SERAP To Govs, Wike: Disclose Details Of Chinese Loans, Liabilities, Repayments

Socio-Economic Rights and Accountability Project (SERAP) has asked state governors in the country and the Minister of the Federal Capital Territory, Abuja, Mr Nyesom Wike, to disclose details of any Chinese loans, liabilities, and other external borrowing obtained and guaranteed by the federal government.

SERAP also urged them to make public the terms and conditions for any such borrowing and the collateral provisions of the agreements.

The civil society organisation, which made the demand in an open letter addressed to the governors and the minister, further demanded details of the repayment obligations regarding any Chinese loans, liabilities, and other external borrowings obtained and guaranteed by the federal government.

In the letter dated August 24, 2024, signed by its deputy director Kolawole Oluwadare, SERAP inquired about the interest rates on the loans, any defaults, debt restructurings, and the extent of debt exposure to China and other creditors.

It also asked the governors and the minister to clarify any investment agreements with Chinese companies and repayment histories of any loans, liabilities and facilities obtained from China and other external creditors guaranteed by the federal government.

The organisation expressed concern that the states and the FCT may have failed to manage their debt obligations efficiently, especially their external debt and investment obligations, as guaranteed by the federal government.

SERAP maintained that’’ The failure to uphold your obligations contradicts section 6 of the Debt Management Office Establishment (Etc) Act and other exposure to Nigeria concerning these Chinese loans, liabilities, and other external borrowing further pointed out that the Chinese loans, liabilities and another external borrowing by your state and the FCT may not have been used for the purposes 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 the federal government guarantees.

“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 fulfill the terms and conditions of the Chinese loans, liabilities and other external borrowings which the federal government guarantees.

“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 confiscating Nigerian assets abroad.

“We would be grateful if the recommended measures are taken within seven days of the receipt and 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 the federal government guarantees 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 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 the Federal Government guarantees, 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,” SERAP stated.