China, Nigeria Seal $5.57bn Loan Agreements under Eight Years

Muhammadu Buhari
  • $3.313bn disbursed, 3.121 currently outstanding
  • TI, CISLAC seek end to wastage by MDAs

Gboyega Akinsanmi

Amid fiscal pressure that threatened its capacity to fund capital projects, the federal government sealed $5.575 billion loan agreements with the Export–Import Bank of China between December 10, 2010 and May 29, 2018, a Debt Management Office (DMO) document has revealed.

With Nigeria’s rising exposure to external debt valued at $27.676 billion as at March 2020, Transparency International (TI) has decried federal government borrowing spree despite huge resources wasted by ministries, departments and agencies (MDAs).

Details about the loan agreements were contained in the DMO’s status of loans obtained from China EXIM between December 10, 2010 and May 29, 2018. The status x-rayed Nigeria’s debt exposure to People’s Republic of China as at March 31, 2020

Of the total $5.575 loan agreements wrapped up with this timeframe, the document showed that China EXIM bank had already disbursed $3.313 billion while the federal government was left with an outstanding loan of $3.121 billion.

Since the December 20, 2010 loan agreement was first closed, DMO’S document revealed that the federal government had paid $192.21 million as part of the principal and $269.68 million as interest on different loans obtained as at March 31, 2020.

The document showed that the facilities were sealed with the following terms of agreement: 2.5% interest rate; seven-year period of grace and 20-year period of maturity.

Under the administration of President Muhammadu Buhari, for instance, the DMO’s document revealed, the federal government applied for $2.591 billion between August 26, 2016 and May 29, 2018, a period of one year and nine months.

As shown in the document, the Buhari administration sealed a $325.67 million loan agreement with China EXIM Bank on April 26, 2016 for the purpose of developing 40 parboiled rice processing plants under the Federal Ministry of Agriculture and Rural Development.

However, the document revealed that the bank never disbursed the $325.67 million loan, which the Federal Ministry of Agriculture and Rural Development proposed to develop 40 parboiled rice processing plants nationwide.

The document, also, revealed that of the $1.267 billion loan sealed for on August 18, 2017, the bank only disbursed $759.84 million, which according to the DMO, constituted about 59.96% of the value contained in the loan agreement.

Specifically, the document disclosed that the Buhari administration wrapped up the $1.267 billion loan agreement for the purpose of executing the Lagos-Ibadan section of the railway modernisation project.

Also, on August 18, 2017, the document showed that the Buhari administration agreed with China EXIM to borrow $480.82 million for the purpose of rehabilitating and upgrading Abuja-Keffi-Makurdi road project.

Of the $480.82 million the parties agreed upon, the document revealed that China EXIM had disbursed only $80.64 million, which DMO claimed, amounted to 17.5% of the total facility sought for the road project.

The document, further, revealed that on May 29, 2018, the Buhari administration applied for $157 million for the supply of rolling stocks and depot equipment for the Abuja light rail project and $381.09 million for the execution of Greater Abuja Water project. However, according to the document, none of these credit facilities have been disbursed. All the facilities, which have been disbursed, are payable with the period of 20 years, though with a grace period of seven years.

Of the $2.591 billion loans the Buhari administration applied for, DMO’s document revealed that the Export–Import Bank of China only approved and disbursed $840.48 million. DMO’s document, however, was silent on why the bank did not disburse a sum of $1.759 billion.

On December 20, 2010, for instance, the document revealed that the Jonathan administration sealed a $399.5 million loan agreement for the execution of a national public security and communication system project and $500 million for the Idu-Kaduna section of the railway modernisation project.

As shown in the DMO’s documents, China EXIM fully disbursed the two facilities to the Jonathan administration while the federal government has already paid $169.44 million as interest and $172.98 million from the principal.

Also, DMO’s document disclosed that the Jonathan administration sealed a $500 million loan agreement for the development of the Abuja light rail project, which the Export–Import Bank of China had disbursed 100%.

The document further revealed that the Jonathan administration closed a $100 million loan deal for the Nigerian ICT infrastructure backbone project; $500 million for the expansion project of Abuja, Lagos, Kano and Port-Harcourt Airport project and $984.32 million for Zungeru Hydro-Electric Power project

In the case of backbone project, according to the document, the bank disbursed the loan 100% to the federal government; 91.06% of the $500 million airport expansion project and 52.65% of the 984.32 million Zungeru Hydro-Electric Power project.

