The phantom of debt relief: a historical dimension

Chijioke Nwankwo
Vanguard Newspaper
September 30, 2005

The Nigerian press has been awash with undulating adulation lavished on the Obasanjo administration for securing a purported unprecedented debt relief of $20 billion for Nigeria. The true story of the so-called debt relief has since been emerging to the embarrassment of the federal government.

It has become apposite to examine the historical trajectory that led to the current debt burden hanging on the necks of African states.

The contact between Africa and the West has brought Africa only pains, anguish and sorrow. The early missionaries who visited Africa claimed to be on a civilizing mission intended to “redeem a tribe of savages.” While the missionaries preached the gospel of salvation, their brothers were busy buying off large stocks of able-bodied Africans as slaves to work in their farms and factories back home. Through these cold and callous economic calculations, the economies of the West grew fat from the sweat and blood of Africans. The industrial revolution grew out of the pain and misery of African slaves. The profits and economic benefits that were derived from the slave trade encouraged more Westerners to engage in it.

Africans were chained together and loaded like chattels into slave ships for onward transportation to Britain, the United States of America and other Western countries. Despite the feeble attempts to fight slave trade through the abolitionist movements, it grew in leaps and bounds with the slave merchants becoming more ferocious and violently formidable in maintaining and safeguarding their lucrative trade. At the Berlin Conference of 1884-5, the competing nations of Europe came together to share Africa amongst themselves. They considered the entire Africa as a commonwealth to be shared like candies. They divided Africa into several parts with each of them fighting to get the areas considered lucrative and potentially rich. The balkanization of Africa, which was achieved at the Berlin Conference, was one more sign of the nature and quality of the relationship between the West and Africa. No African was present at Berlin.

Yet, the fate of Africa was determined at the conference table. The British and the French had the larger part of the booty. They established economic and political control over many areas in the African continent. Up until the period of independence, the European nations expropriated the mineral resources of the countries under their control. They reaped huge economic benefits from the continent through the exploration and exploitation of natural endowments like oil, gold and diamond. These wealth were channeled back to their home countries to sustain their economies. The Belgian economy became dependent on the surplus mineral resources derived from the Congo (the present Democratic Republic of Congo). It was no wonder that when fiery and socialist-leaning Patrice Lumumba came to power, he was liquidated by Western forces who installed Mobutu Sese Seko to continue the despoliation of the wealth of the Congo. This was also why the Western countries built up Jonas Savimbi to fight the government of Edwardo Dos Santos in Angola which was not keen to follow the dictates of Western capitalism. Capitalism, from the Western logic, thrives on exploitation. All the wars in Africa today are traceable to the buccaneering interests of the West. They finance insurrections and rebellions in order to get their hands at rich mineral deposits found in some African countries. This was witnessed in Angola, Liberia, Sierra Leone and Congo.

During the Second World War (1939-1945), the European nations controlling Africa recruited millions of Africans to fight in their war. African soldiers fought in India, Burma and other places. They had no interest, direct or remote, in the war. Many of them were the first line of defence at the battlefronts. Once again, the West used the Africans as canon fodders. Africans were inconsequentials and expendables who would be wasted at any opportunity. The only benefit of the involvement of the Africans in the world war was the patriotic zeal it instilled in the heart of many of the returning soldiers. They had been burnished by the war and became agitated. They added great fervor to the demand for self-rule and independence in many African states. By the end of the I960s, most African countries had gained their independence from their European colonial masters. Political independence came at a great cost. The resistance of the European colonial overlords to the demands for self-rule led to the death of many Africans who were killed for daring to ask for independence. Just as the bloody resistance by slave merchants to the attempts to stop their lucrative trade, the colonial masters employed all dirty and deadly tactics to suppress the demands by Africans for self-governance.

After independence, the European nations maintained their stranglehold on the economies of the independent African nations.

They had unfettered access to the mineral resources found in those countries. Today, Shell Petroleum Development Company produces 90 per cent of Nigeria’s oil. The same scenario is obtainable in other African countries. The relationship between Africa and the West has always been defined by greed, avarice, demonism and suppression. The paramount index is financial benefits for the West.

