Disclose details of China loans, liabilities, repayments, etc, SERAP tells government, Wike

The Socio-Economic Rights and Accountability Project (SERAP) has urged Nigeria’s 36 state governors and the Minister of the Federal Capital Territory, Abuja, Nyesom Wike to “disclose details of Chinese loans, liabilities and other external borrowings obtained and guaranteed by the Federal Government and the terms and conditions of such loans including collateral requirements.”

SERAP urged them to “provide details of payment obligations relating to Chinese loans, liabilities and other external borrowings obtained and guaranteed by the Federal Government, interest rates on the loans, and any defaults, debt restructurings and debt exposures to China and other creditors.”

SERAP also urged them to “clarify any investment agreements with Chinese companies and the repayment history of any loans, obligations and facilities obtained from China and other external creditors and guaranteed by the Federal Government.”

In a letter dated August 24, 2024 and signed by SERAP deputy director Kolawole Oluwadare, the organisation said: “We are concerned that your state and the FCT may be failing to efficiently manage your debt obligations, especially your external debt and investment obligations, as guaranteed by the Federal Government.”

According to SERAP, “Failure to uphold your obligations is contrary to Section 6 of the Debt Management Office (Etc) Establishment Act, and poses financial and other risks to Nigeria in relation to these loans, obligations and other external borrowings from China.”

SERAP stated, “Loans, obligations and other external borrowings from China undertaken by your country and the FCT may not be used for the purposes specified in the terms and conditions guaranteed by the Federal Government.”

The letter reads in part: “SERAP is concerned that there is a significant risk of default on loans, obligations and other external borrowings from China by your state and the FCT, which are guaranteed by the Federal Government.

“There is also a significant risk of seizure of Nigerian assets in foreign jurisdictions by multilateral and bilateral institutions and other creditors if your state and the FCT fail to comply and meet the terms and conditions of Chinese loans, obligations and other external borrowings guaranteed by the Federal Government.

“The lack of safeguards and accountability mechanisms for these Chinese offshore loans, liabilities and borrowings could also leave Nigerian assets in foreign jurisdictions vulnerable to seizure.

“Your country and the FCT have a joint obligation to ensure that the disbursement and repayment plans of China’s loans, obligations, facilities and other external borrowings are consistent with national and international standard provisions, and to prevent or mitigate the risk of confiscation of Nigerian assets abroad.

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“We would appreciate it if the suggested steps are taken within 7 days of receipt and/or issuance of this letter. If we have not heard from you by then, SERAP will consider appropriate legal action to compel your government and the FCT to comply with our request in the public interest.

“Although your states and the FCT have obtained a number of loans, obligations, investment obligations and foreign loans, guaranteed by the Federal Government over the years, millions of Nigerians in your states and the FCT still do not have access to regular electricity supply and have not benefited from renewable energy solutions.

“A recent report by the National Bureau of Statistics (NBS) revealed that over 133 million Nigerians live in various categories of poverty, the majority of whom are women and children.

“SERAP is deeply concerned that many of the 36 states and the FCT in the country are allegedly mismanaging public funds which may include loans, liabilities and other foreign borrowings from China obtained from bilateral and multilateral institutions and agencies and guaranteed by the Federal Government.

“We urge you to disclose details of these Chinese loan disbursements, investment obligations and foreign loans, including details and locations of projects as well as implementation status and completion reports, if any, on these projects.

“According to the Nigerian Debt Management Office, the total external debt for Ogun State was N168,833,006.66 as at December 31, 2023. The total public debt portfolio for the 36 states and the Federal Capital Territory was N9.17 trillion.

“Nigeria’s total public debt, including external and domestic debt, increased by ₦24.33 trillion in just three months, from ₦97.34 trillion ($108.23 billion) in December 2023 to ₦121.67 trillion ($91.46 billion) as at March 31, 2024. The debt represents external and domestic borrowings by the Federal Government, 36 state governments and the FCT.

“SERAP noted that the World Bank has approved several loans and other financing facilities to 36 states in the country including a new $750 million credit line intended for states to implement reforms to attract investment and create jobs.

“The World Bank on December 15, 2020 approved a $1.5 billion loan for 36 states in Nigeria and the FCT for social protection and strengthening the COVID-19 response at the state level. The loan aims to help states build a resilient post-COVID19 recovery and reduce poverty.

“SERAP is concerned that Chinese loans and other foreign loans obtained by your state and guaranteed by the Federal Government are vulnerable to corruption and mismanagement.

“Publishing details of Chinese loans, liabilities, investment obligations and other external loans obtained by your states and the FCT guaranteed by the Federal Government will enable Nigerians to scrutinize them.”

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