President Buhari Forges Stronger Debt Ties With China
President Buhari made his first official visit to China last week, but that was not the major highlight of the trip. The major highlight was that the First Lady Aisha Buhari, and their daughter were part of the President’s entourage. In fact, wailers had a field day claiming that President Buhari went on the trip with his family, thereby turning the official trip into a family vacation.
Not until a video by CCTV showed that President Buhari who was warmly received in Beijing by President Xi Jinping, actually travelled with the Ministers of Transportation, Power and Housing, Trade, Industry and Investment. And has made a mark as the first African Head of State to pay an official visit to China this year. The two countries who have had bilateral relationships spanning over 46 years, agreed that Nigeria’s ties with China has been beneficial to both countries.
Xi Jinping said Buhari’s visit shows the special significance of China-Nigeria ties, as Nigeria has been the first African country to utilize Chinese technology and infrastructure in its development. The event witnessed the signing of six documents which covers areas such as Industrial, Aviation, Financial, Scientific, Technological and Economical. These new agreement, will see China doing so much more and bringing their knowledge and infrastructure to bear in these areas in Nigeria.
Good successful visit and fine objectives you may say, but then what is the need of incurring more loans on an already over indebted country such as Nigeria?
According to an analysis done by www.icirnigeria.org, every Nigerian now owes China over N15,000 in goodwill and in debt, considering the quantum of Chinese aid for development, welfare and loans in the last few years.
As at 2014, Nigeria was the sixth country on the list of third world countries that had received aid from China. It received the sum of $3.1 Billion. This amounts to N1.1 Trillion. In the last three years, the country had received $6Bbillion for infrastructure, which amounts to N2 Trillion. The combined figures is put at about N3 Trillion, and when divided by 198 Million, considered to be the country’s population at the moment, every Nigerian owes China about N15,000.00.
Now this analysis does not include the recently signed loan agreement between Nigeria and China at the Forum on China-Africa 2018 in Beijing, where China pledged to give $60 Billion facility to African countries, a quarter of which would be interest-free.
And guess what! Government officials defend Nigeria’s indebtedness to China as a good strategy to have an edge over United States and United Kingdom in Africa trade.
Dr Ibe Kachikwu, Minister of State for Petroleum Resources, speaking at the meeting in Beijing, praised China’s strategy, claiming that: “They are active in Liberia, Ghana, Angola. They are throwing money where their mouth is and in very many respect is one area where they have beaten both the US, European and British in things like this. Africa requires a lot of development funds; China is able to provide it. Not just provide in terms of money but provide with adequate technology.”
However, the implication of this grant is that Africa may not be able to resist China in terms of trade and in the international politics.
A United States lawmaker, Rep Chris Smith, Chairman of the foreign Affairs Subcommittee on Africa said in a recent opinion article that “China also uses foreign aid as a bargaining chip in corrupt African countries with plenty of natural resources for them to exploit. AidData, a research laboratory at the College of William and Mary, argued in written testimony submitted to my committee that China effectively buys the votes of African governments at the United Nations; they concluded that if African countries voted with China at the UN an extra 10 per cent of the time, they would receive an 86 per cent bump in assistance.”
Nigeria also accepted the Chinese Yaun as a reserve currency, which is expected to compete with the US dollar. However, the US lawmaker lamented that the Chinese in-road into Africa could be dangerous, arguing that “All of these trends rising levels of debt, shoddy infrastructure projects, and investment that permits human rights abusers to consolidate their influence and power, point to serious risks for the future of the African continent.”
In another development however, Nigeria has been ranked the sixth largest revenue earner among the Organisation of Petroleum Exporting Countries (OPEC) member nations. Nigeria has earned N7.93 Trillion ($26 Billion) from oil exports between January and July 2018, but only Nigeria accounted for 6.245 of the total net export revenue, taking adjustments for inflation into consideration. This fact was made available through a revenues fact sheet report published by the US Energy Information Administration (EIA). The report said the 15-member producers’ group earned a total of N127.2 Trillion ($417 Billion) in the period under review. Oil prices rose by a significant two per cent on Wednesday to exceed the $74 mark, the highest recorded in the last two weeks. Saudi Arabia got the largest share with oil export earnings at N38.4 Trillion ($126 Billion), while Equatorial Guinea and Ecuador contributed the lowest. Angola, Nigeria’s closest rival in Africa, also earned N6.41 Trillion ($21 Billion) in the first seven months of 2018.
Now the big question is, if Nigeria has earned this much money through sales of crude oil alone, not to put into account other income generating avenues of the government such as customs and excise duties, tax etc. What has been done with these monies? And why would Nigeria further be indebted to China for loans, when it has obviously been earning incomes through crude? These questions need clear answer, but as always, may never get such answers.
Do you think Nigeria should get more loans from China or any other country?