The Paris Club of rich nation lenders has agreed in principle to a debt relief package for Nigeria. The club of 19 member nations is expected to write off about $18 billion of Nigeria’s $35 billion debt and Nigeria plans to buy back its remaining loans using funds from a windfall in oil revenues.
A Paris Club statement acknowledged that members had taken note of an economic reform program implemented by Nigerian authorities in 2003 and of Nigeria’s “willingness to take advantage of exceptional revenues in order to finance an exit treatment” from the club.
Following the announcement, Estelle Shirbon for Reuters reported that Nigeria’s President Olusegun Obasanjo appeared on national television to “congratulate himself and his team of economic reformers for persuading creditors that Nigeria, ostracized during 15 years of corrupt military dictatorship, now deserved debt relief.” However, she noted, the next day “newspapers brought the excitement down a few notches.”
In her analysis of the country’s debt, Emma Ujah writing for Nigeria’s Vanguard newspaper said: “It is not enough to get debt relief. Debt relief must translate into better living standards for the citizens. The challenges facing Nigeria and other beneficiary countries from the various debt relief initiatives are how to ensure that the money so freed is put to good use in the interests of the people …”
Ujah urged Nigeria’s National Assembly to draft legislation that would place stringent conditions on external borrowing in the future. “It is a well known fact that the bulk of external loans taken by past administrations were for projects that had no sites or at best were poorly implemented and in some cases abandoned,” she said, adding: “The government officials smile[d] to the banks, and congratulated themselves for being smart, while the entire populace [bled]. This must not be allowed to happen again …”
Ujah noted that British Prime Minister Tony Blair’s Commission for Africa had called on African governments to embrace transparent governance and ratify the United Nations Convention against Corruption in 2005. Ujah also repeated the commission’s reminder to governments, states and banks in rich countries to recognize their “duty to tackle corruption.” A duty the commission said included repatriating illicit funds held in overseas accounts and more transparent business dealings with African governments “in a bid to cut bribery.”
Africa’s most populous nation, Nigeria has long been seen as critical to any effort to continent-wide improvement, however, Nigeria as the world’s seventh biggest oil exporter did not qualify for the Group of Eight (G8) debt write-off granted to 18 of the world’s poorest, mostly African nations, last month. Some debt campaigners believe creditors are erasing bad debts to cover their own tracks and are trying to avert debt repudiation through debt relief.
Responding to the G8 debt deal in June, Patricia Adams of the Canadian-based, foreign-aid watchdog Probe International declared lenders were now on the run. After years of resistance, lenders are opting for debt “forgiveness” she said because they fear exposure for negligent and irresponsible lending to corrupt governments they should never have lent money to in the first place.
In March, Nigeria’s House of Representatives passed a non-binding resolution to halt payments on the country’s external debt, the highest of any country in Africa, but the Nigerian Senate later voted to honour debt servicing for this year.
Odious Debts Online, July 5, 2005