Sunday Magazine

Chinese loans: Nigeria should learn from other African countries –Mailafia

Dr. Obadiah Mailafia is a Nigerian development economist, international polymath and former Deputy Governor of the Central Bank of Nigeria (CBN). In this interview with BIYI ADEGOROYE, the former official of the African Development Bank Group speaks on the propensity of Nigeria for foreign loans with lethal conditionality and pervasive corruption in the country



What is your impression about the lethal clause in the 2018 commercial loan Nigeria took from the Chinese Export Import Bank which borders on Nigeria’s sovereignty?



First of all, as someone who has been in the banking industry, I cannot ask the country or anyone not to borrow because capitalism works on the basis of credit. Countries need to borrow and we must get that very clear.


Borrowing is not a sin but borrowing for consumption is a very dangerous calamity and I’m not satisfied with a lot of loans we take. We are borrowing too much for consumption and not enough for clearly identifiable projects which can guarantee return for investment. That is my number one problem and several examples can be given, prominent of which is the Mambila Power Project which some put at $3billion.


There is nothing to show for it. To me that is extremely dangerous, and you will recall one group, I think in France was taking us to arbitration for breach of contract or so.


And on the Section 8 (1) of the commercial loan agreement with China, which says ‘the borrower hereby irrevocably waives any immunity on the grounds of sovereignty or otherwise for itself or its property in connection with any arbitration…,’


I think we have to be very careful. Waiving our sovereignty rights without any qualification is dangerous because it means that if the Chinese decide that they will take over Aso Rock, as part of repayment, it is all well and good. I found that very dangerous and totally unacceptable.


We need to be very clear to list any collateral items we are pledging for any loan as we normally do in the banking industry.


Given what has happened to some African countries who defaulted in their loan repayment to China, don’t we have any reason to fret?


That is why I said we should be specific about our collaterals. Look right now, the Chinese have taken over Lusaka Airport in Zambia.


They have also taken over the Zambian National Broadcasting Corporation and copper asset in the mining sector of the country. There are also certain places where Chinese Police operate in Zambia that Zambian Police are not allowed. Tell me, is Zambia a safe country now?


So it is dangerous; it is an inequity and in fact, it (signing of your sovereignty) almost bothers on treason, because, apart from your sovereignty, what else do you have as a country, really?


And if for whatever reason you are willing all your sovereign rights, in every material particular, then it means you have sold off your country. That is exactly what it is. Ask anybody with a background in International Law, and I have studied it, though I am not a specialist in it, but I have studied enough such that I can argue with any International Law expert anywhere in the world.


It is not just that. Countries like Ethiopia that are having issues paying back their Chinese loans are facing the same problem.


The Chinese are threatening to take over the railway that they built for the Ethiopians and many other countries are facing the same problem. Vast virgin land of the rain forest region of Madagascar is being taken over by the Chinese because the country could not service their loans.


I think that it was an insult on the country for the Honourable Minister of Transport, Chibuike Amaechi, to    come out and threaten that the Chinese would consider withdrawing their loan offer if parliament continued their debate on the matter.


The Chinese do not dictate how democratic institutions operate. In fact, that in itself is an insult to the Nigerian people, that China sitting over there in Beijing can threaten our democratic institutions not to do their work.

Parliament under our constitution has the right to debate any matter in our country and has the right to scrutinise any loan proposal, it is part of their work. In fact they are even the one to approve of such loan. Interestingly, the All Progressives Congress has the majority in the parliament. So it is easy for them to do.


But even then there have to be proper debate. So China is wrong to threaten us with this sort of thing. It is not acceptable. To me, it bothers on treason to pledge and waive your total sovereign rights to obtain a loan.


Nigeria is a country of 200 million people and it is more than 100 years old and shall be more than that by the grace of God. The matter of a loan with one foreign power is not enough to compromise our entire nation.


Outside that issue, I found it unconscionable and an insult to the collective interest of the entire Nigerians You know John Magufuli of Tanzania the other day turned down a $10billion loan offer from China. He said only a mad man and a drunk can sign such a loan agreement with such terms.


So, we must borrow with our eyes wide opened; pay attentions to all the small details in the terms. Fair enough, the Chinese are not giving us loans with IMF conditionalities.


These are put there because anyone that gives out loans must have guarantee that you will repay such. The Chinese have the right to state their guarantee terms, but it is now incumbent on us to agree with them what we can give. Look, don’t deceive yourself. The moment one uniform man comes to give orders in your country, you are no longer a safe country.


What role do you think the Nigerian legal team, headed by the Attorney- General of the Federation has to play regarding the terms of some of these agreements?


