US Treasury Secretary Larry Summers has reversed US government policy and broken the consensus of creditors, by agreeing that Nigeria should be granted “multilateral debt reduction ….by the international financial community”.

Summers made his remarks on a trip to Nigeria on the week-end of the 11th June – a trip cut short because of strikes and riots in reaction to the Nigerian government’s decision to bow to IMF conditionality, and remove subsidies from kerosene and petrol.

The director of Jubilee 2000, Ann Pettifor, today called on creditors to unite behind US Treasury Secretary Larry Summers, and agree massive multilateral debt cancellation for Nigeria. Ms Pettifor said:

“Jubilee 2000 welcomes Larry Summers’ decision to break the creditor consensus that has prevented Nigeria from benefiting from debt cancellation, and to call for multilateral debt reduction. We call on the IMF, World Bank and other western governments to back his initiative.

However, we regret that Secretary Summers’ statement is too cautious, promising too little, too late.

As Nigeria faces further disruption and chaos, creditors should act decisively, and stop collecting the debt now, while insisting that the resources freed up are ring-fenced for the poor. The people of Nigeria need some hope of improvement to their lives, after their long and bitter struggle to end military dictatorship and restore democracy.

“The discredited economic conditions imposed by western creditors through the IMF, have not worked in Nigeria in the past. On the contrary, the same advice – to lift subsidies from fuel – precipitated riots, strikes and a military take-over in 1994. The IMF’s conditionalities were not acceptable then, and they are not acceptable now.”

The Jubilee 2000 Campaign in Nigeria sent a public letter to Mr Summers calling on him to pay urgent attention to debt cancellation.

The IMF and other western creditors showered loans on military dictators in the 1980s, and then failed to collect repayments from these same dictators. Instead western governments, through the IMF, have now demanded repayment of these odious debts from the new democratically elected government, headed by President Obasanjo, chairman of the corruption-busting organisation, Transparency International.

President Obasanjo was incarcerated in Nigeria’s jails by his predecessor, the military dictator, President Abacha. In April, 2000, he convened a summit of 40 African heads of state, who jointly signed a declaration (The Abuja Declaration) committing their governments to using the additional resources released by debt cancellation, for the WHO-backed “Roll Back Malaria” initiative.

Between 1993 and 1994, as Nigeria was attempting to make the transition from military dictatorship to democracy, the IMF stepped in, and before granting assistance, insisted that subsidies be removed from petroleum products. This provoked riots and unrest, and triggered another military take-over.

In 1996, the IMF defined Nigeria as extremely poor, and effectively insolvent when it drew up the list of so-called Heavily Indebted Poor Countries (the HIPC countries). Later, and with little explanation, Nigeria was removed from the list. World Bank officials have since admitted that there is no intellectually coherent basis for her non-inclusion on the list, as Nigeria qualifies on the basis of most of the criteria used. Jubilee 200 believes that Nigeria was removed from the list because of the size of her debt ($33bn), and because creditors refused to face the reality of her effective insolvency.

Instead, Nigeria is now required to transfer $1.5bn to western financial institutions each year, in the form of debt repayments, which is just half of what she is due to pay in debt service. This contrasts with the new government’s budget for poverty reduction of $300 million.

Nigeria, which is almost the size of Europe, is Africa’s most populous nation. 120 million people live in a vast, diverse country on an average income of $300 (£190) a year. (Average income in the UK is £12,400 per year and in the US is $29,240)

The Nigerian government spends no more than £2-3 per head on the health of each Nigerian, in contrast to the British government which spends roughly £720 per head and the US government which spends $2,040 per head.

There is a pervasive myth that Nigeria is oil-rich. Nigeria’s daily oil revenues, if divided between 120 million people amount to a puny 20p per day per Nigerian. In a year, that amounts to £76 each for every one of the 120 million Nigerians.

Jubilee 2000 UK, June 16, 2000