Chinese loans: NASS should apologize to Nigerians - Dr. Uba

A non-governmental organisation, the Amaka Chiwuike-Uba Foundation (ACUF) has demanded accountability from the National Assembly, with regards to the public outcry against the loan obtained by the Federal Government of Nigeria from China.

In a statement to the media on Tuesday, which was signed by the Board Chairman, ACUF, Dr. Chiwuike Uba, ACUF revealed that many African countries rush into signing agreements with China without scrutinizing or studying the terms in details, especially as the leaders already condition their minds to loot or siphon part of the loans “which ends up benefiting the Chinese government”.

Uba faulted the culpability of the National Assembly that seems to be also in haste to approve loans, without exercising its oversight functions of questioning the terms of the agreement.

Furthermore, Uba demanded that the National Assembly must tender an unalloyed apology to Nigerians for misleading them and failing to live up to expectations, even as he that, going forward, the legislature must sit up in order not to plunge the country into more debt and grief.

The statement reads: “Evidently, the ongoing investigation by the National Assembly over the Chinese loans has the capacity to unveil hidden fraudulent clauses in the loan agreements signed by the Nigerian government. Recall that the international community had, in the past, accused China of applying some fraudulent, irregular, and underhand pressures in the structure of their loan agreements with countries, especially African countries; due to weak and corrupt leadership.

“Clauses that give the Chinese an irrevocable power to acquire and run the projects funded through their loans, peradventure the country is unable to repay the loans, are fraudulently inserted in the agreements.

“This situation is made worse by the use of companies allegedly blacklisted by the World Bank for corruption by the Chinese government for infrastructure projects in Africa. Unfortunately, while these agreements are usually not made public, our leaders rarely take time to read/study the agreements before signing, due to African leaders’ weakness, lack of credibility to pay back the loans, and the craving to siphon/loot the loans for private purposes.

“Agreed that the Chinese government may be averse to corrupt practices, as we have witnessed in the way they treat her citizens found to be corrupt, they treat their loans strictly as business and political instrument for control; hence, apply all manner of underhand pressures to achieve their goals.”

He added: “Obviously, the statement credited to Rotimi Amaechi, Minister of Transport, over the loan, is a direct plot to stop the national assembly from revealing any corruption involving the Nigerian government and other hidden grand agendas in contracting some of the loans. Most especially, when it has been proven that most of the Chinese loans lack transparency and are difficult to be captured as well measured as part of international capital flows in countries. It may also reveal that not all Chinese loans are completely infrastructure finance-based, as bandied by the government.

“The interest rates on Chinese loans are based on market terms, very close to private capital market rates, and these loans are also backed by collaterals. In most cases, the loans are not only secured on the national assets, but on natural resources and revenues. In this case, Nigeria may have, as part of the repayment terms, bound to be repaying the loans from concessional loans from the World Bank and the IMF.

“It is erroneous for Nigerians to assume that the executive is accumulating debts without carrying the legislature along. The national government and sub-national government cannot contract any loan without the approval of the legislature. Nevertheless, it does appear that either the national assembly lacks the capacity to scrutinize the loan approval request or they are uninterested in the short, medium, and long term implications of their decisions.

“It is disheartening to see the legislature approve external loans running into billions of dollars in a day. It raises the question of credibility, capacity, transparency, responsiveness, and accountability. Were such requests properly studied, right questions asked and independent cost-benefit analysis carried out to determine the costs and benefits of the loan approved?”
Uba further said: “For the avoidance of doubt, the Constitution vests the National Assembly with the power to make laws with respect to any matter that concerns “borrowing of amounts of money within or outside Nigeria for the purposes of the Federation or of any State” and “public debt of the Federation”. The power is reinforced by the subsidiary legislations such as the Debt Management Office (Establishment, etc.) Act, 2003, the Fiscal Responsibility Act, 2007, the Investments and Securities Act, 2007, and the Central Bank of Nigeria act 2007.

