Read more about Politics
Background: On Thursday, August 6, the House of Representatives summoned the Minister of Transport, Rotimi Amaechi; the Minister of Communication and Digital Economy, Ali Isa Pantani; the Minister of Finance, Budget and National Planning, Zainab Ahmed; the Minister of Power, Saleh Mamman; and the Director-General of the Debt Management Office, Patience Oniha, to appear on or before August 17 and provide answers on $500 million loan to be sourced from the Export-Import Bank of China for railway lines in the country. It is known that countries which are desperate for infrastructural development tend to overlook these controversial clauses especially if they think they can meet up with the loan conditions. In exchange for financing and building the infrastructure that poorer countries desperately need, China often demands back door access to their natural assets, mineral resources, land or seaports. This was the case in Sri Lanka, Djibouti, Greece and many more where wide-ranging national infrastructure has been taken over by these aggressive Chinese loans. There have been reports that in cases of default, these clauses cunningly wired into loan agreements are designed to easily scale arbitration determinations in favour of China, and eventually waive ownership of national assets in contention.
What Nigerian Law says:
According to Nigeria’s Fiscal Responsibility Act (FRA) Section 41, 1(a)), “governments at all tiers shall borrow for only capital expenditure and human development at concessional terms”. Nigeria’s procurement laws under the Procurement Act, also requires that infrastructure projects of such national magnitude must undergo a competitive bidding process to ensure that the government gets value for money.Sign up to the Connect Nigeria daily newsletter
As far as public knowledge is concerned, none of such control measures is being taken to ensure the protection of Nigeria’s sovereignty.
The Federal Government Response:
While speaking with media representatives during the assessment of resumption at the Idu-Abuja railway station, Rotimi Amaechi explained that the ‘controversial’ clause technically does not imply Nigeria is ceding sovereignty but allowing China some relief to take over assets for loan recovery if and when necessary. Conclusion: The incoming public hearing on the matter should surely also throw more light on the shady areas in the controversial loans agreement. Meanwhile, except that the Minister of Transport does not know what he is talking about, the conclusion from all the above premises would imply that the suspicion that some dodgy clauses have been inserted in the China EXIM loans, that could force Nigeria to handover funded assets until loans are recovered, is confirmed. Featured Image Source: Business Post NGGot a suggestion? Contact us: editor at connectnigeria dot com
You might also like:
- Tips for Managing Your Business’s Financial Records
- Borrowing From Friends or Family? Read This First
- How to Avoid Scams and Fraud in Nigeria
- “Build Your First Offer”: Q&A with Emeka Ebeniro on Navigating the Digital Economy and Launching Your First Offer
