The hottest debate in Africa’s largest economy over the past week has been the excessive possibility of losing sovereignty over bad debt to China.
It has arisen amid a wave of demands by federal lawmakers for an erroneously interpreted sovereignty guarantee clause in loan agreements for an investigation into China’s lending practices to Nigeria. The dominant and controversial narrative is that the clause Nigeria might see sign their sovereignty in the event of default. And the outcry has proven significant enough for China’s embassy in the Nigerian capital Oppose plans to seize Nigerian assets.
Nigerian Transport Minister Rotimi Amaechi has tried to clarify the purpose of the clause, calling it a waiver of immunity, which would allow China to use avenues, including arbitration, to resolve potential disputes over payments. “You
(the Chinese) say if you can’t pay, don’t stop us from taking back the items that will help us get our money back. And it’s a standard clause, whether with America that you signed up, or with the UK or some other country, because they want to know they can get their money back. ” he explained in a press release last week.
But opposition groups pushed back against Amaechi’s stance, including his view that an investigation into Chinese loans should be conducted could bring ongoing projects to a standstillas an indicator of the lack of transparency in the way the government deals with the Asian economic engine.
As Eric Olander, co-founder of the ChinaAfrica project points out, much of the coverage in the local media has been driven by reports referring to Zambia as a cautionary story the South African country claims lost some national assets to China about debt default. And as Quartz Africa reported, that never happened.
The call for an investigation into Chinese loans comes because Nigerian federal lawmakers are putting high-level government agencies such as the Financial Crime Watchdog and the Oil-rich Niger Delta Region Development Commission in the spotlight. The timing is also remarkable, given the recent flurry of anti-Chinese sentiment high profile incidents of racism against Africans in China, where lawmakers have called for stricter immigration measures against Chinese nationals.
The controversy stems from an established narrative about China’s “debt diplomacy” in Africa, which was particularly trumpeted by the United States, particularly under the Trump administration. With perceived dwindling influence across the continent in stark contrast to China’s surge, the US has argued that China’s stance as a willing supporter of expensive infrastructure projects is an elaborate game Engaging African countries in debt. It’s a feeling that has been supported by the reality of African countries, including Kenya and Ethiopiastruggling with Chinese debt.
With Nigeria’s growing desperation for external funding amid a Covid-19-triggered monetary crisis, fears remain that the debt burden could escalate given the fact the dire economic outlook. Because oil revenues – the main source of income – have long been undercut by falling production volumes, falling oil prices and, most recently, an almost complete shutdown of the global oil economy. Africa’s largest economy has not been able to fully finance its national budgets in recent years.
As a result, Nigeria has increasingly relied on credit for infrastructure projects involving large tickets and has relied in particular on financial and technical support from China to build its transportation network. So far, China has offered loans to support eleven major infrastructure projects that are ongoing, bringing Nigeria’s debt to China to $ 3.1 billion.11.2% of its external debt As of March 31.
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