Indeed, one of the most ingenious schemes in the world was the plan by the European nations to continue their control of Africa through the deployment of devious intrigues. While appearing to give up political control of Africa, they propped up a group of leaders in Africa that were “westernized” enough to believe that only Western ideas could save Africa. These Africans easily allowed the West to run the economies of African nations. European nations were given a free rein to explore and exploit the natural endowments dotting the continent. Instead of injecting the funds generated through the exploration of these natural resources into their local economies, the new crop of African leaders took the royalties accruing to their countries to the banks in Switzerland and other Western nations where they deposited all the funds in their private coded accounts. Nigeria earned over 325 billion dollars from oil. She is one of the poorest countries in the world. The entire monies earned from oil were stolen by our leaders and kept in banks in Western Europe and America. By leaving these monies in Western banks, the economies of the West were growing fat from the pains and anguish of Africans. Today Nigerians borrow money from banks at 40 per cent interest. In Europe, their businessmen get credit facilities at four per cent interest. The massive outflow of capital also ensured that our economy remains comatose. Our currency is as valuable as a tissue paper. Our young graduates are unemployed. Our citizens besiege the embassies of the Western nations for visas in order to escape the pain and misery of daily life in Nigeria. Others trek to Morocco and cross the Mediterranean sea into Spain.

It is instructive that while African countries were earning huge royalties from the exploration of their mineral resources, their leaders did not stop at looting the treasury with the advice and connivance of their Western mentors and advisers.

African leaders were also convinced to borrow money from the international lending institutions. One of Nigeria’s leaders proclaimed that Nigeria’s problem was not money but what to do with the money. Less than five years after that proclamation, Nigeria started borrowing money recklessly from the IMF and the World Bank. These borrowings were part of the Western agenda to keep Africa down. The monies borrowed never left Europe or America. The lenders shared them with African leaders who also kept their part of the booty in Western banks. African nations are today saddled with dubious, questionable and malodorous loans. No one can point at any institution or public infrastructure into which the huge loans were funneled. To further sustain the economies of the West, African leaders agreed to pay huge sums of money every year to service these foreign debts. In Nigeria, about $1.7 billion is spent annually to service our foreign debt which stands today at about 36 billion dollars.

The major problem bedeviling Africa is the presence of irresponsible, idiotic and self-serving leaders who work for the interests of the Western nations against those of their own peoples. According to Prof. Ali Mazrui, the problem of Africa is the chronic corruption of her elite. African leaders, except perhaps a few like Mandela and Nyerere, are fit for execution. They have sold Africa back to the West. They have handed Africa, on a platter of gold, to the West. They took all our money. They borrowed money on our behalf and put them in their own pockets. They make us pay for what we did not enjoy. The demand for debt relief is hogwash and crazy. We do not owe the West. The people who borrowed these monies are personally liable to repay them. They did not bring the borrowed monies home. Indeed, Nigerian public officials, serving and retired, have over 250 billion dollars in their private accounts in Western banks. Nuhu Ribadu, the head of the Economic and Financial Crimes Commission, put the stolen figure at N56 trillion.

Africa today is a miserable continent. It is a poster child for HIV/AIDS, wars, hunger and deprivation. Paradoxically, this continent sustains the economies of the West especially Western Europe. Hypocritical Europeans proclaim their love for Africa. They tell us that they want to redeem us from poverty and disease. Yet, they impose strangulating regimes of conditionalities through their financial lending institutions. They rip us off through their unfettered access to our mineral resources handed over to them by the charlatans we call our leaders. They squeeze blood out of us every year through debt servicing while the principal sums borrowed are allowed to increase and compound.

The necessity of debt relief for African countries has been a burning issue in recent times. Civil society groups have championed this cause with commendable gusto and determination. Rock stars and celebrities like Bono, Bob Geldolf and Archbishop Desmond Tutu have lent their weight and influence to the campaign for debt forgiveness for African countries. “Make Poverty History” has become an apt cliché to situate the campaign for debt relief. While the leaders of G-8 (the richest industrialized democracies) were meeting at Glendale, Scotland, international musicians staged their Live-8 concerts across the globe canvassing for debt relief.

At the end of the G-8 meeting, some measure of debt cancellation was announced for some Highly Indebted Poor Countries (HIPC) of Africa and the Pacific. Nigeria was conspicuously omitted and excluded from this debt cancellation. Less than two weeks after the G-8 meeting, Nigerians woke up to the news that the Paris Club had granted debt relief to Nigeria to the tune of $20 billion. And the praise-singers went to town with their gongs and cymbals. The revelry has continued unabated.

