Economy
Reps Move to Cancel Nigeria’s Loans From China
The House of Representatives has resolved to set up an investigation committee to look into all extant China/Nigeria loan agreements since 2000 with a view to ascertaining their viability, regularising and renegotiating them.
This was sequel to a unanimous adoption of a motion by Rep, Ben Igbakpa (PDP-Delta) at the plenary on Tuesday.
Moving the motion earlier, Igbakpa said that the National Assembly, the arm of government responsible for appropriation had been kept in the dark on how most of these Chinese loans were collected and utilised.
He said there is widespread global concern about the fraudulent, irregular and underhand characteristics of Chinese loan contracts with African states.
According to him, it has resulted to a new form of economic colonialism foist by China; there is an urgent need to subject all subsisting Nigeria/China contractual loan agreements to forensic fiscal scrutiny and review.
He said that records from Nigeria’s Debt Management Office (DMO) revealed that the People’s Republic of China emerged Nigeria’s major creditor under the bilateral deals with $2.3 billion out of $3.3 billion.
Igbakpa said that the EXIM Bank of China is Nigeria’s biggest bilateral creditor in nearly two decades, having lent the African largest economy $6.5 billion (N1.9 trillion) since 2002.
“Transportation and ICT sectors have six projects each financed by loans from the Chinese bank, while energy, agriculture and water sectors, respectively, have three and two projects tied to Chinese loans.
“According to the Daily Post of Sept. 5, 2018, the first Chinese loan to Nigeria was agreed on March 27, 2002, as follows: $114.89 million each for constructing two 335 MW gas power plants, namely Omotosho and Papalanto (Olorunshogo) in Ondo and Ogun States, respectively.
“Both plants were completed in 2007; the loan was obtained at six per cent interest rate and it covered 65 per cent of the costs of the project, while Nigeria then covered the 35 per cent balance.
“Four months after, two other loans totalling $159.83 million for rural telephony were offered at a 3.5 per cent interest rate.
“Then from 2006 to September 2018, the country obtained 13 more loans, at between 2.50 per cent and three per cent interest rates.
“The last loan obtained by the government from China was $328 million used for the National ICT Infrastructure Backbone II Project.
“At the last count Nigeria has obtained 17 Chinese loans to fund different categories of capital projects and Nigeria would still be servicing the Chinese loans till around 2038, the maturity date for the last loans obtained in 2018,” he said.
The legislator expressed concern that the IMF as reported in the Guardian of Nov. 3, 2019, had raised the alarm that most of the Chinese deals are not Paris Club compliant, and for which the The World Bank has blacklisted six Chinese companies currently operating in Nigeria.
According to him, this is over alleged fraudulent corrupt practices including deceptive tactics, illicit trade, extortion, Greek gifts and neo-colonial proclivities.
Igbakpa listed the companies as published on the World Bank’s website to include CCECC Nigeria Railway Company Limited, CRCC Petroleum and Gas Company Limited and CCECC Nigeria Company Limited.
Others are China Railway Construction (International) Nigeria Company Limited, China Railway 18th Bureau Nigeria Engineering Company Limited and CCECC Nigeria Lekki (FTA) Company Limited.
Igbakpa said that one of the blacklisted companies, China Civil Engineering Construction Corporation (CCECC), is the major vehicle through which Chinese projects in Nigeria are financed.
“This much has been corroborated by Minister of Transportation, Mr Rotimi Amaechi, who stated that since China was financing the projects through the China Civil Engineering Construction Corporation (CCECC), the contractors had 100 per cent execution right on them.
“This means that materials and skills are imported from China thus undermining local industry and jobs.
“The fact that some of the latest loans tied to the said CCECC as reported in Guardian of March 3, 2020, are as follows:
“On railway alone, this administration has recently signed loans mainly categorised under Belt and Road Initiative (BRI)’s government to government agreements of approximately $17 billion with China Civil Engineering Construction Corporation, a subsidiary of the state-owned China Railway Construction Corporation.
“The Federal Government in 2016 signed a $5.1 billion Kano–Kaduna and Port Harcourt-Calabar rail contracts; in 2018, the country signed a $6.7 billion for Ibadan-Kano rail.
“It signed in 2019, a deal worth $1.488 billion for Lagos–Ibadan rail and again in 2019 signed another loan for construction of $3.9 billion Abuja-Warri rail,” he said.
The lawmaker said that amidst widespread allegations of heavily inflated Chinese contracts and fears expressed by stakeholders that most of the projects allegedly did not follow extant regulations, particularly the Public Procurement Act, which enforces tendering or competitive bidding.