“Specifically, section 25, 26, and 27 of the Debt Management Office Establishment (etc.) Act, 2003, states explicitly the roles of the National Assembly on government debts (external and domestic). Section 27 (1) of the DMO Act states that ‘the National Assembly may by a resolution approve, from time to time, standard terms and conditions for the negotiation and acceptance of external loans and issuance of guarantees’.

“In fact, sections of the referenced act expect the National Assembly to request that a particular agreement be brought before it for further approval. It further states that ‘no agreement in respect of which the approval of the National Assembly is required shall come into operation without such approval’.

“In view of the above, as the Claim Holders and the peoples’ representative, the National Assembly is not living up to their oversight functions, which promotes transparency and guarantees accountability in governance.”

He added: “Nigeria is already in a debt trap; therefore, needs to do anything possible to save the country from total collapse. Our failure to take the right steps in the management of our loans is one of the reasons for the fraudulent P&ID gas project and the emerging crisis in the Azura power project where Nigeria risks paying USD$1.2billion for USD$237 million loans collected by Azura from various banks.

“Currently, it is alleged that Nigeria pays $30 million to Azura monthly, even if Nigeria doesn’t have the capacity to take power from the plant. These would not have happened if due diligence were done before the loan agreements were signed.

“Given the damage already inflicted on the citizens by the National Assembly, it is expected that the National Assembly should tender an unreserved apology to the citizens for failing in its constitutional responsibility to the citizens, with respect to loan approvals.

“Irrespective of what has happened, the national assembly should completely review all previous loan agreements to determine if the loans are for the overall interest and well-being of the country. The review should include a cost-benefit analysis on the projects for which the loans were taken, to determine the costs (fiscal, economic, and social costs) and benefits (fiscal, economic, and social benefits) to Nigeria. In view of the inherent lack/inadequate capacity in-house, the national assembly should hire experts to support their work always.”

Furthermore, he said: “Going forward, it is expected that the national assembly should request and study loan agreements before any loan request is approved and also engage the services of professionals in different areas (lawyers, economists, engineers, accountants, finance experts, etc) to provide support to the National Assembly on such matters. For transparency and accountability purposes, loan documents should be made public and available for citizens’ engagement in the entire process. In view of the discovery of the purported clause in the loan agreement that could impair the sovereignty of Nigeria, reputable international forensic firms should be engaged by the national assembly to carry out a forensic audit of Chinese loans (including other external and domestic loans) in Nigeria.

“The socioeconomic impacts of Nigeria’s huge infrastructural gap are incontrovertible. Nevertheless, the infrastructural gap is not enough reason for Nigeria to continue accumulating debts; even when some of the debts end up being used to fund consumption. Nigeria’s annual average expenditure stands at 180% above the annual revenue, with over 50% of the annual average expenditure on debt servicing, 44.5% on consumption, and paltry 5.5% on capital.

“Using current revenue data, debt servicing to revenue is over 80%. This is not sustainable. What pays back debt is revenue and not GDP; therefore, Nigeria should stop any further borrowing irrespective of our current needs. We cannot afford more loans.

“The Bureau for Public Enterprises (BPE) and the Infrastructure Concession Regulatory Commission (ICRC) were established to address the infrastructural gaps in Nigeria through the Public-Private Partnership Framework. For political reasons, even when the two agencies should have been merged, the agencies have not lived up to their mandates since their establishments and have continued to be a conduit pipe for wasting public funds.

“There is an abundance of available funds domestically and externally to fund Private Partnership Agreements, given the huge infrastructural gaps, yet, Nigeria has continued to resort to borrowing. The government needs to promote private sector investment in infrastructure development while the government concentrates on public goods – health, education, and others.

“What we need now is to put the right framework and institutions that promote and protect private investments. Nigeria can also raise more revenue from gas export if the sector is fully developed. Prices of gas have remained unchanged during the COVID-19 pandemic even when prices of crude were gyrating. The solution to Nigeria’s problems does not lie in accumulating more debts but in rethinking our development strategy, policy, and governance structure. We need the right leadership, anyways.”