some of the debts are self-liquidating and our country is able to repay loans as and when due in keeping with our policy of fiscal prudence and sound housekeeping.”

 

Perhaps, Buhari ought to be reminded that Nigerians are very familiar with the narrative of fiscal prudence that led to unsustainable foreign debt. While supportive of accessing foreign capital and expertise to provide critical and much needed infrastructure, Nigerians are alarmed that the country’s debt profile points to the potential mortgaging of the nation’s future. These unbridled loans are reckless and represent insensitivity to the feelings of the governed. They have been seen by many as a clear manifestation of the culture of impunity at the highest level of legislative governance by the 9th legislature, which has been rubber-stamping Buhari’s request for more borrowing. That Amaechi even has the temerity to tell lawmakers not to investigate these loans demonstrates the government’s contempt for Nigerians and its tolerance of a terribly low standard of probity. It is so sad that docile, complicit and rent-seeking dotards like Amaechi can afford to chide lawmakers for exercising oversight over an administration which has been borrowing and taking loans like chieftaincy titles.

 

Nigeria under President Buhari is currently on a borrowing spree. Indeed, the country’s growing public debt profile is scary. Official data show total debt grew from N12.118 trillion in May 2015, to N12.6 trillion in December 2015, N17.36 trillion in 2016, N21.725 trillion in 2017, N24.387 trillion in 2018 and N27.401 trillion in 2019. The figures skyrocketed to frightening levels in 2020 with the active connivance of the 9th legislature. In the early years of the Buhari administration, DMO figures indicate that Nigeria’s total debt increased by about 90% between December 2015 and March 2018, from about N12.6 trillion to about N22.71 trillion and total domestic and external debt stock of the federal and 36 state governments and Federal Capital Territory, stood at N22.38 trillion ($73.21 billion) in June 30, 2018. It can be recalled that this National Assembly approved a whooping N10.08 trillion or $28 billion loan for the Buhari Administration within a period of one year. With the latest public borrowings of N8.7 trillion and N5.51 trillion accompanying the approvals of the 2020 federal budget, the overall debt position has risen to about N41.6 trillion. This is from N12.118 trillion in May 2015 when Buhari took office. This implies that this administration has more than tripled Nigeria’s public debt in five years.

 

It does appear Nigeria is on the cusp of another emerging debt crisis and China’s role has been called into question with routine accusations of “debt-trap diplomacy” or in other words, intentionally miring Nigeria in an unsustainable debt-based relationship. One question begging for answer is whether China’s own economic and geostrategic interests are maximized when Nigeria is in distress? The answer is more likely to be affirmative and demands a lot of circumspection as the example of other African countries serves as a cautionary tale. When Zambia defaulted on its loans, China took full control of the Kenneth Kaunda international airport; Zambia’s main broadcasting corporation and the national power utility ZESCO. The Chinese also seized the airport in Mozambique. China is not a country you would wish to default on loans with. In Somalia, China has taken over the port of Mogadishu and all exclusive fishing rights; in Uganda, China has taken the Entebbe international airport; Kenya lost the port of Mombasa. In South Africa, China has taken over almost all power plants and the Exim bank now owns all farming rights in Kenya, Uganda, Somalia, Rwanda and South Sudan.

 

It took Nigeria over three decades to reach debt overhang of about $32 billion but this administration has borrowed almost the same amount just within five years. The most heart-rending aspect is that Amaechi’s argument is preposterous in its logic and dubious for an elite noted for looting public funds. The ruling elite in Nigeria simply do not have the discipline and integrity to manage loans even where willing creditors are available to take the Nigerian risk. Nations in debt peonage do contend with debilitating interest rate whether the loans are concessionary or otherwise. And the Chinese do seek their pound of flesh and recover their loans “by all means.” Amaechi should bear that in mind before telling lawmakers not to investigate loans that will land Nigeria on another round of debt slavery.