He said that industry watchers have also raised fears over why the Public Procurement Bureau (PPB), the National Assembly and Debt Management Office were bypassed in the approval and execution of these loan regimes.
He said this was done knowing full well that 70 per cent of the corruption in the country is being fuelled by contracts.
Igbakpa said that Nigeria is the most vulnerable in the bilateral loan pacts with China because Nigeria is susceptible to currency volatility risks.
According to him, such risks, most often are transferred to the country with a weaker economy.
“In this connection, we must heed the warning of the IMF Director of Monetary and Capital Markets Department, Tobias Andrian, in the Guardian Sunday Magazine of Nov. 3, 2019.
“It says that because these Chinese loans do not conform to the Paris Club standards, if there is any debt restructuring down the road one day, that can be very unfavourable to those debtor countries,” he said.
Igbakpa recalled that in Business Day of May 14, 2019, countries like Sri Lanka, Zimbabwe, Djibouti, Zambia, Namibia, Kenya and Angola, are at the verge of forfeiting their infrastructures to China over unpaid debts.
He said that industry watchers such as Obadiah Mailafiya, a former Deputy Governor of Nigeria’s Central Bank, who played a key role in Nigeria’s debt relief negotiations with the Paris Club of public creditors in 2005, and Dr Oby Ezekwesili who also helped Nigeria’s debt forgiveness during her time as Director at the World Bank, have warned.
According to him, they said that the assistance from China will come with a price of economic takeover if Nigeria is unable to repay her loan.
The legislator said that the Chinese attitude to indebtedness is the hardest in the world as they do not offer debt relief or cancellation.
“Further worried by the startling revelation as published in an online article by Mma Ama Ekeruche in Stears Business Economy Oct. 26, 2018, that Chinese companies generate their highest revenue from Nigeria.
“Between 2000 and 2016, these companies have earned $34.2 billion from implementing projects in Nigeria, some of which are tied to loan agreements.
“On employment, about 64,500 Chinese workers are employed locally thus we are forgoing alternative streams of income and jobs,” he said.
The house resolved that in the light of the COVID-19 starting from China, the House Committees on Treaties, Protocols and Agreements, Finance as well as Debt Management be mandated to liaise with the Ministry of Finance and the Debt Management Office to seek for review or outright cancellation of latest China loans to Nigeria, on the principle of force majeur.
The green chamber also recommended that henceforth, loans should be in tandem with statutory obligations as prescribed by the Fiscal Responsibility Act. (NAN)
The Federal Government says it will continue to borrow within manageable and sustainable limits in accordance with the Debt Management Office (DMO) debt sustainability framework.
This is contained in a statement by the Director, Information and Public Relations in the Ministry of Finance, Mr Mohammed Manga, in Abuja on Wednesday.
President Bola Tinubu recently requested the approval of the 2024 – 2026 external borrowing rolling plan from the National Assembly.
Tinubu has requested the National Assembly’s approval to secure external loans of 21.5 million dollars and 15 billion Yuan, along with a grant of 65 million Euro, as part of the federal government’s proposed 2025–2026 external borrowing plan.
Manga said that the proposed borrowing plan was an essential component of the Medium-Term Expenditure Framework (MTEF) in accordance with both the Fiscal Responsibility Act 2007 and the DMO Act 2003.
“The plan outlines the external borrowing framework for both the federal and sub-national governments over a three-year period, accompanied by five detailed appendices on the projects, terms and conditions, implementation period, etc.
“By adopting a structured, forward-looking approach, the plan facilitates comprehensive financial planning and avoids the inefficiencies of ad-hoc or reactive borrowing practices.
“This strategic method enhances the country’s ability to implement effective fiscal policies and mobilise development resources,” he said.
According to the statement, the borrowing plan does not equate to actual borrowing for the period.
“The actual borrowing for each year is contained in the annual budget. In 2025, the external borrowing component is 1.23 billion dollars, and it has not yet been drawn.
“This is planned for H2 2025, the plan is for both federal and several state governments across numerous geopolitical zones including Abia, Bauchi, Borno, Gombe, Kaduna, Lagos, Niger, Oyo, Sokoto, and Yobe States.
“Importantly, it should be noted that the borrowing rolling plan does not equate to an automatic increase in the nation’s debt burden.
“The nature of the rolling plan means that borrowings are split over the period of the projects, for example, a large proportion of projects in the 2024–2026 rolling plan have multi-year drawdowns of between five to seven years which are project-tied loans,” Manga said.
