National assets not used as collateral for Chinese loans, says DMO

Nigeria’s national asset was not used as collateral for the solicitation of loans from China, The Debt Management Office (DMO) has said.

Patience Oniha, director-general of DMO, made the disclosure on Saturday during an interview with NAN on Saturday following media reports in recent times that some African countries, including Nigeria, faced the threat of losing critical national assets to the Asian country owing to high-level indebtedness.

According to Oniha, the loans from China to Nigeria were largely concessional, as no national asset was tagged as collateral.

She further disclosed that Chinese loans which presently stood at $3.59 billion constitutes only 9.4 percent of the Nigeria’s total foreign debt stock of $37.9 billion.

“Nigeria’s total debt stock as at Sept. 30 was 37.9 billion dollars, this figure comprised the external debt stock of the Federal Government, 36 state governments and the Federal Capital Territory,” Oniha told NAN.

“But total loans from China stands at 3.59 billion dollars, which is 9.47 per cent of the total external debt. The loans did not require any national asset as collateral; they were largely concessional.”

While urging Nigerians to verify sensitive information from official sources before disseminating it, Oniha explained that before foreign loans are procured, sensitive steps are taken by multiple institutions of government to ensure that they are beneficial to the nation.

“Before any foreign loan is contracted, including the issuance of Eurobond, they are approved by the Federal Executive Council and thereafter, the National Assembly,” she said.

“An important and extremely critical step is that the loan agreements are approved by the Federal Ministry of Justice.

“An opinion is issued by the Attorney-General of the Federation and Minister of Justice before the agreements are signed.

“Several measures which operate seamlessly have been put in place to ensure that data on debt are available and that debt is serviced as at when due. Provisions are made explicitly for debt service in the annual budgets.”

According to her, loan agreements provide a number of steps to take to resolve disputes when they arise.

“The first action is that the parties should resolve it within themselves and if that fails, they go to arbitration,” she said.

“In other words, a lender, in this case, China, would not just pounce on an asset at the first sign of a dispute, including defaults.’’

She said the DMO maintain proper records of debts, provide projections for debt service and process the actual payments for debt service.

Those functions, she noted are carried out in conjunction with the Office of the Accountant-General of the Federation (OAGF) and the Central Bank of Nigeria (CBN).

With NAN report