Tuesday, August 04, 2020 /
13:27 PM / OpEd by Dr. Reuben Abati / Header Image Credit:
Ecographics
The
relationship between Nigeria and China with regard to loans obtained from the
latter to fund Nigeria's infrastructural projects suddenly became a matter of
legislative intervention and public scrutiny last week when the House of
Representatives summoned the Minister of Transportation, the Minister of
Finance, Budget and National Planning and the Minister of Communications and
Digital Economy to appear before it on August 17. The Ministers are expected to
explain certain clauses in the Agreement signed between Nigeria and the
Export-Import Bank of China with regard to a loan of $400 million for the
country's National Information and Communication Technology (ICT)
Infrastructure Backbone Phase II Project. The agreement was signed in September
2018 by the Federal Ministry of Finance on behalf of Nigeria (the
borrower). Nigeria's lawmakers have raised eyebrows about a clause
therein which waives Nigeria's sovereign immunity if it defaults in its
repayment plan.
The contentious
clause is Article 8(1) which provides inter alia that "the borrower hereby
irrevocably waives any immunity on the grounds of sovereign or otherwise for
itself or its property in connection with any arbitration proceedings pursuant
to Article 8(5) thereof with the enforcement of any arbitral award pursuant
thereto, except for the military assets and diplomatic assets." This has been
interpreted to mean that Nigeria is in danger of losing its sovereignty to
China.
The opposition
People's Democratic Party (PDP) has seized upon it to proclaim that it has been
vindicated because it has always argued that the mission of the ruling party,
the All Progressives Congress (APC) has always been to mortgage the future of
Nigeria. PDP Presidential candidate in the 2019 General elections, Alhaji Atiku
Abubakar, quickly added that Nigeria faces the risk of embracing the fate of
Zambia with regard to Chinese loans. Groups and stakeholders in civil society,
including lawyers and the Socio-Economic Rights and Accountability Group
(SERAP) have asked that all agreements ever signed between Nigeria and China
should be brought forward and subjected to close scrutiny, just in case any
government official either out of ignorance or incompetence has committed
Nigeria to a debt-trap, to the disadvantage of future generations.
From the government's side, the only man who has spoken up is Rotimi Amaechi,
the Minister of Transportation, but his explanations do not seem to address the
issue. He says for example, that the waiver of immunity in the agreement is
merely "a contract term", a sovereign guarantee. Nobody is convinced. Amaechi
and his colleagues who have been summoned by the House of Representatives would
have to do much better than that. Nigerians no longer trust their government
when it comes to international agreements. The quoted Article 5(1) in the said
agreement with the Export and Import Bank of China rings too familiar and too
topical in the light of recent revelations about the handling of Nigeria's
agreement with a certain Process & Industrial Development (P&ID). In
that case, still on-going, a sum of $9.6 billion is still pending against
Nigeria, just because some Nigerian officials signed an agreement that put the
country into trouble.
Now, again, in
the case of China, the aforementioned Article 8(1) refers to such words as "arbitration", "property", "enforcement of arbitral award". These are the same
key words in the P&ID case. Hence, additional questions need to be raised
about the Chinese agreement: who signed the agreement? Was due diligence
carried out? Was Nigeria thrown under the bus by the negotiators as has been
alleged in the P&ID case? Ordinarily, a waiver of sovereign immunity
does not mean that China will take over the running of Nigeria. Sovereign
immunity is a principle in customary international law which simply means that
a state cannot be pushed around by another state without its own consent to be
so treated, in a foreign court. Hence, in every agreement that may go to
arbitration, there is usually an agreement as to the place of arbitration and
other details.
What exactly
did Nigeria sign up to on September
5, 2018 with the China EXIM bank? To the extent that the Nigerian people have a
right to know, I am convinced that the House of Representatives is in order to
raise the questions before us.
To go further,
the various stakeholders who have asked for a proper audit of all agreements
with China are definitely aware of how the $6.6 Billion judgment against
Nigeria which became $9.6 billion (because of accrued interest) in the
P&ID case poses a serious risk to the country's economic survival. They are
also probably aware that there are similar cases relating to lack of due
diligence in the signing of agreements that Nigeria is also grappling with.
