China Puts ‘Aggressive’ Terms On Uganda Airport Loan – Researchers

The Ugandan flag.

 

A top Chinese lender has imposed “aggressive” repayment terms on a $200 million loan to expand Uganda’s international airport, US-based research lab AidData said Monday, criticising the bank for forcing the government to repay its debt before funding public services.

Chinese state banks are the biggest source of infrastructure funding to Africa and have been criticised for their predatory lending practices although details of contracts are rarely made public.

Under the loan from China’s Exim Bank to modernise the Entebbe Airport, the Ugandan government is required to channel all revenue from the country’s only international airport into an account held jointly with the lender, according to the contract published Monday by AidData.

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The government is then required to use part of the revenue to repay the loan each year before it can invest in public services.

“These are (more) aggressive terms than what we have seen earlier,” Bradley Parks, executive director at AidData, told AFP, saying the contract “limits the fiscal autonomy of the government”.

State-owned China Communications Construction Company began repairing runways and building new airport hangers in Entebbe in 2016 and the work is expected to be completed this year.

Chinese creditors — unlike other lenders from developed nations — require governments to deposit some earnings from big infrastructure projects in bank accounts they control to serve as collateral.

But the contract for the Ugandan airport goes further.

“The lender is asking not just for revenues from the new projects they are funding, but also from the underlying asset — or the airport — that already exists,” Parks said.

The airport, built in 1951, was generating about $68 million in annual revenue prior to the expansion project and the money was used to fund public services according to Parks, citing data from the government.

The project led to public outrage last year after Ugandan media reported China will take control of the airport if the government in Kampala defaulted, a claim that Beijing later denied.

China Exim Bank did not respond to a request for comment.

US Treasury Secretary Janet Yellen this month said China needs to contribute more to global efforts to provide debt relief for poor nations that are struggling to repay after the pandemic battered their economies.

AFP

Chinese Loans: Anybody That Will Help Nigeria’s Infrastructure Is Welcome – Buhari

 

President Muhammadu Buhari on Wednesday defended his government’s decision to source loans from China, saying anyone willing to help Nigeria’s infrastructure is welcome.

According to data from the Debt Management Office, Nigeria has borrowed $2.02 billion as loans from China from 2015 and the country’s debt portfolio from China has risen to $3.40bn as of March 31, 2021.

Speaking during an exclusive interview on Channels Television, President Buhari stated that whenever there was a need to secure more foreign loans, his administration would do so.

The Commander-in-Chief equally erased fears in some quarters that Africa’s most populous nation might be plunged into a debt trap.

“We take that (loans) where it is necessary. I told you now of something, what it is used to be between Lagos and Ibadan alone not to talk of the rest of the country,” he said.

“But we got the Chinese to help us in the rail and the roads, how can we turn that down? If we had turned that down, maybe between Lagos to Ibadan, you will have to walk.

“So the Chinese are welcome, anybody that is prepared to come and help us and our infrastructure to do the roads, the rail and power will be welcomed.”

READ ALSO: Education Not An Automatic Ticket To Govt Jobs, Buhari Tells Nigerian Youths

Away from the Chinese loans, Buhari also spoke on a wide range of national issues including his decision not to sign the Electoral Act Amendment Bill.

I Am Fully Committed To Mambilla Power Project, Buhari Tells Xi
President Muhammadu Buhari and his Chinese counterpart, Xi Jinping. Credit: AFP

 

Buhari had declined assent to the bill, citing the inclusion of the direct primaries mode of elections.

According to the President, he will sign the bill if the National Assembly makes the needed adjustment.

“All I said (is that) there should be options,” he said. “We must not insist that it has to be direct; it should be consensus and indirect.”

Asked if he would sign if the lawmakers effect the change in that direction, he affirmed, “Yes, I will” I will sign.

He added, “There should be options, you can’t dictate to people and say you are doing democracy. Give them other options so they can make a choice.”

IMF Approves Final Round Of Debt Relief For Poor Countries

In this file photo an exterior view of the building of the International Monetary Fund (IMF), with the IMG logo, is seen on March 27, 2020 in Washington, DC. Olivier DOULIERY / AFP
In this file photo an exterior view of the building of the International Monetary Fund (IMF), with the IMG logo, is seen on March 27, 2020, in Washington, DC. Olivier DOULIERY / AFP

 

The IMF said Monday it had approved the fifth and final round of debt relief under a program meant to help the world’s poorest nations weather the Covid-19 pandemic.

