August 25, (THEWILL) – The Socio-Economic Rights and Accountability Project (SERAP), has urged Nigeria’s 36 State Governors and the Minister of the Federal Capital Territory (FCT), Abuja, Nyesom Wike, to “disclose details of any Chinese loans, liabilities, and other external borrowing obtained, and guaranteed by the Federal Government as well the terms and conditions for any such borrowing including the provisions on collateral.”
The request follows ongoing controversy over a French court order obtained by a Chinese company, Zhongshan Fucheng Industrial Investment Co. Ltd., seeking to enforce an arbitral award of $74.5 million granted in its favour in 2021 against the Ogun government.
In pursuit of enforcement of its arbitration awards, armed with the ex parte orders issued by the Judicial Court of Paris on March 7 and August 12, 2024, Zhongshang has confiscated several Nigerian assets overseas, including two properties in Liverpool, a Dassault Falcon 7X in Paris, a Boeing 737, and a Bombardier 6000 type BD-700-1A10 valued $57million.
Consequently, SERAP demands from the 36 State governors and FCT Minister, to “provide details of the repayment obligations regarding any Chinese loans, liabilities and other external borrowing obtained and guaranteed by the Federal Government, the interest rates on the loans, and any defaults, debt restructurings, and debt exposure to China and other creditors.
“Clarify any investment agreements with Chinese companies and repayment histories of any loans, liabilities and facilities obtained from China and other external creditors and guaranteed by the Federal Government.”
In a letter dated 24 August 2024 and signed by its deputy director Kolawole Oluwadare, SERAP said: “We are concerned that your state and the FCT may have failed to manage your debt obligations efficiently, especially your external debt and investment obligations, as guaranteed by the Federal Government.
“The failure to uphold your obligations is contrary to Section 6 of the Debt Management Office Establishment (Etc), Act, and creates financial risks and other exposure to Nigeria concerning these Chinese loans, liabilities and other external borrowing.
“These Chinese loans, liabilities and other external borrowing by your state and the FCT may not have been used for the purposes for which they have been obtained and terms and conditions guaranteed by the Federal Government.”
The letters read in part: “SERAP is concerned that there is a significant risk of defaults of the Chinese loans, liabilities, and other external borrowing by your state and the FCT, which are guaranteed by the Federal Government.
“There are also significant risks of confiscation of Nigerian assets in foreign jurisdictions by multilateral and bilateral agencies and other creditors in cases of failure by your state and the FCT to satisfactorily observe and fulfil the terms and conditions of the Chinese loans, liabilities and other external borrowing which are guaranteed by the Federal Government.
“The apparent inadequacy of safeguards and accountability mechanisms for these Chinese loans, liabilities and other external borrowing may also expose Nigeria’s assets in foreign jurisdictions to confiscation.
“Your state and the FCT have a shared obligation to ensure that the spending and repayment plans of Chinese loans, liabilities, facilities and other external borrowing are consistent with the provisions of national and international standards, and to prevent or mitigate risks of confiscation of Nigerian assets abroad
“We would be grateful if the recommended measures are taken within 7 days of the receipt and/or publication of this letter. If we have not heard from you by then, SERAP shall consider appropriate legal actions to compel your government and the FCT to comply with our request in the public interest.
“Despite several external loans, liabilities, investment obligations and external borrowing obtained by your state and the FCT, which are guaranteed by the Federal Government over many years, millions of Nigerians in your state and the FCT continue to lack access to regular electricity supply and have been denied the benefit of renewable energy solutions.
“A recent report by the National Bureau of Statistics (NBS), revealed that over 133 million Nigerians are living in different categories of poverty, the majority of them women and children.
“SERAP is seriously concerned that many of the country’s 36 states and FCT are allegedly mismanaging public funds which may include Chinese loans, liabilities and other external borrowing obtained from bilateral and multilateral institutions and agencies and guaranteed by the Federal Government.
“We urge you to disclose the spending details of these Chinese loans, investment obligations and external borrowing, including details of and locations of projects as well as the implementation status and completion reports, if any, on the projects.
“According to Nigeria’s Debt Management Office, the total external debt for Ogun State is N168,833,006.66 as of December 31, 2023. The total public debt portfolio for the country’s 36 states and the Federal Capital Territory is N9.17 trillion.
“Nigeria’s total public debt stock, including external and domestic debts, increased by ₦24.33 trillion in three months alone, from ₦97.34 trillion ($108.23 billion) in December 2023 to ₦121.67 trillion ($91.46 billion) as of March 31, 2024. The debt represents external and domestic loans obtained by the Federal Government, the 36 state governments and the FCT.
“SERAP notes that the World Bank has approved several loans and other funding facilities to the country’s 36 states including the recent $750 million credit line meant to the states to carry out reforms to attract investment and create jobs.
“The World Bank on 15 December 2020 approved a $1.5 billion loan for Nigeria’s 36 states and the FCT for social protection and strengthened state-level COVID-19 response. The loan aims to help the states build a resilient recovery post-COVID-19 and to reduce poverty.
“SERAP is concerned that the Chinese loans and other external borrowing obtained by your state and guaranteed by the Federal Government are vulnerable to corruption and mismanagement.
“Publishing details of the Chinese loans, liabilities, investment obligations and other external borrowing obtained by your state and the FCT which are guaranteed by the Federal Government would allow Nigerians to scrutinise them.
“Section 39(1) of the Nigerian Constitution 1999 [as amended], section 44 of the Fiscal Responsibility Act and article 9 of the African Charter on Human and Peoples’ Rights to which Nigeria is a state party impose legal obligations on your state and the FCT to disclose the details sought.
“Section 41 of the Fiscal Responsibility Act provides: ‘1) The framework for debt management during the financial year shall be based on the following rules: a. Governments at all tiers shall only borrow for capital expenditure and human development, provided that such borrowing shall be on concessional terms with low interest rate and with a reasonably long amortisation period subject.
“Section 44 of the Fiscal Responsibility Act provides: (1) Any Government in the Federation or its agencies and corporations desirous of borrowing shall specify the purpose for which the borrowing is intended and present a cost-benefit analysis, detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied.
“According to section 21(1)(2) of the Debt Management Office Establishment (Etc), Act, ‘No external loan shall be approved or obtained by the Minister unless its terms and conditions shall have been laid before the National Assembly and approved by its resolution. (2) The Federal and State Government or any of their agencies shall not obtain any external loan except with a guarantee issued by the Minister.”
