Ladies first and last (2)
Nigeria’s recourse to foreign loans first generated public outcry in 1985 when the then-military President, Ibrahim Babangida, obtained a $2.4 billion loan from the International Monetary Fund ‘to meet a critical balance of payments deficit’. Unfortunately, this trend has, till date, not abated with the external debt profile currently standing at N33 trillion as of March 2020.”
At various stages, during the regime of General Sani Abacha (1993 to 1998) my firm provided the government with reports which raised serious doubts about the authenticity of the debts. To make matters worse, our beloved country became a victim of its own naivety. We hired foreign consultants – Chase Manhattan Bank and others to reconcile our debts. These were the same creditors we allegedly owed huge sums!!
To make matters worse, the so-called reconciliation was merely the comparison/matching of the paper submitted by creditors with fake documents which had been fraudulently injected into the Central Bank of Nigeria’s computer system.
The nationals of a particular country took vast and notorious advantage of our nation’s reckless exposure to their advantage.
It is to the credit of General Abacha that he bluntly refused to honour the avalanche of dubious debts. He even publicly declared that the creditors should do their worst as he was ready to face any court anywhere in the world – be it the World Court or whatever.
What gave him the confidence was our report which tabulated what Nigeria had borrowed and what we had paid back. It showed clearly that we had actually overpaid our creditors!!
Read Also: Ladies first and last (2)
With that threat, the creditors were ready to grant huge discounts and concessions but following the death of General Abacha, they were back to their old game.
I would like to believe that the records of the discounts and concessions that were on offer would be available in the archives of the Ministry of Finance; the Central Bank of Nigeria and The Presidency.
While Chief Phillip Asiodu was the Secretary of Finance during the Interim Government which preceded the regime of General Sani Abacha, both the London Club and Paris Club debtors had indicated that they were willing to include Nigeria amongst the “HICs” [Highly Indebted Countries] which would qualify for the “Trinidad Terms”. Also available were “Toronto Terms” and the “Netherlands Initiative”.
To quote Francesco Abbate and Anh-Nga Tran-Nguyen (December 1992)
“In 1988, Paris Club creditors introduced the Toronto Terms, major policy advance in the rescheduling of the official bilateral debt owed by low-income countries. The implementation of the Toronto Terms has not, however, resulted in debt relief commensurate with the weak debt-servicing capacity of most low-income African countries.
Read Also: Ladies first (and last) (1)
Recognising the inadequacy of the Toronto measures, the governments of the United Kingdom and the Netherlands have recently put forward proposals for massive debt reduction. The U.K. proposal known as the Trinidad Terms consists of reducing the stock of Paris Club debt by two-thirds and rescheduling the remaining one-third over twenty-five years, with interest payments capitalised during a five-year grace period; debt service would then grow as a function of the debtor’s export capacity. The Dutch proposal calls for full forgiveness of official bilateral debt owed by the least developed and other low-income countries facing severe debt problems provided they are implementing sound economic policies.
The debt-service profiles resulting from the implementation of the Toronto and the Trinidad terms (the latter with two different rates of growth of debt-service payments, 5 percent, and 8 percent) demonstrate that the debt-service reduction under the Trinidad terms is substantial. In fact, the Trinidad terms are concessional; the resulting grant element would amount to about 67 percent, while the combined grant element of the three Toronto options is only 20 percent.
Moreover, under the Toronto terms, debt-service obligations generally must be rescheduled repeatedly, sometimes every year (the assumption used in the chart). The resulting debt service would increase sharply from Year 9—reaching a level slightly below the debt service due in the absence of debt relief—and would peak in Year 14 at a level almost four times higher than the debt service under the Trinidad terms.”
In essence, some of us were somewhat blindsided (caught off-guard) when against the 67 percent write-off which Nigeria had been negotiating in 2000, we settled for only 60 percent write-off in 2005 and also handed over the U.S. $12 billion from our reserves.
I presume that the records are in the custody of The Presidency and/or The Ministry of Finance and the Central Bank of Nigeria.
Time and Space will not permit me to dwell on the events that followed the “debt forgiveness” and the subsequent mismanagement (perhaps deliberate!!) and miscalculation of what was actually owed by the Federal Government and what was to be debited to the States. In the confusion that was inevitable, bogus refunds provided a bonanza for “consultants”.
A separate chapter would have to be reserved for the activities of Jeffery Schmidt and Robert Minton and their two companies – Predelit and Triolis which literally made a killing by buying Nigeria’s debt instruments on the secondary market and reselling them at a huge mark-up to the Nigerian government !!
I vividly recall my encounter with Mr. Naseem Goan who had purchased U.S. $1.5 billion of promissory notes (debts allegedly owed by the defunct Gongola State) and was willing to discount it heavily even if it meant buying cocoa, which had not even been harvested in Nigeria at crazy prices, to be exchanged/sold for dollars just to suck money out of Nigeria, regardless of the fact that even if you sold all the assets (including cattle, goats, etc.), there was no way Gongola State could have accumulated such a massive debt not to talk of repaying.
Having witnessed all these, (and seeing the same mistakes being repeated) some of us are entitled to wonder whether the juice was worth the squeeze in lamentation (or nostalgia) over our vanishing country.
Separately, in the belief that it would be of interest to you, we are willing to provide you with our firm’s involvement with the tracing and subsequent recovery of the “Abacha loot” for which we have not been rewarded with recognition or payment of our fees.
For: J.K. Randle Professional Services
Bashorun J.K. Randle, FCA; OFR