This $6.9bn Chinese loan
Last week President Muhammadu Buhari 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.