Well, you know we still have a big problem here. We have not learnt from our mistakes. You know the PI&B saga is still pending. I thought that by now the AG and Minister of Justice would have taken all efforts to review of contract agreements that Nigeria entered into with foreign country or countries. But if the AG saw those contracts and still allowed them to go, then we have a serious problem.


Now, no minister wants to be seen as the one standing between you and a loan that can be a lifeline for the government. And this government has serious financial embarrassment and challenges.


But I think it is very dangerous to go into a loan on any terms just because you need money. I think they should do more work. So far, I’m not satisfied with what they have done.


Now, this loan agreement was signed in 2018.


Don’t you think the National Assembly should have scrutinized this before it was entered into?


Of course, by law they should have. In fact and on basic principles, loan proposals still goes to the Senate for discussion and they give their approval in principle and it is on the basis of that that it is taken.


I think he last Senate, under the leadership of Senator Bukola Saraki turned it down, but now we have a rubber stamp parliament; that seemed to have run roughshod over it. But that is not good enough.


There are issues that should be outside party politics, such as national defence, national security, educational, health and the loans you take form foreign powers. So we need a consensus bipartisan approach that is patriotic, nationalistic and rigorous.


The website of the Debt Management Office puts the nation’s debt profile at $79billion. Is that not too huge an exposure?


It is extra-ordinary. Yes it is. It is not      just about the amount, but about the rapidity at which we incur it. Then the sorrowful part, very sorrowful is that we don’t have much to show for these loans.


That is the sad aspect. We continue to borrow and there is nothing we can point to as a competed project with these huge loans. I am very sorry to say even in Kenya and Ethiopia, where the Chinese have been involved in rail projects, the cost is only half of what we are spending.


We have been so foolish enough. In Ethiopia when they were discussing with the Chinese, they gave the Chinese some conditions like all the coaches and engines must be assembled in Ethiopia.


Number two, the Chinese must train more than 3,000 Ethiopian engineers and technicians on assembling, managing and operating this railway project. Finally, they built in the component of continued assistance maintaining the project once completed. Sadly, our own is BOT- Build, Operate and Transfer. To me it is an act of folly that the land of Chinua Achebe; the land of Wole Soyinka can have such an unscientific approach to development. It is very sad.


How do you see the manner the Minister glided over the matter when the National Assembly took him up on the issue?


I don’t know what he took that morning before going to the parliament, but I can tell you the truth, he did not know what he was talking about. I don’t think he even has an understanding of International law; he does not understand what sovereignty means and he does not understand that the country has waived it. I don’t think he is aware of what other countries have gone through when we talk about Chinese loans.


He is probably in the wrong job.


In terms of managing funds available to the nation for development, how do you see what is happening in NDDC right now where billions of naira are being flushed down the drain?


NDDC is a bazaar, an Arab bazaar where people make noise, shout and grab as much as they can and get away with it.


That is really what it is. It is not even a development institution, rather a place where people share money and this is very regrettable. The man who set it up, then President Olusegun Obasanjo, had very good intention, even though he did not implement a lot of them, but his successor, Umaru Musa Yar’Adua, did a lot.


Unfortunately this is the way things have turned. It is an embarrassment. I think we should freeze everything about NDDC and restructure that organization to put it on a proper footing. There should be a law that says that the operating cost of NDDC should never and must never exceed 20 per cent of the commission’s budget every year.


Salaries, emolument and cost of running the organization must fall within that. Besides, all these small projects and contracts here and there should be stopped. Rather there should be investment in sustainable power project, education, road infrastructures.


These is where the money should go to and then by law, every child in the oil bearing states must have scholarship up to post graduate level.


They should find a way to use that money judiciously, turn it into an endowment fund and bring into the board of the endowment fund an in-    ternational advisory council, made up of the World Bank, UNDP, maybe one or two bilateral organisations like the DFID and African Development Bank.


Bring them together with an independent Niger Delta and other Nigerian people into the advisory board, so that every penny coming out of the commission for any project must be scrutinised and approved by the advisory board. That is what I will recommend.


Otherwise, the whole thing is a frightening waste of resources. It is regrettable that an organization that was set up because of injustice has now become an embodiment and perpetrator of injustice.


Because that is what NDDC is today.


…and the alleged involvement of some National Assembly members in the contract scandal?


Well, that is what we are hearing from the media. Some of them have been implicated, but I have no evidence to conform anything like that. But if they have, they should come clean, refund the money or something like that. Anybody involved must be made to refund that money. Hat is my honest opinion.


The North-East Development Commission is also said to be unable to account for N100billion donation. What do you make of that?


Well, I think that we must take steps to investigate this. We need a forensic audit in this commission and ensure we prosecute anyone found wanting. Unfortunately, we don’t have an independent board that investigates and monitors all their projects. You see, people have used the lockdown to do a lot of evils, even to get away with murder. Look at the figures being bandied around in the case of the NDDC is in the neigbhourhood of N80billion between January and May. You can imagine and I suspect this might also be happening in the case of the North- East Commission.


