A new deal for Africa: Rooting out looters: Nigeria new president aims for debt relief

Muriel Olaiya lives more comfortably than most Nigerians. For a start, her husband has a job. It pays for the extras that make the difference between living and simply surviving in Lagos.

The Olaiyas have a generator for use during the frequent power cuts, and a water tank because not a drop has come through the mains in years. And when Mrs Olaiya became pregnant last year she opted for a private clinic for the birth rather than Lagos’s ‘slaughter slabs’ – the ill-equipped state hospitals.

The baby was premature but an incubator was to hand. Then the electricity failed. The child was rushed to Lagos’s main hospital, but traffic jams caused by long queues for fuel were horrendous. Mrs Olaiya’s son died within hours of his birth for want of electricity in the biggest city in the world’s seventh largest oil-producing country.

‘I can’t understand it. I’m sure he would have lived if this were South Africa or England or America,’Mrs Olaiya said. ‘This country has so much money and the population has nothing. Look at how we live. I don’t think anyone could say we are progressing.’

Nigeria may be one of the world’s major oil producers but it is also listed as 13th from bottom on the United Nations development index. For this paradox, maladministration and corruption are mainly to blame. Both have contributed to a collapse in infrastructure, mass unemployment and the piling up of an pounds 18bn foreign debt.

At the end of May Nigeria’s new civilian government inherited the burgeoning economic crisis in Africa’s most populous country, of more than 100m people. At his inauguration President Olusegun Obasanjo made a plea for help in solving the problems left by 15 years of military rule. ‘We call on the world, particularly the western world, to help by sharing with us the burden of debt which may be crushing and destructive to the restoration of democracy in our land,’ he said.

His reasons are clear enough. Take the hospitals. The Nigerian government spends the equivalent of just 75p a person on health care each year. The country’s infant mortality rate is 84 of every 1,000 births – one-fifth higher than the average in the developing world. Maternal mortality in childbirth is nearly three times the developing world average.

Education, water and roads are similarly neglected, as are almost all services dependent on government funds. But Nigeria presents those who want to help it with a dilemma. It is not Mozambique or Burundi, living hand to mouth on minuscule industries and foreign aid. Nigeria earns about pounds 8bn a year from oil. So why should Nigeria receive debt relief when it not only has a generous income but successive military governments have chosen to loot the treasury instead of paying the country’s debts?

Billions plundered

Even the most recent military ruler, General Abdulsalami Abubakar – widely praised for holding elections and handing power to President Obasanjo – oversaw what has turned out to be massive plundering of the central bank before leaving office. In recent months about pounds 2bn – more than an entire year’s debt payments -has evaporated from the treasury. Much of it disappeared into the pockets of military officers.

To Nigeria’s leading debt negotiator, Donald Duke, the answer is clear. ‘What got the military out of power was not democracy but the dreadful state of the economy. If we, the democratic government, cannot deliver food for the mass of people we can forget about democracy.

‘If we want to keep the military out we have to make the economy work, and for that we need help on the debt. We have already paid more than Dollars 40bn [ pounds 25bn] in servicing debt. Anything the creditors get today is a bonus. It’s almost a punitive sanction.’

Britain is spearheading international efforts to win debt relief for Nigeria. But there are conditions. The chancellor wants Lagos to adhere to a privatisation programme, market reforms and increased scrutiny by international financial institutions. ‘We must reward performance not promises, particularly on early institutional reform,’ the economic secretary at the treasury, Patricia Hewitt, said at a conference last month.

What Britain means is that Nigeria’s pervasive corruption must be curbed. Graft has fed inflation, ruined whole industries and contributed to widespread unemployment. Corruption robs schools, hospitals and welfare services of funds. It scares away foreign investors who view dealing with any Nigerian official – military or civilian – as little short of a mugging.

It has driven away the best and the brightest. Nigeria is, along with South Africa, among the leading exporters of doctors in the world. In the United States, there are more doctors from Nigeria than there are from any other foreign country.

‘It’s difficult to appreciate it because of the heights corruption has been taken to,’ Mr Duke said. ‘Most of our institutions are bastardised. When corruption debilitates your economy, you have a problem. But I don’t think the world is asking for a corrupt-free environment. They know it’s not possible. We are talking about a level of transparency and decency.’

IMF monitoring urged

To that end, Gordon Brown says it is essential that the Nigerians ‘request’ an International Monetary Fund monitoring mission in the central bank and finance ministry ‘to maintain international confidence in reform efforts’. The demand has hit a nerve in strongly nationalist Nigeria. The new vice-president, Atiku Abubakar, immediately rejected it. ‘I don’t think we are so bad to warrant that,’ he said.

But Mr Duke says Nigeria could live with the measure. ‘If you don’t have anything to hide, what’s the problem with IMF monitoring?’ he asked. ‘You don’t want the IMF telling you who should be governor of the central bank. But if you’re building a bridge for Dollars 500m, the IMF is entitled to know where the Dollars 500m is going.’

President Obasanjo has promised ‘decisive action’ to deal with Nigeria’s financial collapse. He has pledged to introduce a wide-ranging anti-corruption bill this month, saying there will be no ‘sacred cows’. ‘The beneficiaries of corruption in all its forms will fight back with all the foul means at their disposal. We shall be firm with them,’ he said.

But international bankers acknowledge that they are going to have to live with an ‘acceptable level of corruption’ for some time. ‘It’s racist to say that we should put up with corruption in Africa. But try to eradicate it and you can create social upheaval,’ said a European banker in Lagos.

‘We need to distinguish between the corruption of greed and the corruption of necessity. Civil servants’ pay has just been raised to pounds 20 a month. Of course there’s going to be petty corruption when people in the employ of the state earn so little. That is how they survive. What we want to see an end to is the wholesale theft that robs this country of its future.’

The army remains one of the toughest nuts to crack. Mr Obasanjo has set up a panel to review the slew of contracts awarded by the military in the months before it left office. But he shows no great enthusiasm to delve too deeply.

The new president has declined, for instance, to target the officers who plundered billions while in power – of whom the most notable is General Ibrahim Babangida, a former military ruler who has yet to explain what happened to a pounds 8bn windfall that came Nigeria’s way when oil prices surged during the Gulf war.

Mr Duke argues that western banks and governments were partners in crime with the army and so should accept responsibility. ‘They would like to hold us responsible for what the military did. Western banks knew what the military were like when they lent the money, so why should our democratic government be more responsible than them?’

Military spending is likely to prove the hardest area to open up. Some observers doubt that even the army high command knows or understands its budget, let alone where the money goes. But Britain, in particular, is not interested in putting too much pressure on the army. It is keen for Nigeria to keep its troops in Sierra Leone, where a barbaric rebel army threatens to topple the British-backed government.

Many Nigerians would agree with Mr Duke’s assessment that the military was driven from power more by a collapsing economy than a popular clamour for democracy.

If that is the case, the wholesale cancellation of the country’s debts might prove a greater danger to democracy than a moratorium of several years to allow for economic revival and a peaceful transfer of power to the next elected administration. A debt moratorium could be a prod to help to keep the military at bay.

Life Expectancy: 54 years

% population living on less than Dollars 2 a day: 60%

% population with access to safe water: 42%

Oil exports as % of total exports: 96%

GNP per capita: Dollars 239

Debt owed per capita: Dollars 241

(Source: World Bank, UNDP, UNCTAD)

Guardian (U.K.), June 15, 1999

Categories: Africa, Nigeria, Odious Debts

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