By Kingsley Omose
ROTIMI AMAECHI: If we don’t take these loans to DEVELOP Nigeria…when I got to Lagos on Saturday to inspect Lagos-Ibadan (rail), the number of people JUBILATING may not like me; they may not care about me if I walked on the streets but they were jubilating because of the fact that they can take transport from Lagos to Ibadan.
To the credit of the Chinese, they do not give out loans to other countries that will not be applied for the purposes for which the loans were granted.
This is because, unlike other multilateral lending institutions, all loans granted by Chinese lenders are project based, so there is little or no direct cash payments.
This is why when Nigeria suffered a foreign exchange shortfall during the global Covid-19 pandemic lockdown, it was to the IMF and World Bank it turned to for loans.
The IMF insistence on devaluation of the local currency before granting the $4.5bn loan to Nigeria is why the Naira is today is in an upward trajectory in value loss against the USD.
The import here is that whether you’re getting loans directly in the form of cash or through projects delivery, all lenders have an agenda, and that is to control the borrower.
With the IMF, and to a lesser extent the World Bank, it allows these institutions to obtain concessions or adjustments that bring immediate benefits to their own backers.
Of course if a country wants a loan with no strings attached, it heads to the international bond market but those loans come at higher interest rates for countries like Nigeria.
This is not the place to inquire into why countries like Nigeria pay 7% and upwards as interests for these loans, and that the likes of the U.S. and UK are getting at zero % interest rates.
But this structure of the global economy order is why the US, UK and EU have been able to pump trillions of USD to attempt to reflate their economies due to Covid-19, and Nigeria is struggling.
With the Chinese, there is an illusion of the concessions and adjustments being much more indirect and not immediate, you possibly only lose the ownership of the project when you don’t repay.
They further sweeten the loan arrangements by the seemingly long repayment period of ten to twenty years and what appears to be low interest rates of say 2% per annum.
So on paper it really appears that you’re getting a good deal, you have a railway or airport terminal or Port delivered through the Chinese loans and there is resulting JUBILATION by the masses.
If the objective of the Chinese was to use their monies to develop other countries while leaders there spend their own monies on recurrent expenditure and sheer pillaging, won’t that be bizzare?
First, you may never get to see the loans disbursed to you by Chinese lending institutions because although Nigeria is the one borrowing the money, the disbursements go majorly to Chinese companies.
Second, the Chinese companies are also the ones who get to design the projects, meaning that no Nigerian architectural and engineering firms are involved in designing these concepts.
Third, the construction companies are also Chinese meaning that there is no tender and Nigerian construction companies are not allowed to participate or even partner in these construction projects.
Fourth, the technology and hardware required for constructing these projects are majorly sourced from China meaning you’re stuck with their technology and at the prices these are offered to you.
Fifth, majority of the technically skilled personnel required for construction of these projects also come from China meaning the expertise and corresponding costs remain predominantly Chinese.
Sixth, look around and you will discover that many of the local suppliers in Nigeria involved in supplying these Chinese funded projects at the construction phase, are also Chinese owned.
Seven, Nigeria is the country signing for the loan on paper and making both the interest and principal repayments for these loans, but each of the project is also used as a collateral for each loan.
Eight, the place of arbitration in the event of a dispute between Nigeria and China over the terms of these Chinese funded projects is Hong Kong, and Chinese law will apply.
Nine, the Chinese lending institutions and construction companies are usually owned directly or indirectly by the Chinese government, meaning China is the real McCoy.
Ten, the use of the projects as collateral for the Chinese loans means critical infrastructure in Nigeria already belong to China unless and until these loans are paid off.
A child living in a mansion in a lovely neighbourhood will go around boasting in school about the father’s good works not knowing borrowed money was used to fund it.
That is the implication of looking to jubilations by members of the public over the delivery of critical public infrastructure by the FG not knowing the funding arrangements behind them.
We can excuse away the simplicity of mind exhibited by the Nigerians who jubilate over the delivery of such projects, but such simplicity of mind should not be exhibited by those in government.
Some people in China sat down to put together its policies for engagement with countries like Nigeria, Zambia or Kenya who desire development funded by others.
The question then is, did Nigeria, Zambia or Kenya also sit down to put together policies by which they will obtain development funding from countries such as China?
Remember, the objective of the lender either giving you cash directly or in the form of a project that they will build remain the same, that of control of the borrower.
And we cannot blame the Chinese for designing this elaborate funding arrangement that profits them immensely, every country save of course Nigeria, is always looking out for it’s own interest.
The price for American help in defeating Axis powers in the Second World War is the political, economic and social dominance it has in the world today.
Some people in America sat down to design it’s post Second World War engagement policy with the rest of the world, and America’s global dominance is the product of that.
The Chinese are aiming to achieve that same global dominance without firing a single bullet and they are relying on what they call Soft Power to achieve this.
The Chinese have sensed for years that U.S. global dominance is waning and this has accelerated under Donald Trump’s America First Policy and the Covid-19 environment.
So in giving out developmental loans to poor countries like Nigeria, Zambia and Kenya, China is only rolling out policies that are in line with it’s goal of rising softly, softly.
The tragedy of course are the simple minded leaders of these poor countries who like the simple minded people they lead do not realise that they are exchanging one form of dominance for another.
The simplicity of mind of Nigerian leaders is frightening, you just have to see the empty outcome of Nigeria’s sacrifices towards South Africa, Zimbabwe and Liberia to understand the scale of the simplicity.
In the case of South Africa, it’s companies have turned round to be economic powerhouses in Nigeria, turning existing policy of the strong gaining from the rich on it’s head.
That simplicity continues even now with the warnings to the National Assembly that Nigeria may lose further borrowings from China if the legislators continue to ask questions about Chinese loans.
That simplicity is also obvious in the questions the National Assembly committees are asking government officials who appear before them to answer questions regarding terms under which Chinese loans were obtained.
Alas, simplicity of mind seems to be the order of the day, both on the part of those governing and those being governed, and that is why the Slave Plantation system never really ended.
For simple minded countries who want to spend their monies on overheads and pillage the balance, and use loans to develop, they are merely exchanging or sharing their vassal status with one or more countries.
Kingsley Omose, a public policy analyst contributed this article from Lagos