NO matter the challenges confronting Nigeria, we are still a great country. We have patriots who will not allow the dignity and sovereignty of our country to be toyed with for any reason.
Bolaji Akinyemi, Professor of Political Science and former External Affairs Minister, explained in a recent interview that sovereignty waivers are for court arbitrations. “That is standard procedure.
Economic relations are different from political relations. In political relations, you can plead your sovereignty to protect you but in economic relations, you cannot plead your sovereignty to stop you from paying back your foreign loans.”
Also, renowned social critic, Femi Falana, SAN, said in a television interview: “In every international commercial agreement, that clause is a standard one. It has nothing to do with trading off the sovereignty of Nigeria”.
Data from the Debt Management Office, DMO, shows the total borrowing from China of US$3.121 billion as at March 31, 2020, are concessional bilateral loans (not high interest rate commercial loans) with interest rates of 2.50 per cent per annum, tenor of 20 years and grace period (moratorium) of seven years.
The China loans represented only 3.94 per cent of Nigeria’s total public debt of $79.303 billion as at March 31, 2020.
The loan terms are compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007. In addition, the low-interest rate reduces the Interest Cost to Government while the long tenor enables the repayment of the principal sum of the loans over many years.
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These two benefits make the provisions for Debt Service in our annual budget lower than they would otherwise have been if the loans were on commercial terms.
Furthermore, the $3.121bn loans are project-tied borrowing. The projects include Nigerian Railway Modernisation Project (Abuja to Kaduna section), Abuja Light Rail and Nigerian Four Airport Terminals Expansion Projects (Abuja, Kano, Lagos and Port Harcourt).
Others are the Nigerian Railway Modernisation Project (Lagos to Ibadan section), the rehabilitation and upgrading of Abuja-Keffi-Makurdi Road, among others. Noteworthy is that the infrastructural and economic impacts of these loans are visible.
For instance, the Abuja to Kaduna rail line has become a major source of transportation of commuters and cargo between Abuja and Kaduna. Also, the new international airport in Abuja has improved our air transportation, while the Lagos-Ibadan rail line, when completed, will ease human and cargo traffic on the busy Lagos-Ibadan expressway.
These projects have boosted job creation, upgraded our infrastructure deficits and helped us beat our economic recession. Above all, the loans were approved by the National Assembly.
We commend Nigerians for their vigilance on this matter. It has given us a valuable opportunity to understand it better. The bigger challenge is extending this vigilance to ensuring that all loans work equitably for all Nigerians, not just some favoured sections thereof.
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