The Minister of Humanitarian Affairs said she spent N600million on the School Feeding Programme during the lockdown too…


The point is who are you feeding when schools are on holiday? Look, I am against the feeding programme right from the beginning in the first place. Britain introduced the school feeding programme after World War II because there was a lot of malnutrition, but what they did was to put emphasis on milk.


Let me tell you, all these cows that we are worshipping, if we can just ask them to produce milk that is taken to the children in school, it will not be so expensive like the school feeding proramme. When you ask them to put meat in the food, they give the children what we call gwadza in Hausa, that is nonsense food and keep the rest of the money, so that the contractors just share the money.


So nothing is coming out of the school feeding programme. I’m not against the programme, but if you give the children milk in the afternoon, the nutritional value will be more than this nonsense food.


And unfortunately, I learnt that in Kaduna, during lunch time the schools will be filled with Almajiris and after feeding them will all disappear. So what they are creating is a false entitlement mentality that it is okay to expect free food. In Brazil they give certain conditions. The child must be in school. Their mother is given some amount of    money to ensure that they are retained in school and are learning something useful. They go to poor ladies, maybe a widow with four children with nobody to help her.


But here we are approaching it the wrong way. It is insulting to our intelligence to say we spend N600million to feed school children during the lockdown. They were not at school, but you claimed to have taken food to them at home. Is that within the mandate of the school feeding programme?

The answer is no. You can run things as if you are in a Banana Republic.


What do you make of the Boko Haram, attack, especially recently when Borno State Governor Prof. Babagana Zulum said that the war is being sabotaged?


No, I don’t agree with him. I have great respect for the military because they are fighting under very difficult circumstances. In this situation, my first instinct was to look for somebody to blame, not the military, but to me this is the principle. People who have signed to give their lives for you should not be blame for everything. I don’t agree with that.


That is why I am not happy with the Amnesty International. I used to be a member, but two years ago when they wrote a report condemning the Nigerian military, I signed off that I will not have anything to do with Amnesty International again for the rest of my life.


Look, put yourself in this situation. They are fighting for you. Instead of you to blame Boko Haram you are now blaming the military for infractions.


So the atrocities that Boko Haram is committing are not worth reporting but what the military did not do well was worth reporting! So in principle, I don’t agree with him. He was not attacked by the military but by Boko Haram. I’m sorry that his predecessors in office have been allegedly in complicity with Boko Haram and there is a lot of hypocrisy there.


Well, the military should have done better, which should also be looked at, but that is not enough to blame the Nigerian military who are doing their best under difficult conditions.



The killing in Southern Kaduna is assuming a terrifying dimension. What do you make of government’s action or inaction about it?


What is going on in Kaduna State is genocide; it is ethnic cleansing, and you know that General Sani Abacha said that if an insurgency goes on for more than 48 hours, the government knows something about it.


From the body language of the authorities, it seems clear to me that they know something about what is going on. I wouldn’t go as far as to say they are the ones engineering it.


Whose body language are you referring to in this regard?


…The state authorities, of course. Their body language suggests that they are very happy about what is going on. So it is genocide, a religious war against the people of Southern Kaduna. I am not the one saying it. The House of Lords in Britain has said exactly the same thing.


The International Commission for Religious Freedom in the United States has said the same thing, and there is a group in France that has said so too.


Unfortunately, it seems there is a conspiracy about this and I am afraid that some media houses have been bought over, or cajoled into not reporting this thing is genocide. Look at me; half of my family is Muslims, while the other half is Christians. Among the Jaba people in southern Kaduna, almost 30 per cent of them are Muslims, but we live peacefully with each other, as brothers and sisters.


But some people somewhere have imported mercenaries, militias and they have armed them to the teeth, many of them from Chad, Niger, and Mali.


They have gone into our villages, killed raped and committed all kinds of genocidal activities atrocities against innocent people. There is so much bloodshed, so much pain among our people and I don’t know why the whole world is watching this genocide going on. And the whole idea is to turn the whole Southern Kaduna into a vast Ruga settlement for Fulanis. That to me is the agenda. They have taken over large territories.


Laduga, around Kachia is larger than the whole of Abuja, but they have taken over the place. In my own area, Sanga Local Government, on the boundary with Plateau State, they have taken over a huge chunk of that area and thousands of these mercenaries have settled there with sophisticated weapons.


They spread terror everywhere and my people are living in hardship and sorrow. I am a humanist and a public intellectual and I have no reason to hate anyone, but I hate injustice, oppression and shedding of innocent blood.


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