He said that these projects cut across critical sectors of the economy, including power grids and transmission lines, irrigation for improving food security, fibre optics network across the country, fighter jets for security, rail and road infrastructure.
According to him, the majority of the proposed borrowing will be sourced from the country’s development partners, like the World Bank, African Development Bank, French Development Agency, European Investment Bank, JICA, China EximBank, and the Islamic Development Bank.
Manga said that these institutions offer concessional financing with favourable terms and long repayment periods, thereby supporting Nigeria’s development objectives sustainably.
He said that the government seeks to reiterate that the debt service to revenue ratio has started decreasing from its peak of over 90 per cent in 2023.
Manga said that the government has ended the distortionary and inflationary ways and means.
According to him, there is significant revenue expectations from the Nigerian National Petroleum Corporation Limited (NNPC Ltd), technology-enabled monitoring and collection of surpluses from government owned enterprises and revenue-generating ministries, departments, and agencies and legacy outstanding dues.
“Having achieved a fair degree of macroeconomic stabilisation, the overarching goal of the federal government is to pivot the economy onto a path of rapid, sustained, and inclusive economic growth.
“Achieving this vision requires substantial investment in critical sectors such as transportation, energy, infrastructure, and agriculture.
“These investments will lay the groundwork for long-term economic diversification and encourage private sector participation.
“Our debt strategy is therefore guided not solely by the size of our obligations, but by the utility, sustainability, and economic returns of the borrowing,” he said.(NAN)
The Federal Government says it will continue to borrow within manageable and sustainable limits in accordance with the Debt Management Office (DMO) debt sustainability framework.
This is contained in a statement by the Director, Information and Public Relations in the Ministry of Finance, Mr Mohammed Manga, in Abuja on Wednesday.
President Bola Tinubu recently requested the approval of the 2024 – 2026 external borrowing rolling plan from the National Assembly.
Tinubu has requested the National Assembly’s approval to secure external loans of 21.5 million dollars and 15 billion Yuan, along with a grant of 65 million Euro, as part of the federal government’s proposed 2025–2026 external borrowing plan.
Manga said that the proposed borrowing plan was an essential component of the Medium-Term Expenditure Framework (MTEF) in accordance with both the Fiscal Responsibility Act 2007 and the DMO Act 2003.
“The plan outlines the external borrowing framework for both the federal and sub-national governments over a three-year period, accompanied by five detailed appendices on the projects, terms and conditions, implementation period, etc.
“By adopting a structured, forward-looking approach, the plan facilitates comprehensive financial planning and avoids the inefficiencies of ad-hoc or reactive borrowing practices.
“This strategic method enhances the country’s ability to implement effective fiscal policies and mobilise development resources,” he said.
According to the statement, the borrowing plan does not equate to actual borrowing for the period.
“The actual borrowing for each year is contained in the annual budget. In 2025, the external borrowing component is 1.23 billion dollars, and it has not yet been drawn.
“This is planned for H2 2025, the plan is for both federal and several state governments across numerous geopolitical zones including Abia, Bauchi, Borno, Gombe, Kaduna, Lagos, Niger, Oyo, Sokoto, and Yobe States.
“Importantly, it should be noted that the borrowing rolling plan does not equate to an automatic increase in the nation’s debt burden.
“The nature of the rolling plan means that borrowings are split over the period of the projects, for example, a large proportion of projects in the 2024–2026 rolling plan have multi-year drawdowns of between five to seven years which are project-tied loans,” Manga said.
He said that these projects cut across critical sectors of the economy, including power grids and transmission lines, irrigation for improving food security, fibre optics network across the country, fighter jets for security, rail and road infrastructure.
According to him, the majority of the proposed borrowing will be sourced from the country’s development partners, like the World Bank, African Development Bank, French Development Agency, European Investment Bank, JICA, China EximBank, and the Islamic Development Bank.
Manga said that these institutions offer concessional financing with favourable terms and long repayment periods, thereby supporting Nigeria’s development objectives sustainably.
He said that the government seeks to reiterate that the debt service to revenue ratio has started decreasing from its peak of over 90 per cent in 2023.
Manga said that the government has ended the distortionary and inflationary ways and means.
According to him, there is significant revenue expectations from the Nigerian National Petroleum Corporation Limited (NNPC Ltd), technology-enabled monitoring and collection of surpluses from government owned enterprises and revenue-generating ministries, departments, and agencies and legacy outstanding dues.