The $115 million in relief under the Washington-based crisis lender’s Catastrophe Containment and Relief Trust (CCRT) affects debt service payments falling due for 25 member states between January 11 and April 13 of next year, the IMF said in a statement.

READ ALSO: Malawi Police Arrest Former Minister, Bank Chief For Lying To IMF

In the statement, the IMF said its directors view the CCRT relief as having “helped its poorest and most vulnerable members to free up resources to tackle the pandemic and its repercussions,” though they warn not all money pledged for the trust has been received.

The CCRT enables the IMF to provide grants to the poorest and most vulnerable countries hit by a natural disaster or public health crisis, and was tapped by the fund in April 2020 to aid the response to the Covid-19 pandemic.

AFP

Reps Approve Buhari’s Request For $5.8bn Loan, $10m Grant

A file photo of some members of the House of Representatives during a plenary.

 

The House of Representatives has approved President Muhammadu Buhari’s loan request of 5.8 billion dollars and grant of $10 million.

The loans are to be sourced from the World Bank, Islamic Development Bank, China Exim bank, Chinese Africa Development Fund, and International Fund for Agricultural Development.

In approving the loan, the House asked that the terms and conditions of the loan from the funding agencies be forwarded to the National Assembly for proper execution and commendation.

READ ALSO: Buhari Nominates New Minister, Seeks Senate Confirmation

The House Committee on Aids, Loans and Debt Management, had presented its report through the Chairman, Rep. Ahmed Safana (APC-Katsina).

Safana observed that out of the total borrowing of $5.8 billion covers $2.3 billion for the Grid Modernization and Expansion Programme, $290,000,000 for the malaria project, $700,000,000 for the Sustainable Water Supply, Sanitation and Hygiene (WASH) Project, $786,382,967 for the Gurara Phase II project among several others.

“That the House do consider Final Report of the Committee on Aids, Loans and Debt Management on the Proposed 2018–2020 External Borrowing (Rolling) Plan No.3 (Laid:14/12/2021) – Committee of Supply,” Safana said.

“That the House do approve the under listed ongoing negotiation of external borrowing of $5,803,364,553.50 and a Grant component of $10,000,000 under the 2018-2020 External Borrowing (Rolling) plan.”

The loan is part of the Federal Government’s 2018-2020 external borrowing plan.

Senate Approves Buhari’s $16bn, €1bn External Borrowing Request

Screen shot from video showing lawmakers during plenary on Wednesday, November 10, 2021.

 

The Senate on Wednesday approved President Muhammadu Buhari’s External Borrowing (Rolling Plan) request in the sum of $16,230,077,718, and €1,020,000,000.

Also approved by the upper chamber was a grant component of $125 million.

The loans are to be funded by the World Bank, China Exim Bank, industrial, and commercial banks as well as African Development Bank (AfDB) among others.

Wednesday’s approval was sequel to the consideration of the report of the Senate Committee on Local and Foreign Debts, as presented by the Chairman of the Committee, Senator Clifford Ordia.

Ordia, while presenting the report, said the projects which funds are requested for in the 2018-2020 borrowing plan are ongoing.

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The lawmaker noted that the said projects will stimulate a “rebirth of commercial and engineering activities and the consequent tax revenues payable to Government as a result of these productive activities will increase.”

In September 2020, President Buhari requested the facilities in an addendum to the 2018-2020 borrowing plan. The National Assembly had in July approved $8.3 billion and €490 million as initial loan requests.

Making a case for the extra request, the president stated that the loans would stimulate the economy and create jobs.

Meanwhile, a bill to amend the Niger Delta Development Committee (NDDC) Act 2000 to include states, which have recently attained oil-producing status, has passed the second reading at the Senate.

Sponsor of the bill, Senator Solomon Olamilekan said on Wednesday that following the discovery of oil in Bauchi, Lagos, and Ogun, the states have officially joined the league of oil-producing states and by virtue of this, they are entitled to the 13 percent derivation due to them according to the provision of Section 162 Sub-Section 2 of the Nigeria Constitution.

While many agreed with Senator Olamilekan, there were some who did not support the amendment of the NDDC Act.

One of such was Senator George Sekibo who questioned the quantity of oil discovered in the states to be included in the NDDC, wondering if the quantity is enough to be refined and sold to benefit the country.

Similarly, Senator Matthew Urhogide argued that the name of the commission is specific in identifying the states which should be under the commission.