It has since been established that what we have is only an “understanding to enter into an agreement for a comprehensive debt treatment.” There is no debt relief yet. Our spotlight-chasing Finance Minister has been all over the place dancing around that a bundle of pure magic has been wrought before our very eyes. Fortunately, Dr. Ngozi lweala does not have a monopoly of knowledge of the intricacies and confounding dynamics of international finance. Those who also know about international finance have since deflated the tendentious claims of the government and its growing army of groveling flatterers. Dr. Chu S. P. Okongwu, erstwhile finance minister, is schooled in the dense semantics and esoteric conundrum of international finance especially the Bretton Woods model which is founded on the Washington consensus. He has stated, unequivocally, that Nigeria has not been granted any debt relief. In Okongwu’s words, “. . . we do not have debt relief in the bag. So, while the authorities may have reasons to conjure up self congratulations, adulation, and justifications for the President’s numerous foreign trips, the minutes of the meeting of the Paris Club on Nigeria’s debt relief do not provide such bases.” (Debt Relief? Nothing to celebrate – This Day newspaper, July 21, 2005).

No one has come out to counter the weighty issues raised by Dr. Chu. S.P Okongwu. The so-called debt relief requires us to pay $6 billion immediately to the Paris Club and a further $6 billion in the next six months in order to qualify for debt relief that is still subject to the approval and concurrence of the Board that runs the Paris Club. Dr. Okongwu has correctly argued that No responsible country in the world would agree to make upfront payments of $12 billion just to secure a phantom debt relief. In the past three years, oil prices have skyrocketed at the international markets. We have accumulated “Exceptional Revenues” which the Obasanjo administration is so eager to offload into the waiting hands of western Nations in the name of debt relief.

According to official sources, Nigeria borrowed $17 billion from the foreign lenders. We have repaid $22 billion, and still owe $36 billion. Nigeria spends about $1.7 billion in annual debt servicing. The emission of this colossal sum annually has critically impaired the capacity of the government to provide the basic infrastructure and services to the people. Yet, we have agreed to remit $12 billion in one fell swoop to the western Nations holding us hostage. This debt relief package, despite persistent avowals to the contrary, reeks of dishonesty, deceit and unpatriotism.

If the Paris Club is candidly interested in granting us debt relief, it could do so in various ways outside the arcane and fosiIized orthodoxies of egghead economists. There are simple-minded approaches which lenders like the Paris Club could follow if they genuinely want to grant us debt relief. The Paris Club could stop all further compound interests, penalties and charges accruing to the $36 billion they claim we are presently owing. It could forgive us $10 billion and ask us to pay the remaining $26 billion without further interests, penalties and charges. This payment could be spread out and amortized over ten years with a capital remission of $2.6 billion eyery year. Instead of continuing with debt rescheduling and servicing, the Paris Club could convert all further payments to it into repayments of the current debt with a permanent moratorium on further interests, penalties and charges. If we spend about $1.7 billion to service our foreign debt annually, it follows that any meaningful waiver on our foreign debt would significantly reduce the sum spent on annual debt servicing.

The Paris Club took none of the above approaches. Yet we are expected to make merry and gloat about some debt relief. It has oft been said that the task of nation building is too great to be left only to politicians. What makes it more ominous is that this debt relief deal is being burnished as the coalescing template for the realization of the third term bid of the Obasanjo Administration. It has been heralded as a defining and critical factor underscoring the indispensability of General Obasanjo to lead Nigeria. Equally worrisome is the fact that a fuel price hike is in the offing as an umbilical adjunct of the touted debt relief. The concatenation of these events should alarm any discerning observer in Nigeria. It is sad; so sad.

Nigeria is an import-dependent economy with oil as her mono-export product. Where an import-dependent nation depletes her foreign reserves, how would she fund her imports without recourse to further borrowings? This is one question our so-called first-class economists in the Obasanjo administration should answer now. Those who praise them for purportedly securing this salacious debt relief deal should remember that our first jumbo loan of $1 billion was taken just because foreign experts advised us to borrow to avoid being considered an “under-borrowed” country in the face of oil boom revenues of the late 1970’s. No servitude is worse than that which is self-imposed.

Categories: Africa, Odious Debts

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