Nigeria’s rising foreign debt: ‘Covid – 19’ to the rescue

Due to the sweeping grip by the Corona Virus (also referred to as COVID – 19) pandemic on global attention, several other major changes and even turn-arounds in Nigeria, were side stepped. One of these was the sudden suspension by the Federal Government of the $23.7 billion foreign mega loan bid, with China billed to […]

Due to the sweeping grip by the Corona Virus (also referred to as COVID – 19) pandemic on global attention, several other major changes and even turn-arounds in Nigeria, were side stepped. One of these was the sudden suspension by the Federal Government of the $23.7 billion foreign mega loan bid, with China billed to contribute a substantial part of it. The federal government had since November 2019 requested the Ninth National Assembly to approve the loan package with the latter not obliging until recently, when after a cycle of contentions on the floor of the Senate, the Red Chamber approved it. However, even before the ink of the endorsing signatures in the Senate had dried, the same federal government announced the suspension of the loan package. It had hit the rocks on many grounds, leaving it currently in suspended animation.

In one vein was its sudden loss of traction in the House of Representatives which should have simply passed it in concurrence with the Senate, but did not.  According to the Speaker of the House of Representatives Femi Gbajabiamila, the stalling of the loan package in the Green Chamber was due to the exclusion of projects in the South East geopolitical region, and implied lopsidedness in its provisions.

Meanwhile in another vein, the Minister of Finance, Budget and National Planning Zainab Ahmed, had blamed the suspension of the loan on “current realities in the global economic landscape”. Addressing the 2020 version of the ‘International Conference on Nigerian Commodities’ organised by the Securities and Exchange Commission (SEC),  Ahmed had stated that “the current market indices do not support any external borrowings at the moment, despite that the parliament is still doing its work on the borrowing plan”. Hence while Gbajabiamila and his legislator-colleagues would still be working on balancing the impact of the loan in   compensating the South East zone over their share of the loan, the dividends of such enterprise may still be determined by factors beyond their control.

Ostensibly, the unfavourable “market indices” in the global landscape which Ahmed was referring to, include at least two factors. On one hand is the recent drop in global price of crude oil, which is the mainstay of Nigeria’s economy – a situation that has diminished the country’s revenue prospects.  Another and perhaps more significant is the escalating scourge of the Corona virus referred to as COVID-19, which has held the entire world hostage, with its virulence and daily mounting mortality. It is really tempting to ask if Nigeria is finding a positive value in this death-dealing dispensation of the COVID -19 pandemic? Come to think of it, in a world where wonders will never end, it may actualy be unwise to rule out such a likelihood especially for Nigeria.

There are many reasons why this development can be hailed or decried depending on the background factors and the perspective of the observer. In the first place it is easily recalled that this current loan package was the substance of a long drawn out conflict between the Presidency and the Eighth National Assembly when it was first proposed in 2016 as a $30 billion facility. The National   Assembly then eventually conceded the sum of $4.5 billion. But that was not before the associated legislative process was laced with a prolonged jostle between the NASS and the Presidency. A striking feature of that interaction was that a spate of insinuations of bad blood between the two institutions superseded   the more realistic scenario of the National Assembly calling for caution over the   unbridled profligacy in government and attendant poor debt management in Nigeria’s fiscal regime.  From available historical records, much of the loans procured by Nigeria and which are nominally designated for capital, infrastructure development, ended up in recurrent subheads, from where they migrated to private pockets. Hence then and as at now, the overriding concern in Nigeria’s public space has been over the country’s capacity to service its ballooning indebtedness, both for now and in the future.

Meanwhile, China with its global expansionist agenda, operates a policy of trapping unwary, financially distressed countries like Nigeria, with mouthwatering loan packages which the latter’s leaders were ever willing to procure even without much regard to the future interest of the country. For the purpose of clarification, it must be conceded to Nigeria to obtain loans and any other assistance from any party in the world, as long as such venture falls in line with the nation’s overall interest, both for now and in the future.

Nigerians are concerned over the unbridled passion of the present government   for borrowing huge sums of money without concrete plans for repayment – a situation that offers nothing but economic enslavement of present and future generations of the citizenry, to creditor countries. This scare has become real with China – a major creditor nation to Nigeria, making no bones of its readiness to confiscate the public assets and even sovereignty of debtor nations, who default on its loans.

With the advent of the Corona Virus China is afflicted with the proverbial dilemma of the wood pecker bird. As legend has it, the wood pecker bird which is believed to be able to carve holes in every known type of wood, boasted of carving a hole in hard rock when its mother would die. However on the eve of its mother’s death the bird developed a boil on its beak. In the raging pandemic of the COVID -19, China, Nigeria’s ‘Father Christmas’ of sorts,  has remained one of the most hard hit countries and clearly has more than enough domestic concerns to engage it attention than chase an endless stream of loans for Nigeria. This signal from China, remains more authentic than whatever euphemism that may have been deployed by Finance Minister Ahmed to mask the real reason for the suspension of the loan.

In a more poignant context, the interplay of these two factors has once more, graphically betrayed the hollowness and failure of the government’s policy and knee-jerk enterprise in fostering the long held agenda of diversifying the Nigerian economy. It would seem that like in times past, catastrophes only spur the country’s leaders to mouth remediation plans for such contingencies, only to return back to the old ways of doing things, once relief comes. The most recent of such knee-jerk dispensations was the 2016 economic recession that midwifed the   Economic Recovery and Growth Plan (ERGP). As at present the positive dividends of the ERGP remain only in the claims of government officials as the economy still gropes and misses its performance targets.

Given that by its pervasive impact on the global economy, the ravages of COVID-19 may not abate in a hurry, who knows how far the ‘benevolence’ of China and other creditors to Nigeria, will be retained in respect of providing loans in the spirit of business as usual – hopefully after the reign of COVID- 19? Until that dispensation comes, this is thanking COVID-19: even in its fatalistic odiousness, for coming to the country’s rescue in helping cage the unbridled passion for cheap but booby-trapped foreign loans, by Nigeria’s leaders.