He further stated that non- Niger Delta states can benefit from the 13% derivation but to say that they belong to the commission makes a mockery of the original idea for setting up NDDC.

Deputy Senate President Ovie Omo Agege, who also was strongly against the bill, accused Senator Olamilekan of being a meddlesome interloper.

According to Omo-Agege, Senator Olamilekan should pursue the development of the southwest development commission and not an amendment of the NDDC act.

Nigeria Won’t Have Exited Recession Without Borrowing, Says Finance Minister

 

The Minister of Finance, Budget and National Planning, Zainab Ahmed has again defended recent borrowings by the Federal Government, insisting they were instrumental to the country’s exit from recessions.

She said this on Friday during the Public Presentation and Breakdown of the 2022 Appropriation Bill.

“Having witnessed two consecutive recessions, we have had to spend our way out of the recession which contributed significantly to the growth of our public debts,” the minister stated in Abuja, one day after President Muhammadu Buhari presented the Appropriation Bill to the National Assembly.

“It is unlikely that our recovery from these recessions would have been as fast without the sustained government expenditure funded partly by debt.”

Before now, the minister had said Nigeria will fund its 2022 budget deficit, pegged at N6.258 trillion, through fresh borrowings.

The move was greeted with controversy across the country. Critics and members of the opposition said the development, as well as other borrowings by the Federal Government, call for concern.

“Our party holds it as an act of wickedness that individuals who know that they will be leaving office in less than two years will be accumulating debts instead of seeking ways to reduce the liability they have brought upon our nation,” the Peoples Democratic Party (PDP) said following Buhari’s request for approval to borrow $4 billion and €710 million to fund the deficit in the 2021 budget.


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Technically At War

Nigeria’s Minister of Finance, Budget, and National Planning, Zainab Ahmed says the borrowings are within “sustainable limits.”

 

But Zainab has explained that borrowings have helped the government in providing infrastructure to boost the economy.

“Borrowings are essential to enable us to deploy necessary capital expenditure and invest in human capital development,” she maintained.

According to her, with the country’s rising levels of insecurity, the government had to resort to borrowing.

“To compound matters, the country has technically been at war, with the pervasive security challenges across the nation,” the minister added.

“This has necessitated massive expenditures on security equipment and operations, contributing to the fiscal deficit; Defence and Security sector accounts for 22% of the 2022 budget!”

She further allayed fears over Nigeria’s debts, insisting the “debt level of the Federal Government is still within sustainable limits”.

2022: Five Major Areas Nigeria’s Loans Will Be Focused On

President Muhammadu Buhari on Thursday presented the 2022 Appropriation Bill before the National Assembly

 

President Muhammadu Buhari on Thursday submitted the 2022 Appropriation Bill before the Joint Session of the National Assembly in Abuja.

According to the President, the “Budget of Economic Growth and Sustainability” would have its deficit mainly funded by new borrowings totalling N5.01 trillion, N90.73 billion from Privatization Proceeds and 1.16 trillion Naira drawdowns on loans secured for specific development projects.

While arguing that the nation does not have a debt sustainability problem, but a revenue challenge; President Buhari assured the lawmakers and Nigerians that his administration is determined to tackle the revenue problems and ensure that debts remain sustainable.

READ ALSO: Nigeria’s Debt Still at Sustainable Level, Says Buhari

He further explained that his government has endeavoured to use the loans to finance critical development projects and programmes aimed at improving Nigeria’s economic environment and ensuring effective delivery of public services to our people.

For President Buhari, the loans acquired have been and will continue to be focused on:

1. The completion of major road and rail projects;

2. The effective implementation of power sector projects;

3. The provision of potable water;

4. The construction of irrigation infrastructure and dams across the country; and

5. The critical health projects such as the strengthening of national emergency medical services and ambulance system, procurement of vaccines, polio eradication and upgrading Primary Health Care Centres across the six geopolitical zones.

Speaking further about infrastructure financing, President Buhari disclosed that there will be some innovations.

According to him, in 2022, the government will further strengthen the frameworks for concessions and public-private partnerships (PPPs).

“Capital projects that are good candidates for PPP by their nature will be developed for private sector participation,” the President asserted.

He also disclosed that the present administration will also explore available opportunities in the existing ecosystem of green finance including the implementation of the nation’s Sovereign Green Bond Programme and leveraging debt-for-climate swap mechanisms.

