Africa

US lawmakers call Nigerian debt ‘odious’

Washington: Anti-debt campaigners and some U.S. lawmakers are joining forces to call on the George W. Bush administration to return debt arrears owed by Nigeria and to let the African nation spend the funds on health and education through a World Bank-sponsored fund.

Eighteen members of the U.S. Congress sent a letter to U.S. Treasury Secretary John Snow and Export-Import Bank President James Lambright asking Washington to return part of the 12.4 billion dollars Nigeria will have to pay by March as part of a debt reduction agreement reached last year with the Paris Club.

In October, the Paris Club of bilateral creditors agreed to forgive 18 billion dollars of Nigeria’s 34-billon-dollar debt. As part of the deal, Nigeria agreed to pay 12.4 billion dollars to its creditors over the next six months from its debt arrears. The first part, 6.3 billion dollars, is being paid now while the last part will have to be paid by March.

But the legislators argued in their letter that Washington should send back the funds on humanitarian grounds, especially since the sum owed to the United States – 396 million dollars – is comparatively small.

The U.S. share of the debt is held by the Ex-Im Bank and the U.S. Agency for International Development.

“We feel that the U.S. should not accept the payment of debt from Nigeria given that it is one of the world’s most impoverished countries,” said the letter. It added that a write-off would cost the United States, the world’s largest economy, “a relatively small amount in terms of the U.S. budget, but large in terms of the potential impact in Nigeria”.

The lawmakers, led by Rep. Donald Payne, a New Jersey Democrat, and Rep. Maxine Waters, a Democrat of California, noted that 20 percent of Nigerian children do not live to the age of five. In the impoverished West African nation, 2,500 children die every day from preventable diseases, while more than 300,000 Nigerians die each year from HIV/AIDS.

The United States, the country’s seventh largest creditor, holds a smaller share of Nigeria’s foreign debt than Britain, Italy, France or Germany.

Under the proposal, the amounts forgiven will go for poverty reduction by channeling them through the World Bank-sponsored Virtual Poverty Fund. The lawmakers say the programme will be transparent since it includes oversight by government and civil society groups.

Earlier this month, several non-governmental organisations, including ActionAid, Oxfam, Islamic Relief, Christian Aid and Jubilee Debt Campaign, wrote to British Prime Minister Tony Blair urging him to consider similar moves. The groups noted that the largest share of the Nigerian arrears was going to the British government.

“This means that in just the next few months, the UK will receive from Nigeria almost exactly twice as much as it is giving in aid to the whole of Africa in 2005,” the groups said.

The payment from Nigeria is also more than what Britain will contribute to the G8 debt cancellation deal for 18 other poor countries over the next 30 years.

Britain will take 26 percent of the amount due, while Italy, France and Germany will be taking 17 percent.

When the Paris Club debt write-off plan surfaced in October, civil society groups criticised the deal as incomplete. They said it did not take note of the fact that the origins of Nigeria’s debt were based on fraudulent lending or built up through penalties and interest on arrears accrued by previous dictators.

The U.S. lawmakers made the same point in their letter on Wednesday.

“Much of Nigeria’s debt can be considered odious given the fact that the original loans were made to authoritarian regimes – many of which were then looted while interest and penalties accumulated,” they said.

Anti-debt organisations have decried conditions in the Paris Club agreement that they say would force Nigeria into a new economic belt-tightening programme sponsored by the International Monetary Fund (IMF), which is not a creditor.

The IMF, which is controlled by the world’s most industrialised nations, has often been blamed for imposing stringent, and frequently controversial, economic policies that benefited international corporations and local elites at the expense of the poor and the public ownership.

But those opposed to canceling Nigeria’s debts point out that it is an oil-producing nation that should be able to use oil revenues to pay its arrears, especially with oil prices at near record highs.

Nigeria is a member of the Organisation of Petroleum Exporting Countries (OPEC).

Emad Mekay, Inter Press Service News Agency, January 7, 2006

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Categories: Africa, Nigeria, Odious Debts

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