This includes the international arbitration in Paris with Sunrise Power and
Transmission Company over the Mambilla Hydro Power Plant. Sunrise went to
arbitration accusing the Nigerian government of breaching a 2003 agreement when
it granted a separate contract to Chinese companies. The same Export-Import
Bank of China was on the sidelines of that agreement. I understand the matter
has been resolved but 17 years after the initial agreement, the country is yet
to make any significant progress with the Mambilla Hydro which if things had
progressed as scheduled would have emerged as the second largest hydro power
plant in the whole of Africa. In this case, as in others, Nigeria remains
behind because some characters failed to do the right thing. Similarly, the
Ajaokuta Steel Company Limited which was meant to be a game-changer for
Nigeria's industrial growth process, was also held down for years by
disagreements over agreements and a prolonged legal tussle between the Federal
Government and a company called Global Infrastructure Nigeria Limited (GINL).
Ajaokuta Steel is a living archetype of how all good intentions in Nigeria
fail. In one word, legal tussles and arbitral disputes over contracts,
obligations and commercial agreements have over the years, exposed the failure
of public policy and the incompetence of state officials in Nigeria.
Minister
Amaechi is concerned that if the same controversy is brought to the door-step
of the Chinese, they may simply refuse to provide necessary loans for the
Ibadan-Kano rail line. Amaechi appeals to the patriotic instincts of Nigerian
lawmakers: he wants them to suspend all further enquiries until Nigeria gets an
additional $5.3 billion from the Chinese. He means well no doubt, he wants
Nigeria to get that Chinese money that Nigeria needs, but in his appeal lies
the bigger question about Sino-Africa
relations, and the place
and conduct of African leaders within that matrix.
Amaechi is
certainly an admirer of China's romance with Africa. He begs his own country's
parliament to "mechionu" as Igbos would say, so Nigeria can get more Chinese money
and sign more agreements. Someone needs to tell Rotimi Amaechi that Nigeria's
engagement with China cannot and should not be reduced to an Abiriba, Aba, or
Alaba market transaction business model: "my brother, bring money make we do
business, chop together." But he is not alone. Many African leaders are like
that and as they engage China, they fail to look at the sub-text.
In the 70s,
China was far behind many African countries. I grew up in a country where any
product that was made in China or Taiwan was derisively dismissed. China and
Taiwan were the standard euphemisms for fakery, inferiority and cheapness. In
those days, Nigerians talked about the British Standard (BS). Nigeria's economy
was doing well. The Naira was at par with the pounds sterling. Nigerians
travelling to London on Fridays aboard Nigeria Airways, stopped by at Liverpool
market and the Main street and spent money as if it was going out of business
as a legal tender. This was the age of the oil boom. No Nigerian would touch anything
Chinese. I grew up being told that anything Chinese or Taiwan does not last.
Even when this COVID-19 break-out began, I heard some older Nigerians insisting
that if indeed the virus originated from China, it would not last, because
nothing that comes from China can be relied upon. Unfortunately, China pulled
itself up by the boot-straps. China re-invented itself while other countries
either went to sleep or became complacent. It is ironic that today, Nigeria
adores China. In our class at the University of Maryland, College Park, 1996
-97, in an American Foreign Policy Process class taught by Hodding Carter III,
in the Department of Government and Politics, we read a book titled "The
Coming Conflict with China". That conflict then was at best
hypothetical. Today, it is a reality. China is one country that has
leap-frogged into the future in an unimaginable manner. The emergent conflict
between China and the Western world will be the most definitive factor of this
century and the next to come. Africa and the developing world are both at the
centre of that conflict.
With China thus
on the ascendancy, its leaders defined for that country, broad geo-political
ambitions. With the West in retreat and increasingly navel-gazing,
protectionist and isolationist, China launched a muscular approach to foreign
policy with its Belt and Road Way Initiative through which it sought to engage
developing economies by way of financial support through loans and grants. The
focus has been so far, infrastructural development but there is a lot more in
there. Strategically, therefore, long before COVID-19, China tried to fill a
vacuum that Western nations created. As Western creditors prescribed more and
more stringent conditions for bilateral and multilateral loans, China offered cheap,
easy and accessible alternative financing arrangements: interest-free
government to government credits, and preferential loans from China EXIM and
the China Development Bank. The latter, that is preferential loans, represents
the bulk of China's overseas lending. Developing countries were over-excited.
