Posted by By KENNY ASHAKA on
The Presidency has revealed that a sizeable slice of the $36billion debt owed foreign creditors by Nigeria was used to purchase and stock sardines for the military by the General Ibrahim Badamosi Babangida regime in 1986.
The Presidency has revealed that a sizeable slice of the $36billion debt owed foreign creditors by Nigeria was used to purchase and stock sardines for the military by the General Ibrahim Badamosi Babangida regime in 1986.
Director-General of the Debt Management Office (DMO) in the Presidency, Dr. Mansur Mukhtar, who made this revelation, also said that some state governments used their commissioners to sign up notarised notes (notary public) which accepted agreements with clauses that waived Nigerian immunity for the foreign creditors.
Mansur, just back from a debt re-scheduling mission, made these revelations while addressing Economics students of the Ahmadu Bello University (ABU), Zaria under the aegis of the National Economics Students Association of Nigeria (NESA) weekend.
The DMO boss said, however, that President Olusegun Obasanjo shares the blame for some of the debt problems as he took $3billion loan in two tranches.
He said, however, that the subsequent administration of Alhaji Shehu Shagari compounded the debt profile with profligate spending, which in turn cultivated an increasing consumption pattern that could not be sustained.
He added that, a most bizarre discovery was that parts of the $36billion loan were used to purchase hospital equipment that never arrived Nigeria, while a large chunk was used under the Babangida regime to import sardines for the military.
"And it was very revealing, some of the loans that we saw. Figures, monies, huge amount of money taken to buy sardines and stock for the military. Huge amount of money signed up to buy hospital equipment that never arrived.
"But we had all the legal documents that had been signed and sometimes our own people, commissioners at the state level, signing a notarised note (notary public) that they have duly accepted those things.
"But many of the agreements had also clauses that waived our sovereign immunity, meaning that if Nigeria failed to service any of those debts, any of the creditors could get to court not in Abuja or Zaria or Lagos, but a court in London.
"It is very specific about the jurisdiction either in London or Europe or somewhere and in the event of the judgment, they will lay claims to the assets of Nigeria abroad, including monies of the Central Bank and oil transactions of the NNPC. We had signed off all those. So, these were what we were confronted with when we went to reschedule with IMF," he said.
The Director-General also explained why the Paris Club was reluctant to grant Nigeria debt relief, saying, Nigerians, who were in Paris in 1986 to negotiate debt re-scheduling displayed an affluent lifestyle that surpassed those of their creditors.
"The first time we went to Paris Club was in 1986. But what happened? Our leadership then, people that went to Paris Club for these meetings; when they went to Paris, they stayed in the most expensive hotel. They kept the creditors waiting for nearly one hour.
"And when they were coming; they came in five to six limousines; these long cars. So they were not taken seriously. Again, they agreed to re-schedule over a long time and then successively, we did not meet the terms of re-scheduling.
"In 1986, we rescheduled. We were not paying. In 1989, we rescheduled again. In 1991, we rescheduled again. In 2000, when we went to reschedule, we were presented $21billion that had to be rescheduled.
"But do you know what? Out of that $21billion, 24 per cent of that were penalties that accrued. So about $5.5billion was penalty that accrued between 1992 and 2000, because then, the government had stopped servicing those debts," he further said.
Mukhtar also said that the debts were a trap and described the profile as a "no-win situation" since the loans appreciated as payments were being made.
For instance, he said, "In 2001, when we had reconciled with our creditors, we were talking about a debt stock of $28.7billion. In 2002, even when we had paid money, it had gone up to $30billion. In 2003, it went up to $31.9billion and so on. And in 2004, we were talking about $36billion."
The Director-General remarked that the cancellation of about 60 percent of the debt (about $18billion) calls for a sober reflection, "a period for asking questions, legitimate questions. How did we find ourselves in this quagmire? What is the origin of these debts, these loans that were incurred? The loan that we took, what did we do with the money? We took the money and what happened with it? Did it produce any positive result?" he asked.
What about all the interests and penalties that we have been paying? How can we justify it? Why didn't we repudiate it in the past?"
The DMO boss gave a detailed account of the origins of the debts, noting that Nigeria started borrowing in 1958 when she took about 30 million pounds concessional loan from the World Bank with very low interest rate and 10 years grace period with 50 years re-payment term to build a railway structure.
He also disclosed that the first educational loan was taken in 1965 to expand infrastructural facilities in secondary and technical institutions, adding that, "again, this was a soft loan and there were a few of these which were taken up to the late 70s and we didn't have problems in our debt profiles.
"The debt service was about $30 million to $40 million per annum which was quite manageable. And then, as we started getting resources from oil, then it coincided with the period of the 70s when there was a lot of money in the system,
"The petrol dollars was put in the western banks and so, they started encouraging us to borrow, and came up with this notion that we were under-borrowed. Nigeria is an under-borrowed, country".
Mansur therefore warned Nigerians to brace up for hard times as the Federal Government was prepared to pay the $6billion arrears on penalties in September as well as the remaining $8billion of the total debt six months later to free future generations from the shackles of debt burden.