Friday, Aug 14th 2020 7:24 PM

Market Digest Nigeria


Nigerians express concern over $47b Chinese loan, projects execution

Stakeholders have expressed worry over what they described as secrecy clouding obtaining loans and contract execution in the country amid allegations of massive corruption and blatant violation of national laws and due process.

Indeed, The Guardian learnt that the development could pit the National Assembly against the Executive arm of the government later this week, as some lawmakers have concluded plans to raise the matter in the Senate. Specifically, the stakeholders are worried that the terms of the contracts signed with Chinese firms and the agreements for most of the loans obtained are shrouded in secrecy. They are, therefore, planning to ask why the firms are the sole executors of most of the projects and why materials and skills are being imported from China to undermine local industry and jobs. They are also demanding to know the cost of the projects which is believed to have been inflated.

Cao Baogang (right), vice-president of China Railway Construction Corporation (CRCC) China-Africa Construction Limited, shakes hands with Nigeria’s former Transport Minister, Idris Audu Umar, after signing a contract for a railway project in Nigeria in Abuja

While Nigeria and China have in recent times entered into funding deal reportedly standing at $47 billion and spread across 22 major infrastructural projects, the current agitations backed by some civil society organisations are coming at a time when other African countries, including Kenya, are unravelling massive corruption in loans and contracts led by China. A Kenyan activist, Okiya Omtata, had since 2013 questioned the Kenyan government in court, demanding details of pacts signed with China, especially the agreement on a $3.2 billion standard gauge railway . Investigations which examined the cost of the project last week exposed the inflation of the contract cost.

This revelation came at a time when the Natural Resource Governance Institute (NRGI) alerted Africans to the fact that resource-backed loans hovering around $164 billion with 77 percent coming from two Chinese banks, China Development Bank (CDB) and the China Eximbank, were shrouded in secrecy and crippling debt levels in developing countries. A source, who is familiar with the current development in the country, said that the ministry of transportation was already under tension. He said that the revelation in Kenya was nothing to be compared to the rot in the costing for most contracts, especially railways being constructed in the country.

According to the source, some of the deals, the agreements of which were not disclosed, are written in Chinese and are not understood by most state actors in Nigeria. He also said that the deals neither passed through the National Assembly nor required approval by the Debt Management Office as such details were limited to the presidency and other key parties. On railway alone, this administration has recently signed loans mainly categorised under Belt and Road Initiative (BRI)’s government to government agreements of approximately $17 billion with China Civil Engineering Construction Corporation, a subsidiary of the state-owned China Railway Construction Corporation.

The Federal Government in 2016 signed a $5.1billion Kano – Kaduna and Port Harcourt- Calabar rail contracts; in 2018, the country signed a $6.7billion for Ibadan -Kano rail; it signed in 2019, a deal worth $1.488billion for Lagos – Ibadan rail and again in 2019 signed another loan for construction of $3.9billion Abuja – Warri rail. While Nigerians had raised concern that most of the projects excluded local contractors, the Minister of Transportation, Rotimi Amaechi, had stated that since China was financing the projects through the China Civil Engineering Construction Corporation (CCECC), the contractors had 100 percent execution right on them.

The National President, Association for Public Policy Analysis, Princewill Okorie, noted that at a time when the government made anti-corruption fight its focus, the prevailing atmosphere did not only indicate that the administration lacked transparency and accountability but revealed the level of passivity among Nigerians.

According to him, the government must make details of contracts and loans available to show commitment to transparency and open data agreement. A professor of Economics, Segun Ajibola, said: “Given our issue with corruption, I don’t think the Chinese fit into our profile. If there is a proposal from any part of the world that undermines accountability and transparency, we should not encourage it as a country.”

“All the contracts with the Chinese don’t go through public procurement law. It is, therefore, difficult to monitor. Money for value is not also established and it is difficult to know how the contract is executed,” he said.

Making reference to the objectives of the physical responsibility law, Rafsanjani alleged that government borrowings in recent times were fraudulent, reckless and irresponsible, stressing that the loans were devoid of prudent management. Rafsanjani, who said the National Assembly had been blinded on how loans were collected and utilised, urged the lawmakers to look into the development.

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