They swooped on China's offers like bees after nectar. Today, China is the
world's largest creditor to the developing world. Since 2008, China has been
Africa's main trading partner. There is even now in place, a Forum on
China-Africa Co-operation.
Nobody saw
the catch, and countries
were caught flat-footed. China has been accused of debt-trap diplomacy. Many
countries embraced that diplomacy with their hands tied behind their backs and
today, their countries are in the throes of debt servitude. China gives but it
takes! China helped Sri Lanka to build the port of Hambantota. Both countries
signed an agreement, similar to the one Nigeria signed with the Export-Import
Bank of China. Today, China runs that port with Chinese personnel. In Djibouti,
the Chinese are in charge of the ports too, just because Djibouti borrowed
money it could not pay back. In Zambia, for similar reasons, China is now
controlling the Zambia National Broadcasting Corporation (in other words, China
is in charge of mind control in Zambia). China is also planning to take over
the Zambia National Electricity Company. Djibouti took loans from China to
build a new port and two new airports, Unable to repay its loans, China has
also taken over a part of Djibouti's sovereign rights and possession of its new
port, and has since set up in that country, its first military overseas base.
There have been issues as well, with China's relations with Kenya, Democratic
Republic of Congo and other African countries.
But should we
blame China?
Whatever
travails developing countries may have gone through in the hands of China, in
the form of damages to their sovereignty, we must all agree on certain basic
points. One, "there is no free lunch". China is not offering anyone a free
lunch. Its cheap loans are tied to its own strategic interests in the
world. African nations are the ones submitting themselves as pawns to
China's global strategic agenda. African leaders are most certainly
complicit. Two, "when you borrow, you pay". Chinese negotiators are
often focused. If you don't pay in cash, you will pay in kind. The Chinese only
give out their loans even under the Belt and Road Initiative to countries that
have something to offer in return. Many developing countries are so
economically narrow and badly managed, they end up giving up national resources
for borrowed funds that translate into debt servitude. Three, and this is the
worst part, is that Chinese loans are often opaque. This is one of the reasons
China is not a member of the Paris Club. It may have committed to the G-20
process on the moratorium for debt service re-payments for example, but China
has stubbornly refused to participate in data calls. It is the biggest player
in Africa's infrastructure boom but it may never disclose the full details.
China's influence
in Africa even runs far deeper. In Nigeria, that influence has gone beyond loan
agreements that touch on sovereign rights to an increasing ubiquity of Chinese
presence in Nigerian lives. It is so real that the Chinese have now taken over
a rather complicated business chain in the country from manufacturing to
retail, including internet services, hospitality, car sales and ride hailing
services. One of these days, we may wake up to see a Chinese roasting corn by
the road-side in Nigeria, properly licensed to do so!
Nigerian
lawmakers have a responsibility to shout out about Nigeria's sovereignty, and
the integrity of agreements with China or others. We certainly don't want
to hear that a certain Amaechi has signed off Nigeria's Presidential Villa to
the Chinese to get cheap loans to build a rail line to Port Harcourt! If that
were to be the case, the Chinese will take over that Villa and like P&ID,
look at us all in the face, talk about the sanctity of agreements, and dare
Nigeria to go to the court of international arbitration. The onus is on Amaechi
and co to tell us what we need to know. The Chinese knee is on our necks today,
simply because our leaders have failed to lead us aright.
Related News
and Articles on China-Africa Relations
1.
Nigeria and China: Understanding the imbalanced relationship Jun 1, 2020
2.
The economic Relations
between China and Nigeria - GRIN
3.
Why is China interested in Nigeria? - Stears Business Oct 11, 2019
4. What China Is Really Up to In Africa - Forbes Oct 3, 2019
5. The Conflict in China's African Investment - The Atlantic
6.
China-Africa:
It's the politics, stupid! - The Africa Report.com Jul 7, 2020
7. Africa Starts to Have Second Thoughts About That Chinese ... Jul
22, 2020
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