Tayo Oke
So much has been said and written about sovereignty and loan in reference to China in the last week that the public will have found a little bewildering. That Nigerian loan negotiators willingly signed away the country’s sovereignty at the behest of China; that the negotiators did not even know or bother to find out the terms of the agreement; that they simply signed what amounts to a blank cheque in favour of the Chinese. The National Assembly has been aghast at the turn of events and has been delving into the details. The person fronting the loan request, the Minister for Transportation, Chibuike Amaechi, has given evidence to a House of Representatives committee, where he warned the members not to meddle too much into the agreement for fear of offending the Chinese, which could then scupper the deal and the country’s rail project.
There are two narratives on offer to the public from this. One, that China is an enormously generous and kind lender, with the sole intention of helping the infrastructural development of Nigeria through its “Belt and Road Initiative” that extends throughout Africa. China, it is thought, gives loans without any ulterior motive; without the slightest intention of seeking “hegemony” over an inch of the territory of Africa, unlike the old colonial masters of yesteryears. The other narrative is one which alarms everyone including China itself. It is that the country is a predatory lender, who does not care very much about how the money lent is spent as long as it can get its hands on the precious resources of the borrowing nation in an anticipated default. These are powerful, and highly seductive lines. But, neither gives the correct interpretation of reality.
International movement of capital and commerce is one that is totally devoid of sentiments and injured feelings, of the kind enveloping the debate over the Chinese loan. Loan deals, unlike other commercial transactions, are rarely, if ever, susceptible to parity and asymmetry of negotiating strengths. On the contrary, a loan deal is usually a David and Goliath situation. And, guess who usually comes top? The day the beggar dictates his own terms is the day he ceases to be a beggar. The National Assembly can huff and puff about loss of sovereignty all day long, until the cows come home, it will not make a blind bit of difference to the country’s inherently inferior negotiating position vis-à-vis China or any other lender for that matter. You need my money, here are my terms. That is the bottom line the Nigerian lawmakers appear to find stomach chilling at the moment, but they will get over it. China under Xi Jinping’s leadership has moved into the space long vacated by western economic interest in developing nations across the world. China has invested more than $700bn in 112 countries across the developing world to date. China is the single largest creditor to Africa, holding almost a quarter of the continent’s total debt. Chinese investment presence has been felt more in Djibouti, Ethiopia, Kenya, Niger, Angola, etc. Angola is a particular case in point. It has one of the highest per capita incomes in Africa with loads of revenue from oil. It is, nonetheless, exposed to Chinese loans to the tune of $25bn. Those who wish to play down the Chinese loan to Nigeria are quick to point out that the latter’s exposure to Chinese loan, at just over $3bn or 3.94% of the total debt burden of $80bn is really small beer. Or, is it?
It is difficult to play down Nigeria’s level of indebtedness to China considering the mountain of debts the politicians continue to build up elsewhere. Since the All Progressives Congress assumed the reins of power, the country’s debt profile has taken an upward trajectory. From N12tn in 2015, to over N30tn till date, and counting. Nigeria is not only borrowing from China, it is also busy accumulating debts from the IMF ($3.4bn), World Bank ($750m), “Sukuk” (Islamic) bond ($1.5bn), and (N162bn direct borrowing). This is not to count several layers of state borrowings all over the place. Talk of mortgaging the future of the unborn in this country? Look no further.
This is what puts the ‘miniscule’ Chinese loan in a proper context. What the lawmakers and many commentators find disconcerting about the loan is the ‘offending clause’ in the agreement which reads: “Borrower hereby irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8 (5)…except for the military assets and diplomatic assets”. Many experts and influential commentators have given their words of reassurance that this is pretty normal, anodyne stuff. In other words, it is a standard form agreement. While this position is generally correct, it is missing the point. It is that such loan undertakings are quasi-treaties, and should always be subject to ratification by the National Assembly. In this case, it has not, simply because the Debt Management Office has been empowered by the Debt Management Office Act 2003 and Fiscal Responsibility Act 2007, to comb through such deals on behalf of the Executive branch. Consequently, the National Assembly can shine a light on it once it has been signed and, (if that is the intention), sow the seeds of confusion and cynicism around it as a show of their disgust, but that is all they can do.
Anyway, why would China wish to continue lending to Nigeria, and Africa, despite the growing public outcry over a possible new wave of Chinese “debt entrapment” sweeping through the continent? After all, it was not too long ago that the continent was engrossed in a moral crusade demanding debt forgiveness from Western lenders. Much of the unpaid and unpayable debts were indeed forgiven, and written off, leaving room for new and fresh lenders to throw the dosh at the continent. China has stepped into the vacuum not necessarily as a Good Samaritan, but principally for self-interest. First, China has built up trillions of dollars in foreign reserves over the last 30 years of economic growth and expansion. She has invested a lot of it buying the US Treasury bonds in their trillions, but has come to realise how ‘risky’ this strategy has become in view of the new ‘Cold War’ between China and America. China is set to overtake the US as the leading economy in the world by 2030, if not earlier. America’s attitude towards the growing Chinese economic influence has become decidedly hostile across the aisles in the US Congress. China must, therefore, find other outlets for the surplus cash in its coffers hence, the pivot towards Africa and other less developed nations. Second, the loan deals serve China’s need for raw materials as well as her long term geopolitical interest.
As for the “loss” of sovereignty in respect of Chinese loans to Africa, this is simply poppycock, I am afraid. How much sovereignty could Africa have already lost to the IMF and its draconian and infamous “Structural Adjustment Programme” over the last three decades? The IMF regularly, and practically, fills the finance ministries of many states on the continent with personnel directly from Washington, ‘advising’ them of reform mechanism, and setting their macro-economic priorities for them. On the face of it, therefore, Nigerian officials seem happy to hobnob with their Washington-based, Western finance ‘mentors’ because sovereignty is assumed to have been conceded anyway, but when China asks them to put pen to paper on a small aspect of that, they suddenly throw up their hands in horror. Members of the House of Representatives, please give us a break!
drtayooke@gmail.com
