Chinese loans and Nigeria’s future

Although Mr Rotimi Amaechi, Transportation Minister, has tried to make light of the precarious situation the country has found itself with respect to the Chinese loans which threaten Nigeria’s sovereignty, the fact is that should the country fail to pay back the loans on schedule, there would cease to exist an independent Nigeria.

In his attempt to explain away the gravity of the inclusion of the sovereign guarantee in the Chinese loan agreement, Amaechi had said during a television interview that “When you say I give you a sovereign guarantee and I waive that immunity clause, the immunity clause is that, if tomorrow I’m not able to pay you and you come to collect the items that we’ve agreed upon, that these are items I have put down as guarantee, I can use my immunity and say no, you cannot touch our assets, we are a sovereign country. Is China our father that will give us money for free? They are saying, ‘if you are not able to pay, don’t stop us from taking back those items that will help us recover our funds’. And it’s a standard clause, whether it’s with America you signed it or with Britain or any country, because they want to know they can recover their money. What the clause does is to say to you, ‘I expect you to pay according to those terms and conditions. If you don’t pay, don’t throw your immunity on me when I come to collect back the guarantee you put forward.’ That’s all.”

While Amaechi is right to say that the lender is empowered to take over the collateral for a bank facility when the borrower defaults, he should also realize that the facilities concerned with respect to the Chinese loans are not just mere assets but items of national pride, national security and sovereignty.

According to the Debt Management Office (DMO), one of the 11 projects financed with the Chinese facility is the Nigerian National Public Security project. The project is a wholesale security facility with an inbuilt Global Open Trunking Architecture (GoTa) device, which is a CDMA-based voice and data telecommunications system with national coverage. The facility has two Mobile Switch Centres (MSC) with one each in Lagos and Abuja; 12 Base Station Controllers (BSC), 675 Base Transceiver Stations (BTS) and 21 Microwave repeaters. When activated, security agencies can, from their remote offices, survey wide areas across the country and can as well execute coordinated responses.

Nigeria took a $399.5million facility in 2010 to finance this project. The Exim Bank of China granted the country a seven-year moratorium and is expected to pay back the loan by 2030. So far, Nigeria has paid $76.83million as part of the principal and $84.92million as interest, totaling $161.75million. The outstanding against the country currently is $322.67million. The implication of this is that in three years after the expiration of the moratorium, Nigeria only paid about four percent of the principal with 96 per cent still outstanding. If Nigeria was able to pay just four percent in three years, what is the guarantee that it would be able to pay 96 per cent in 10 years? From all indications, Nigeria may fail to pay back the loan on due date and this would have far-reaching implications for our sovereignty.

The fact, which the current leadership is shying away from, is that unless Nigeria completes the payment of both the principal and the interest by December 20, 2030, China will take over the management of the project. This is particularly pathetic because unlike the World Bank, International Monetary Fund and other lenders, China may not be favourably disposed to the rollover or refinancing of the loans as these are not contained in the terms of the loans. Once a country defaults, China moves in and takes over the collateral which is usually the infrastructure for which the loan was secured.

Should Nigeria fail to repay this loan and China takes over the Nigerian National Public Security project, an important segment of the Nigeria’s security architecture would be in the hands of a foreign country. What kind of sovereignty can Nigeria then claim? If a foreign country is in control of the surveillance facility of Nigeria, what is left of our sovereignty? If a foreign country is overseeing a critical part of our security architecture, how secure can we be as a country?

To finance the Abuja Light Rail and the Zungeru Hydroelectric Power projects, Nigeria took $500million and $984.32million loan from China in 2012 and 2013 respectively. Unless Nigeria keeps to the terms of the loans and is able to pay off the debts completely by 2032 and 2033 respectively, China would move in and take over these facilities.

What happens if China takes over the power projects and chooses to sell electricity to our neighbours rather than us? What happens if China takes over the Abuja Light Rail and imposes a high tariff? Where would that leave Nigerians?

It is so gnawing that our leaders trivialize issues that are important to us. While those at the helm of affairs may have no qualms about throwing away our national assets, it is our duty as Nigerians to ensure that does not happen. We should put them on their toes. We should ensure that no further loan that may enslave us as a people is taken. We should also ensure that they keep to the repayment terms of the current loans so that they don’t by design or default give our assets to their foreign friends.

 

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