Nigeria tops African peers on debt transparency – DMO

Nigeria tops other African countries on debt transparency, according to Monday Usiade, director of market development at the Debt Management Office (DMO).

Usiade spoke at the BusinessDay Policy Intervention Series, held Thursday, where he explained that Nigeria’s debt data, including the lenders and the borrowing purposes, was publicly available information.

“Talking about transparency at the federal level, I think we give ourselves a pass mark. Nigeria is recognised by the International Monetary Fund (IMF) and World Bank as a leader in debt transparency in Africa.”

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Although there is no ranking regarding debt transparency, Nigeria’s efforts at enhancing debt transparency have been recognised. Nigeria was one of the first countries in Africa to adopt the Commonwealth Secretariat’s Debt Recording and Management System (CDRMS). The World Bank also recognises Nigeria’s efforts among developing economies at promoting debt transparency, including a very robust Public Debt Management Legal Framework (PDMLF).

According to Usiade, “To ensure our financial sovereignty, we meticulously review and negotiate contracts with international lenders. We’ve implemented a standard clause, approved by the ministry of justice, which waives sovereign immunity in specific circumstances. This protects Nigeria’s assets and prevents undue influence from foreign creditors.”

Usiade, who represented the DMO at the event, highlighted some of the nuances around public lending, including the waiver of sovereign immunity.

He noted, “Every contract with a sub-national or sub-regional entity includes a clause known as ‘waiver of sovereign immunity.’ This seemingly small clause can have significant implications if not carefully reviewed. It’s crucial to understand its terms to avoid unintended consequences.”

A waiver of sovereign immunity is a clause that allows a sovereign state, such as Nigeria, to be sued in a foreign court. By including a waiver of sovereign immunity clause in a contract, a state can agree to be subject to the jurisdiction of foreign courts in case of disputes arising from the contract. It is often included in international contracts to provide legal recourse for the other party in case of default or breach of contract.

The DMO official highlighted the challenges posed by waivers of sovereign immunity, citing a 2012 loan from China for airport renovation projects as an example.

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He noted: “When borrowing from China, they often include a specific clause, usually a footnote that stipulates that the project must be financed by the project’s revenue. If the project fails to generate sufficient revenue, China reserves the right to take over the project.”

“I experienced this during negotiations for airport remodelling projects in 2012-2013. I advocated for the removal of this clause. So, Ngozi (finance minister) insisted on removing the clause and the clause was removed.”

The event featured a panel session involving the NGX CEO, the managing director of FMDQ Securities Exchange, Chapel Hill Denham, and The Trusted Advisors.