On loans, their use and misuse
THE Federal Ministry of Transport’s Permanent Secretary, Mohammed Bashar, while briefing President Muhammadu Buhari on that ministry the other day, said that on the watch of Dr. Ngozi Okonjo- Iweala, immediate past finance minister, a substantial part of the $1.005 billion loan obtained by the Federal Government from the China Eximbank for a Lagos-Kano rail line was diverted to other ends.
These ends, whatever they are, if the report is true, should emerge from answers to the clarification being sought by the president and all Nigerians.
If the allegation is true, it would not only be a breach of the terms on which the concessional loan was agreed but also a terrible dent on the integrity of the Nigerian government and people. President Buhari has justifiably been concerned to get to the bottom of this if indeed a ‘virement’ has occurred in respect of this loan.
‘Virement,’ something that may just be unique only to Nigeria’s management of public finance is, in its usage, the act of diverting the fund authorised for a project, to another for some reasons. It gained currency a few years ago in the circle of government spending as officials would move money legally appropriated for one sub-head to another without recourse to the appropriate authority for approval. In a clime where due process is the norm, such an act is ultra vires and absolutely illegal, regardless of motive. And, not unusually, the motive is dubious, or, to put it as it is, corrupt.
Ngozi Okonjo-Iweala, the former finance minister, who is directly touched by this allegation has in a statement dismissed the allegation as of ‘no substance.’ She claimed that ‘the Kano-Lagos [rail] project was not even among the projects presented for funding …’[but] the Lagos-Ibadan rail project…but in the end, no funds were assigned for [it]’.
Secondly, the billion-dollar include ‘the 500 million dollar-worth expansion of four international airport terminals in Lagos, Kano, Abuja, and Port Harcourt.
There is also the 500 million dollars for Abuja Light Rail project; 984 million dollars for Zungeru Hydro-electric Power project, and 100 million dollars Galaxy Backbone project’ and all of these are at different stages of completion. Okonjo-Iweala further averred that ‘the procedure [for the disbursement is that] funds for approved loans remain in the China Eximbank and are released directly to the Chinese firm executing the contract only after the presentation of duly certified proof of work by the responsible ministry, in this case it would have been the Federal Ministry of Transport, based on agreed milestones.’ She then concluded: ‘for the sake of emphasis, the China Eximbank does not disburse money directly to government and therefore the issue of diversion does not arise.’
Okonjo-Iweala’s position seems to be supported, at least in part, by two known facts. One is that sometime in the life of the Goodluck Jonathan administration, Vice-President Namadi Sambo reportedly laid the foundation for the track of the Abuja-Kaduna fast train project where he also confirmed the China Eximbank’s commitment of $500 million to it.
Also, former Minister of Aviation, Stella Oduah, admitted to a Chinese loan that is ‘almost free money’ to upgrade airport terminals. Securing funds from the China Eximbank is a government-to-government deal on terms that, for a patriotic, prudent, transparent government, can be quite generous and most helpful to develop key and capital-intensive infrastructure.
At least in principle, it does not allow room for cash availability to persons in government. It is a nine-step procedure than begins with the application from the needy country to the bank which evaluates it and recommends to the Chinese Ministry of Commerce.
All things being equal, a framework agreement is signed, project agreement is signed and the executing agency or company submits its invoice and progress of execution report to the borrowing country which in turn transmits these documents to the China Eximbank to pay to the extent of work satisfactorily done.
The borrower pays interest and applicable fees to the bank. It appears simple enough except that in practice, a system of crooked officials with the will would find a way to bend even the most well-intentioned rule. And given the damning accounts coming out about the activities of people in government, very few persons would resist the temptation to think Nigerian public officials guilty until proven innocent.
Development loans from the Peoples Republic of China or any source for that matter, on whatever generous terms, is money that must be repaid sometime. Judiciously spent, it repays itself many times over and strengthens the nation’s capacity.
Irresponsibly expended, it is a debt trap for future generations and a dangerous mortgaging of the fortunes of Nigeria in the years ahead. There is never free cheese except in a mouse trap; these loans come with terms that are well and patently beneficial to the lender especially in terms of the procurement of goods and services.
Critics of these loans argue that they are intended more to promote Chinese exports than to hasten the economic development of recipient countries. This may be so but it would not be specific to the Chinese alone. It is largely the way of loaner nations. Indeed, the China Eximbank is a Chinese government policy bank and its mission statement includes ‘support for China’s foreign trade and shift in growth mode’, and ‘support for Chinese enterprises to go global’. To these ends, the Chinese government ‘provides capital and liquidity support’ to Chinese businesses.
On the other hand, it is up to government officials to seek and accept foreign loans with the utmost patriotic intentions, through wise and transparent negotiation, and judicious faithful application under the agreed terms. This can maximally benefit the borrowing country in terms not only of the infrastructure and general economic development, but the transfer of skills and technology which, it must be noted, is part of the mission statement of the China Eximbank.
Also, it is evident that over the years, federal and state governments have taken foreign loans to finance projects that are never completed, or are ‘white elephants’ that add no value except to their private pockets. This is the backdrop against which, in the allegation of foul play, it is difficult to grant Nigerian public officials a benefit of the doubt.
The Nigerian people, already bias with sordid revelations, are justified to smell, rightly or wrongly, corruption in these matters. Only a comprehensive response to the current queries on the Chinese Eximbank’s and other such loans that conclusively reveal in facts and figures the truth will suffice. That is what Nigerians deserve and should not take too long in coming.