The British government has drawn sharp criticism from development charities for taking a debt repayment from Nigeria which dwarfs the UK’s entire annual aid budget for the African continent.
The Group of Seven leading industrial countries, which met in London over the weekend, are soon to receive $12.4bn (£7.2bn) from Africa’s most populous nation as part of a debt rescheduling package agreed this year by the Paris Club of creditor countries. As Britain is Nigeria’s largest creditor, it is set for a windfall of £1.7bn in the coming months – considerably larger than the £1bn-a-year portion of the European Union rebate that Tony Blair has offered to give up.
Charity Jubilee Debt Campaign says the payments mean the G7 will receive more in six months from Nigeria than the 2005 Gleneagles G8 deal will provide to poor countries in a decade. The G8 is the G7 plus Russia. Trisha Rogers, Jubilee’s director, said: “It is obscene for G7 countries to take billions of dollars from one of the poorest countries on earth. In particular this means the UK will take from Nigeria almost exactly twice as much as it is giving in aid to the whole of Africa in 2005.” She urged Britain, which chairs the G7, to take the lead in refusing to accept the payments.
Gordon Brown, who has been for some years one of the key forces behind greater debt relief for poor countries, said after the G7 meeting that he thought it fair that Nigeria pay some of its debts given that it had a huge windfall from the doubling of oil prices over the past 18 months. Nigeria is a significant oil producer and a member of the Opec cartel.
“The key issue is that Nigeria has substantial oil revenues this year. Nigeria wished to write off its debts . . . it did a deal with the Paris Club that it would have some of them written off if it agreed to pay some of them,” he said.
Under the terms of the Paris Club deal, Nigeria will see $18bn of its total of $30bn cancelled on condition that it pays off the remaining $12.4bn immediately out of its bumper oil revenues. Half is to be paid in the coming days and the rest in March.
But the Jubilee Debt Campaign argues that Nigeria is one of the world’s poorest countries – one in five children does not live to the age of five – and has already paid off $17bn of debt. The rest – consisting of penalties and interest – was run up by previous dictators.
The country has a democratic government which, Jubilee says, has made clear steps in fighting corruption and was praised by the World Bank for its transparency and willingness to commit future funds to the poor.
All proceeds from debt relief have been earmarked for poverty reduction and will be tracked through the World Bank-supported Virtual Poverty Fund.
Reverend David Ugolor of Jubilee Nigeria said: “This money should be helping the 80m Nigerians who live in extreme poverty, not subsidising rich countries like the UK. If they take this money, they will be denying our people access to education, healthcare and water. We call on the UK and other rich governments not to take the money. If they do, we will hold them responsible for condemning many of our poor to continued suffering and death.”
But Mr Brown insisted the debt deal, which will save Nigeria $1bn a year in debt servicing cost, was one that Nigeria was happy with and willingly signed.
“Nigeria is not one of the heavily-indebted poor countries (HIPC) and has lots of potential wealth,” he said. As a result of the Gleneagles debt deal, he said, up to 40 HIPC countries would be seeing significant reductions in their debts.
At the end of 2004, Nigeria’s external debt came to $36bn, of which $30bn was owed to the Paris Club and $6bn to multilateral lenders such as the World Bank and African Development. Nigeria is the world’s eighth largest oil exporter and pumps about 2.4 million barrels per day of crude. It hopes this figure will rise to 3.5m bpd within five years in response to the surge in global prices over the last two years, which has seen oil prices double to close to $60 a barrel, bringing extra inflows of money into the African state.
Ashley Seager, The Guardian, November 5, 2005