In aggregate, under Jonathan, the document showed that the federal government applied for $2.983 billion between December 20, 2010 and September 28, 2013, a period of two years and nine months.

Of the $2.983 billion applied for under the Jonathan administration, the document disclosed that China EXIM disbursed $2.473 billion, leaving about $510 million, which according to the document, the bank did not disburse.

Disturbed about Nigeria’s rising debt exposure, TI lamented wastage of public funds and resources by the MDAs under the control of the executive arm of the federal government.

In a statement by its Head of Nigeria Office, Mr. Auwal Rafsanjani, TI asked the National Assembly to deny the affected MDAs approval of another loan until these illicit flows were accounted for and recovered.

Rafsanjani observed that these MDAs “are under the purview of the executive arm. Denying further approval will go a long way in reducing the burden of debts on citizens which by extension exacerbates poverty and inequality.

Lamenting the country’s rising public debt stocks, Rafsanjani said while the Senate approved the N5.5 billion for priority projects, the House of Representatives also approved $22.7 billion that was rejected the previous year.

Rafsanjani, also Executive Directive of Civil Society Legislative Advocacy Centre (CISLAC), observed that civil society organisations had called for accountability and transparency in the management and utilisation of recovered funds.

He noted that despite these calls by civil society organisations, the story remained the same as recovered funds were re-looted and even alleged borrowed funds were diverted into personal pockets.

He, therefore, called on the leadership of the National Assembly to refrain from giving further approval for borrowing and to mandate the executive to recover misappropriated, mis-managed and looted funds as stated below.

In 2018, he said findings from a series of audits of the oil and gas sector carried out by the Nigeria Extractive Industries Transparency Initiative showed that Nigeria National Petroleum Corporation and its upstream arm, NPDC, had failed to remit $21.778 billion and N316.074 billion to the Federation Account.

He said: “These were amounts due from three main sources: federation assets divested to NPDC and Nigerian Petroleum Development Company’s (NPDC) legacy liabilities; payments for domestic crude allocation to NNPC; and dividends from investment in Nigerian Liquefied Natural Gas (NLNG) paid to but withheld by NNPC.”

As shown in the report of the Auditor-General as at June 2019, Rafsanjani claimed that 160 agencies defaulted in the submission of audited accounts for 2016; 265 agencies defaulted in submission of audited accounts for 2017 and 11 agencies had never submitted any financial statements since inception.

In total, according to him, the audit showed N20 billion in various taxes (PAYE, withholding Tax, VAT, etc.) in the year under review, was not remitted to the Consolidated Revenue Fund of the federation.

In 2019, he added that a former Executive Chairman of the Federal Inland Revenue Service, Mr. Tunde Fowler, said that Nigeria “loses about $15bn (N5.37tn at N358/dollar) to tax evasion annually.”

“The suspended acting Chairman of the Economic Financial Crime Commission, Mr. Ibrahim Magu was alleged to have declared N539 billion as recovered funds instead of N504 Billion as earlier claimed, amongst other allegations.

“Some time last year, the three Nigerian refineries operated at a capacity as low as 5.55 percent while the country’s importation of refined crude accounted for over 80% of its consumption,” he said.

Rafsanjani cited a June 2020 publication of the NNPC 2018 Audited Financial Statement (AFS), which revealed that three of Nigeria’s four refineries gulped N1.64 trillion in cumulative losses recorded in their operations since 2014.

In January, he claimed that the Senate resolved to probe the NNPC over a sum of $396 million, which the corporation spent on turn-around maintenance of the refineries, between 2013 and 2015, without any positive result.

Between January and May, Rafsanjani noted that the Interim Management Committee of the NDDC “has been accused of misappropriating N80 billion.

“The North East Development Commission (NEDC) is presently also being probed for mismanaging N100 billion voted to the commission barely one year ago without any significant impact on suffering refugees across the North-East region.

“Some of the infractions uncovered against the Nigeria Social Insurance Trust Fund (NSITF) include N3.4 billion squandered on non-existent staff training split into about 196 different consultancy contracts in order to evade the Ministerial Tenders Board and Federal Executive Council (FEC) approval.”

Also, TI’s head in Nigeria cited an alleged illegal withdrawal of $1.05bn from Nigerian Liquefied Natural Gas Limited (NLNG) dividend account by the Nigerian National Petroleum Corporation (NNPC).

According to him, this comes to a grand total of $23.224 billion and N7.744 trillion. This is beside the $3.4 billion IMF loan to Nigeria that stakeholders have consistently called for accountability in its utilisation since its release.