The president enunciated that the strategies to improve revenue mobilisation will be sustained in 2022 with the goal of achieving four key objectives and they include:

Enhancement of tax and excise revenues through policy reforms and tax administration measures; review the policy effectiveness of tax waivers and concessions; boost customs revenue through the e-Customs and Single Window initiatives; and safeguard revenues from the oil and gas sector.


Rivers Govt Approves N25bn For Completion Of Law School, Flyover, Other Projects

The Rivers State Executive Council holds a meeting in Port Harcourt on September 27, 2021.

 

The Rivers State Government has approved the sum of N25 billion for the completion of the Nigerian Law School in Port Harcourt, flyover and other projects in the state.

The projects, expected to be financed by a loan from a commercial bank in the state, were approved on Monday at the State Executive Council meeting held at the Government House in the state capital.

Briefing journalists on the outcome of the meeting, the Commissioner for Information and Communications, Paulinus Nsirim, explained that the loan would be used to fund people-oriented projects that would further enhance development in all the nooks and crannies of the state.

Nsirim said projects to be funded with the loan include the Nabo Graham-Douglas Campus of the Nigerian Law School, the Chokocho-Igbodo Road in Etche Local Government Area and the Oyigbo-Afam Road in Oyigbo Local Government Area.

“This loan has a repayment plan of 18 months, with effect from October 2021, and to be completed in April 2023 from the state’s Internally Generated Revenue. The repayment period is N1,547,874,350 monthly,” he said.

He reaffirmed Governor Wike’s commitment to ensuring that all projects initiated by the state government were completed before the end of his tenure, adding that no project would be abandoned.

On his part, the Commissioner for Works, Elloka Tasie-Amadi, said the N25 billion loan was deemed necessary because all the projects it would be used to fund were time-bound.

“For instance, the Oyigbo-Afam Road or the 27-kilometer Chokocho-Igbodo Road, these projects have construction time, which means that it is very important that we commence the projects immediately and take advantage of the coming dry season as well,” he said.

“We also have considered the inflationary trend in the country and found out that we don’t know what the prices of these projects will become if we take much longer time to activate them. So, these considerations have made the Rivers State government take this loan from Zenith Bank to fund all these projects.”

FG Borrowings: Reps To Probe Probable Exclusion Of Rivers From Benefitting States

A file photo of members of the House of Representatives

 

The House of Representatives on Wednesday indicated its willingness to investigate the probable exclusion of Rivers State from the list of states to benefit from the Federal Government’s borrowings.

The lower chamber is to probe the possible omission of the oil-rich state as a beneficiary of states earmarked for projects.

This is sequel to a motion of urgent public importance by Representative Solomon Bob alleging that Rivers is the only state out of the 36 states to be left out.

The lawmaker further alleged discrimination against Rivers State which contributes enormously to the federation account.

The House has mandated its Committee on Aids and Loans to liaise with the presidency to include Rivers State in the loans if it is found to be the only state that has been excluded.

The Reps’ move is coming two days after Rivers State Governor, Nyesom Wike described as an act of discrimination, the alleged refusal of the Federal Government to include Rivers as one of the states that would benefit from projects, for which it was seeking fresh foreign loans to execute.

“Look at the money that Federal Government has gone to borrow from the World Bank, of all the projects in all the states, the Federal Government did not include Rivers State,” the governor said.

He explained that beyond the provision of infrastructure, his administration was seeking a law that would provide comfortable accommodation for judicial officers on retirement.

The reason, he said, was to ensure that while in service, the judicial officers can concentrate on their jobs without cutting corners and avoid corrupt practices.

He observed that there are attempts to frustrate federating states like Rivers, to actualise the constitutional provisions that empower them to harness their resources and revenues, particularly VAT.

According to Governor Wike, what the Federal Inland Revenue Service (FIRS) was doing was illegal and could be likened to robbing from the states.

Borrowing To Accumulate Debt For Next Generation Is Criminal – Obasanjo 

 

Former President Olusegun Obasanjo has reacted to the Federal Government’s plan to source for fresh loans, saying borrowing to accumulate debt for the next generation is criminal.

Speaking to Channels Television on the sidelines of an event in South Africa, Obasanjo noted that if the existing debt is left unserviced or unpaid, it might become a problem for successive administrations.

While noting that borrowing is not a problem, the former Nigerian leader stated that what could be a problem would be what one is borrowing for and the plan or capacity to pay back.

