Why China Won’t Write Off Debt for Nigeria, Other Sub-Saharan Countries
After years of defaults and debt write-offs by several multilateral and bilateral institutions, China, Africa’s now largest bilateral creditor, entered Africa’s loan market with a unique model that will ensure African nations do not get away with procured loans even if their leaders squandered it.
In early 2000, President Xi Jinping announced an African Infrastructure loan project to support and open up the African economy. A vision most African leaders keyed into because of its seemingly easy process and approval when compared to the process and scrutiny involved in securing loans from the likes of World Bank, the International Monetary Fund and other top financial institutions.
However, underneath the quick response and fast approval is a complex model that ensures these African nations are indebted to China, even in certain situations like COVID-19.
To avoid unnecessary requests for debt write-offs, defaults, and reliefs, the Chinese government had limited its African loans to infrastructural projects executed by Chinese owned companies and in most cases with Chinese labour.
Deborah Brautigam, Head of the China Africa Research Initiative at JHU’s School of Advanced International Studies, put loans made by the Chinese government to African nations between 2000 and 2018 at about $152 billion.
“The Chinese have always done their lending on the idea that individual projects contribute to structural transformation and economic development,” said Deborah Brautigam, who heads the China Africa Research Initiative at JHU’s School of Advanced International Studies. The thinking is, “those projects might be good projects and viable projects to get countries to a new stage where they might be in a position to repay the loans,” she said.
However, while the World Bank and other global financial institutions may offer debt reliefs and total write off in certain situations like the world is currently experiencing with COVID-19, China is unlikely to write off any debt given the fact that those infrastructural projects are expected to get yield results in future as the economy expands.
Also, the loans are visible projects either under construction or completed, therefore, China may offer moratorium and reduce interest rates but not write off loans as experienced in April during calls for debt relief. China was the last to join and has turned down a similar request by the International Monetary Fund to write off part of the debt owed by the Republic of Congo in 2019.
FG Establishes New Crime Agency, Proceeds of Crime Recovery and Management Agency
Proceeds of Crime Recovery and Management Agency Established by Government
The Federal Government has approved the creation of a new crime agency called “The Proceeds of Crime Recovery and Management Agency” to better manage the loots recovered from financial criminals by the growing list of anti-graft agencies established by the government.
The new agency was approved on Wednesday at the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari.
The president said the new agency seeks to move the fight against corruption to the next level as there is no agency of government that “can give you off-head the number of landed assets, number of immovable assets, the amount in cash that are recovered by the federal government by way of interim forfeiture overweigh of a final forfeigture.”
“So, it is indeed overtime a kind of arrangement that is not uniform and consistent.”
He added: “Next level of transparency, next level of accountability in essence, will have in place an agency of government that is exclusively responsible for anything proceeds of crime.
“A one-stop shop arrangement by which all the assests that are recovered arising from crimes that are indeed vested in the federal government, you have a one-stop arrangenet where you can have an information. As it is for example, the Federal Ministry of Justice is only in a position to account and giving comprehensive account of what
recoveries were made by the ministry.
“But any recovery made by the police, DSS, the Ministry of Justice is not in a position to know. So, for the purpose of decision making and policy, the federal government is not in a position to have a wholistic appreciation.
“So, by the bill that is now presented for the consideration of the council, we’ll have a law that establishes an agency, and secondly, an agency.
“And as you rightly know, Mr President has sanctioned ever since he came on board, that there should be a budget line, a budget item for recovered assets.
“So, if you have a budget item for recovered assets, this agency will now be in a position to provide information to the Federal Ministry of Finance, Budget and National Planning on demand as to what amount is available for budget purposes, thereby establishing the desired transparency, the desired accountability which has not been available before now.
“So, it is about a memo that seeks to establish a legal framework, that seeks to establish institutional framework, that seeks to further take the fight against corruption to the next level by way of establishing transparency, accountability and making the possibility of forfeiture a proceeds of crime easy through the sanctioning of non-conviction based forfeiture among others.”
Inflation Rate Increases Further in August to 13.22%
Prices of Goods and Services Jump in Nigeria in August
Nigeria’s inflation rate rose further in the month of August to the highest since April 2018, according to the latest report from the National Bureau of Statistics (NBS).
In the report released on Tuesday, the NBS said Consumer Price Index, which measures inflation rate, increase by 13.22 percent in the month under review.
This represents a 0.40 percent points increase from the 12.82 percent posted for the month of July.
On a monthly basis, consumer prices increased by 0.09 percent points from 1.25 per cent achieved in July to 1.34 percent in August 2020.
The report read in part, “The consumer price index, which measures inflation increased by 13.22 percent (year-on-year) in August 2020. This is 0.40 percent points higher than the rate recorded in July 2020 (12.82 percent).
“On a month-on-month basis, the headline index increased by 1.34 percent in August 2020. This is 0.09 per cent higher than the rate recorded in July 2020 (1.25 per cent).”
Rising costs continue to disrupt consumer spending in Africa’s largest economy, especially after President Muhammadu Buhari removed subsidy, up VAT from 5 percent to 7.5 percent and implemented service reflective electricity tariff during a tough period of global pandemic.
Despite majority of Nigerians saying the time is wrong, experts have said it was the International Monetary Fund and the World Bank that compelled the administration to up revenue generation in order to continue to service its debt and embark on necessary capital projects.
With the $3.4 billion loan secured from the IMF in May running out amid falling oil price and weak demand for the commodity, the Buhari led administration once again approached the World Bank for another loan of $1.5 billion to further cushion the negative impacts of COVID-19.
According to the people familiar with the process, the new loan is not receiving much attention from the multilateral financial institution as it insisted that some of the agreement reached with the International Monetary Fund before securing the $3.4 billion have not been implemented.
This, experts said was one of the main reasons the federal government made all the recent adjustments despite economic challenges and limitations.
The food index increase from 15.48 percent in July to 16 percent in the month of August, according to the statistics office.
“This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fish, fruits, oils and fats and vegetables,” it added.
The persistent increase in prices bolstered cost of living and plunged consumer spending in Africa’s largest economy due to broad-based layoffs and businesses shutting down operations for a safe haven.
NNPC Says It Spent N41.98 Billion on Pipeline Repairs in Six Months
NNPC Spends N41.98 Billion on Pipeline Repairs
The Nigerian National Petroleum Corporation (NNPC) has said it spent a total sum of N41.98 billion on pipeline repairs and management in the first six months of the year.
The corporation stated in its latest monthly oil report, saying “Products theft and vandalism have continued to destroy value and put NNPC at disadvantaged competitive position.”
It explained that a total of 1,067 pipeline points were vandalised between June 2019 and June 2020 with 33 of those vandalised in June 2020. That was 11 percent lower than the 37 points vandalised in the month of May.
The NNPC said, “Mosimi-Ibadan accounted for 33 per cent while ATC-Mosimi and Warri-River Niger recorded 27 per cent of the breaks each; other locations make up for the remaining 13 per cent.
“NNPC in collaboration with the local communities and other stakeholders continuously strive to reduce and eventually eliminate this menace.”
Further break down showed the NNPC spent N5.48 billion on pipeline repairs and management costs in the month of January 2020. In February, March, April, May and June of the same year, the corporation spent N6.74 billion; N7.69 billion; N7.84 billion; N7.99 billion and N6.24 billion, respectively.
The corporation also said the pipelines have aged over the years, therefore, giving rise to frequent failures and consequent operational downtimes.
“In addition, these facilities have aged over the years giving rise to frequent failures and consequent operational downtimes, high maintenance cost and revenue losses,” the NNPC added.
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