“Having achieved a fair degree of macroeconomic stabilisation, the overarching goal of the federal government is to pivot the economy onto a path of rapid, sustained, and inclusive economic growth.
“Achieving this vision requires substantial investment in critical sectors such as transportation, energy, infrastructure, and agriculture.
“These investments will lay the groundwork for long-term economic diversification and encourage private sector participation.
“Our debt strategy is therefore guided not solely by the size of our obligations, but by the utility, sustainability, and economic returns of the borrowing,” he said.(NAN)
The Chairman, Joint Tax Board (JTB), Dr Zacch Adedeji, has urged officials of the board to organise traders and artisans into a formal body before capturing them in the tax net.
Adedeji said that this was in line with the agenda of President Bola Tinubu not to tax poverty but prosperity.
The chairman stated this at the 157th Joint Tax Board meeting held in Ibadan, on Monday.
The theme of the meeting “Taxation of the Informal Sector: Potentials and Challenges”.
Speaking on the theme of the event, Adedeji stressed the need to evolve a system that would make the informal sector formal before it could be taxed.
Adedeji, who also doubles as the Chairman, Federal Inland Revenue Service, (FIRS), said “What I would not expect from the JTB meeting is to define a system that would tax the informal sector.
“The only thing is to formalize the informal sector, not to design a system on how to collect tax from market men and women.
“As revenue administrator, our goal is to organise the informal sector so that it can fit into existing tax law.”
Citing a report of the National Bureau of Statistics (NBS) in the first quarter of 2023, the chairman said that the nation’s unemployment index was attributable to recognised informal work.
Adedeji stated that workers in that sector accounted for 92.6 per cent of the employed population in the country as at Q1 2023.
“JTB IS transiting to the Joint Revenue Board with expanded scope and functions.
“We are hopeful that by the time we hold the next meeting of the Board, the Joint Revenue Board (Establishment) Bill would have been signed into Law by the President.
“The meetings of the board provide the platform for members to engage and brainstorm on contemporary and emerging issues on tax, and taxation,” he said.
In his address, Gov. Seyi Makinde of Oyo State, said the theme of the meeting was apt and timely, stressing that it coincides with the agenda of the state to improve on its internally generated revenue.
According to him, the meeting should find the best way forward in addressing the issue of the informal sector and balance the identified challenges.
“Nigeria is rich in natural resources, but it is a poor country because economic prosperity does not base on natural resources,”
Makinde also said that knowledge, skill and intensive production were required for economic prosperity, not just the availability of natural resources.
He stressed the need to move from expecting Federal Allocations to generating income internally.
“We are actively ensuring that people are productive and moving the revenue base forward,” Makinde said.
The governor said that tax drive should be done by simplifying tax processes, incentives for compliance like access to empowerment schemes and loans.
He urged JTB to deepen partnership and innovation in using data on tax to track and administer it.
Earlier, the Executive Chairman, Oyo State Board of Internal Revenue, Mr Olufemi Awakan, said the meeting was to address tax-related matters, evolve a workable, effective and
efficient tax system across the states and at the Federal level.
He urged participants to find amicable solutions to challenges of tax jurisdiction, among others.
Tax administrators from all the 36 states of the federation, who are members of JTB, were in attendance. (NAN)
The Nigeria Customs Service (NCS), Federal Operation Unit (FOU), Zone D, has seized smuggled goods worth over N110 million between April 20 till date.
The Comptroller of Customs, Abubakar Umar, said this at a news conference on Tuesday in Bauchi.
He listed the seized items to include 11,200 litres of petrol; 192 bales of second hand clothing, 140 cartons of pasta, 125 pairs of jungle boots, 47 bags of foreign parboiled rice and 9.
40 kilogramme of pangolin scales.Umar said the items were seized through increased patrols, intelligence-led operations, and strengthened inter-agency collaboration.
The comptroller said the pangolin scales would be handed over to the National Environmental Standards and Regulations Enforcement Agency (NESREA) for appropriate action, while the seized petrol would be auctioned, and the proceeds remitted to the federation account.
He attributed the decrease in smuggling activities of wildlife, narcotics, and fuel to the dedication and professionalism displayed by the personnel in line with Sections 226 and 245 of the NCS Act 2023.
The comptroller enjoined traders to remain law abiding, adding the service would scale up sensitisation activities to combat smuggling.
“We remain resolute in securing the borders and contributing to Nigeria’s economic development,” he said.
The FOU Zone D comprises Adamawa; Taraba, Bauchi, Gombe, Borno, Yobe, Plateau, Benue and Nasarawa. (NAN)
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