Former Minister in Nigeria Oby Ezekwesili has responded to the recent loan by President Muhammadu Buhari from the Chinese government during the Forum for China-Africa Corporation (FOCAC) 2018.
This event was attended by the 53 Heads of Government from Africa hosted by the President Xi Jinping of China.
Mrs. Oby Ezekwesili in a thread on Twitter shared her views on the aide of $328 million from China. She shared her experience in negotiating with the Chinese while she worked at the World Bank for many years reaching up to the position of Vice-President.
According to Mrs. Oby Ezekwesili;
Chinese attitude to Indebtedness is the HARDEST in the world. I know, because one had to deal with it in the course of my work @ the World Bank, helping African countries to get the HIPC Debt Cancellation. It ANNOYS ME TO NO END to see our countries BINGING on Chinese Loans.
Most annoying of this latest round of RISING SCALE of Public Debt by countries of the continent is that the politicians are behaving EXACTLY like the ones who PILED UP DEBTS in the 80s & 90s. “Just sign up for plenty Loans…forget about imperatives of Debt Sustainability.” KAI!!
The Chinese KNOW EXACTLY what they are doing. If you read their Loan Agreements with African countries, you will see how TIGHT they cover their exposure. Meanwhile, our own Leaders go there to naively, gleefully and with huge dose of inferiority complex, sign on to BAD DEALS.
Our Teams put so much effort into helping countries which received significant Debt Reductions under HIPC to build up Debt Management capacities. The idea was to help avoid a REPEAT of the DEBT ALBATROSS of the 80s, 90s and early 2000s. Alas, the REPEAT is on @ a LARGE SCALE.
For the massive Investment that our continent needs for even basics like Infrastructure (some $93B annually from one of the studies by our team some years ago), the continent does NEED to BORROW to complement primary source of financing- its own domestic revenue mobilization.
However, BORROWING WELL is at the heart of Public Debt Management. Watching the External Loan Bazaar – especially the Chinese genre – that has been happening across Africa in recent times, WE SHOULD ALL BE WORRIED. Countries are best advised to AVOID the RISKIEST DEBT TYPES.
Lacking the WILL to carry out BOLD &Politically Costly REFORMS that will attract Private Sector investment into critical sectors of Economy, our Governments substitute with RISKY NON-CONCESSIONARY LOAN from China & elsewhere. Some even hand over national patrimony in exchange.
Until African leaders &citizens mobilize CONSENSUS around the CORE ROLE of private sector in helping SOLVE our ECONOMIC problems, WE SHALL KEEP GOING A-BORROWING & thus A-SORROWING. Citizens are ENABLING #LazyLeaders on the Continent to AVOID HARD WORK & go for #ChineseLoans.
Nigeria’s total public debt stock at the end of the first quarter of the 2017 fiscal year was N19.16 trillion (or US$62.9 billion), representing about 18% of nominal GDP. Governments( previous & current liked and like quoting this) & declaring that it is within global threshold.
Folks, Debt to GDP ratio is NOT the CRITICAL INDICATOR for our country. What should worry us SERIOUSLY is our : Debt Servicing to Revenue Ratio. Last time I followed the data of the IMF on this, it was 63% . Gosh. This is squeezing out Fiscal Space for Public Investment!
The combination of HIGH levels of Debt Servicing Ratio & Recurrent Cost of Government entirely consume our Public/Budget Revenue, leaving us to finance Capital Investment/Budget by running a DEBT-FUNDED Fiscal Deficit. It is a vicious cycle. We are entrapped & MUST BREAK OUT