Contrary to speculations in Nigeria that debts cannot be written off, they actually can be.

One more word and I will be through with this debt relief saga. I have been very amused reading responses to my comments on the issue. I have observed a deliberate attempt to misrepresent my views and twist the facts, which is even nicer than attempts to label me as an illiterate. When I decided to participate in this discourse, I never knew it was going to be a “rofo rofo” affair. I thought it was going to be a battle of viewpoints and hard facts.

My intention today is to set the records straight so that I can move on to other issues as we strive to push for a better, greater and virile Nigeria. Anybody who still wants to misrepresent my views hereafter should please feel very free to do so. Contrary to speculations in Nigeria that debts cannot be written off, they actually can be. Pakistan was a pariah state after the coup of Pervez Musharraf, but the moment he supported the invasion of Afghanistan by the US forces, its debts were written off. I need not mention the countries which supported the war in Iraq and got favourable debt treatments. It is as political as it is financial and nobody should be deceived about that. I am more interested in the political aspect of it, not the classroom theories and indices.

Can debt relief offers be rejected if the conditions are not very favourable, especially if the debtor countries think the offers could be a drain on their resources? The answer is yes. After the Tsunami tragedy last year, some of the affected countries did not accept the conditions for debt treatments because they believed those conditions did not favour them. They rejected the offers. Therefore, it is possible to reject debt relief offers depending on the priorities and the expectations of the debtor countries.

In all my comments on this saga, I have never for once suggested that we should not pay our debts. What I simply asked was: if they said we would no longer be creditworthy if we don’t liquidate our debts immediately, how come we were still getting more loans despite Abacha’s refusal to pay? Of course, the real point I was making here was deliberately obscured by the debt relief celebrants, and it was now interpreted to mean I was canvassing repudiation. My suggestion was so clear: let’s go back to these people, negotiate off the interests and penalties and pay the balance over the next few years while we invest our oil windfall judiciously for the benefit of the suffering masses of Nigeria. It may be difficult, but it is not impossible. My suggestion does not need to be accepted, but, at the same time, it does not need to be twisted or taken out of context for the sake of winning an argument.

Repudiation, of course, is not completely an outdated ideology. It is very attractive and I like it, but I deliberately avoided suggesting this because I know that in negotiations, something has to give on both sides as long as it is reasonable. In my presence at his Ota Farm early this year, President Olusegun Obasanjo said, on the debt issue, he would pursue “multilateralism” and “bilateralism” and if this doesn’t work, he would go for “unilateralism”. “Unilateralism” is euphemism for repudiation. That is the president himself talking. Joseph Stiglitz, former chief economist at the World Bank and a Nobel prize winner in Economics, once suggested that Third World countries should repudiate their debts because they are “odious” and “unfair”.

I have observed that in this debt relief discourse, two major camps have emerged. The first camp is arguing on behalf of the Paris Club. The second camp is arguing on behalf of the people of Nigeria. I don’t blame the onlookers because the whole scenario could be very confusing. It would appear every argument has its merits and everybody has strong points to back up his position. The only trouble is that we have not evolved a mechanism whereby public opinion will be of any significance in decision-making. Indeed, there is contempt for any opinion that does not originate from a particular faction of Aso Rock.

The Paris Club camp says something like: “Our biggest problem is foreign debt. Let’s part with $12 billion now and we will be free forever and Nigeria will begin to prosper. Don’t ask questions – just clap and be happy.” If we look at their arguments, there is some merit, no matter the cost to our economy and the long-suffering people of Nigeria. There are those who support this argument without knowing that they are arguing on behalf of the Paris Club. Yes, there has been a “debt collection” strategy in place for sometime now. The strategy has been to deny ministries capital votes, stash away excess crude earnings, cut the wage bill by retrenching workers and increase fuel prices, so as to systematically build up the external reserves far in excess of what is required. Then, one day, we would say: “We’ve got so much money now. Let’s pay Paris Club.” That is why some people went to negotiate away our excess crude oil earnings without regards for the laws of the land.