“But if you are borrowing and accumulating debts for the next generation and the next generation after them, it is criminal. What are you borrowing for?” Obasanjo asked.

“If we are borrowing for recurrent expenditure, it is the height of folly. If we are borrowing for development that can pay for itself, that is understandable. Then the payment, how long will it take to pay itself?”

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The ex-president recalled that during his tenure in 1999, the country was spending $3.5 billion to service debts that kept on increasing.

“When I came into government as elected President, we were spending $3.5 billion to service debts. Even with that, our quantum of debts was not going down.”

Nigeria’s debts have continued to rise as the Federal Government seeks foreign loans to deliver key infrastructural projects.

Five days ago, President Muhammadu Buhari wrote to the National Assembly, seeking approval to borrow fresh sums of $4,054,476,863 and €710 million in an addendum to the 2018-2020 borrowing plan.

In the letter, the President explained that owing to “emerging needs”, there is a need to raise more funds for some “critical projects”, while seeking the parliament’s nod to also approve grant components of $125 million.

The request was in a letter read by Senate President Ahmad Lawan on the floor of the upper legislative chamber on Tuesday.

In July, the national assembly approved the sums of $8.3 billion and €490 million loans contained in the initial 2018-2020 borrowing plan.

‘Hinged On Genuine Needs’: APC Defends Borrowing By Buhari’s Govt

File photo: President Muhammadu Buhari presiding over the Federal Executive Council (FEC) meeting in Abuja on August 18, 2021.

 

The All Progressives Congress (APC) says the President Muhammadu Buhari’s government is borrowing to address the country’s infrastructure deficit which would in turn stimulate the economy. 

Buhari had on Tuesday written to the National Assembly, seeking approval to borrow the sum of $4,054,476,863 billion and €710 million, a move critics and members of the main opposition Peoples Democratic Party (PDP), have faulted.

But in a statement on Wednesday, the APC accused the PDP of mismanaging the country’s economy when the party (PDP) was in power, explaining that the borrowings will create employment, and strengthen agriculture among others.

“From the foregoing, it is abundantly clear that the borrowing is hinged on genuine needs and based on the necessity to strengthen the foundation of the national economy and achieve the desired primary purpose of the government –  uplifting the living standard of the citizens,” the statement signed by the National Secretary of the APC Caretaker/Extraordinary Convention Planning Committee (CECPC), Sen. John James Akpanudoedehe, read.

The APC, which accused the PDP of pushing the country into “insolvency” to the extent that some states were unable to pay workers their salaries, lauded the present administration for bailing out the states.

“In a welcome and commendable change, the Buhari-led administration through its economic management skills bailed out states to pay salary backlogs and embarked on large-scale infrastructure development projects that stimulated the economy and exited the era of insolvency and recession caused by the ineptitude of the PDP administration,” the statement added while praising the cooperation among the three arms of government.

According to the ruling party, the cooperation will “ensure good governance, particularly in the area of economic development.

“The country and citizens are the ultimate beneficiaries.”

President Buhari Writes Senate, Requests Fresh Loan Of $4bn And €710m

A photo released by the State House on August 16, 2021 showing President Muhammadu Buhari signing the Petroleum Industry Bill into law. Bayo Omoboriowo/State House
President Muhammadu Buhari (File Photo)

 

President Muhammadu Buhari has written to the National Assembly, seeking approval to borrow the sum of $4,054,476,863 billion and €710 million.

The request was made known in a letter read by Senate President Ahmad Lawan at plenary on Tuesday.

In the letter titled Addendum to Request For Senate’s Concurrent Approval Of Multilateral Fund Projects Under the 2018-2021 Federal Government External Borrowing (Rolling) Plan, President Buhari explained that owing to “emerging needs”, there is a need to raise more funds for some “critical projects”.

“The projects listed in the addendum to the 2018-2021 Federal Government External Borrowing Plan, are to be financed through sovereign loans from the World Bank, French Development Agency (AFD), China-Exim Bank, International Fund For Agriculture Development (IFAD), Credit Suisse Group and Standard Chartered/China Export and Credit (SINOSURE) in the total sum of USD4,054,476,863.00 plus Euro 710, 000,000.00 grant component of USD 125,000,000.00”.

A copy of the letter signed by President Buhari 

 


 

This is not the first time President Buhari is writing to the National Assembly to request approval for external loans this year.

In May, he requested the sum of N2.343 trillion which according to him, was meant to part-finance the budget deficit of N5.602 trillion in the 2021 budget.