The second camp, to which I belong, says: “Let’s take advantage of the global campaign for debt cancellation and plead for a better deal while we invest our windfall in things that will have direct impact on the people of Nigeria. Debt is not our biggest problem. Misgovernance is. Let’s get our priorities right – welfare of Nigerians first, welfare of Paris Club second.” No matter how stupid our argument sounds to the debt relief practitioners, it also has its own merit. I [would] rather see [a] reduction in infant mortality, improvement in power supply, rehabilitation of the education sector, eradication of water-borne diseases, massive agricultural projects, made-in-Nigeria cars and [a] drastic cut in unemployment than see smiles on the faces of the Paris Club shylocks.

I am also amused by the way some people have made a U-turn over this debt issue. The campaign all along was that Nigeria should get 100% debt cancellation. The president has been asking for 100% since 1999. He called it debt forgiveness. A Nigerian minister said in January this year that Western countries should not wait for [a] tsunami to happen in Nigeria before cancelling our debts. Can somebody else make that argument today without being branded?

Another twist was added to this discourse by Sanusi L. Sanusi in an opinion article in [the] Daily Trust last week. He tried to accuse me of cooking up figures and also insinuated that I hated members of the economic team. I had written that given that Nigeria’s debt was a very bad case, paying $12 billion today is equal to paying $30 billion over 23 years in the eyes of the creditors. In fact, the value of a lump sum of $12 billion today is more attractive than $30 billion spread over 23 years. It’s a trade-off and while it looks like $18 billion had been written off, the truth is that it is in their favour, with all these scary speculations about the future of Nigeria. Sanusi, however, argued that if we don’t pay $12 billion today, the debt will rise to $70 billion in 23 years. This is amazing. Even the owners of [the] debt relief are not making that argument. What they are saying is that rescheduling the debt over 23 years will incur [an] additional $8 billion in interest. Where Sanusi got his figure of $70 billion [from] beats my imagination. He should avoid celebrating more than the celebrants, whom I know are his close friends in any case.

He also accused me of lying with figures on the percentage of public debt to the GDP. I got the 20% figure from the World Factbook 2005 published by the CIA. It is available on its website at www.cia.gov and whoever is interested should check it. I am not good at cooking up figures – I’m not a government official. When I wrote recently that commissions on the debt buy-back deal would be in the region of $300 million, it sounded like fiction. But I actually got the figure from a government official who was arguing with me over my stand on the debt issue. I had said, using previous debt buy-back deals as my premise, that the financial consultants who would handle this deal would get $300 million in commission. He fired back: “Yes, it will even be more than that, but why don’t you focus more on the fact we are going to get our freedom from Paris Club at last?” It is very comforting, however, that Dr. Mansur Muhtar, the DG of the Debt Management Office, has assured that the debt buy-back deal will be done by “direct labour” – that is, without consultants.

Why should I hate members of the economic team? Why? We all know that the fastest way to make money in Nigeria today is to befriend people in government. If I want to touch my first millions today, I know the route. I stand to gain nothing by antagonising people in government. My problem with them is that the World Bank and IMF are fully in charge of Nigeria and we all know how they came in. They say don’t spend money on social services, don’t spend money on subsidy, don’t spend money on this, save money and pay your debts, retrench drivers and cleaners who earn N10,000 monthly (while directors who steal millions of naira are left intact) etc., etc. In a country of crushing poverty and high unemployment, this policy cannot work. Only about 5% of Nigerians can truly say they are very comfortable economically. Therefore, the Western policies we are implementing effectively alienate most Nigerians. Why should anyone be happy with that? That is not my definition of hatred.

With this kind of blackmail and insults flying around, I want to honourably bow out of this debt relief discourse. I never knew it was going to be a “rofo rofo” fight. I am beginning to think there is more to it than I can fathom. I have been getting some hate mail, which luckily I have been able to trace to their sources, and I keep wondering why this desperation. As my Igbo brothers would say, “When a handshake goes beyond the elbow, it is becoming something else.”

Simon Kolawole, This Day (Lagos), August 21, 2005