House of Reps asks for review or cancellation of all debts owed to China under force majeure principle

LAWMAKERS in the House of Representatives have asked Nigeria's Debt Management Office (DMO) to liaise with the finance ministry and seek a review or the outright cancellation of all the country's loans to China.

At yesterday's plenary, the House mandated its treaties, protocols, agreements and finance sub-committees to get in contact with the DMO and finance ministry and make it clear that the loans have to be cancelled on the basis of the force majeure principle. Force majeure is a common clause in contracts that frees both parties from liability or obligation when an extraordinary event or circumstance such as a war, strike, riot, crime or epidemic prevents one or both of them from fulfilling their obligations.

With the spread of the coronavirus pandemic, Nigeria's economy has virtually stopped functioning as it heavily dependent on crude oil, whose sales have all but ceased. This has forced the government to step up borrowing and with all this lending coming on top of previous loans, the House has set up a panel to look into all extant China/Nigeria loan agreements since 2000, with a view to ascertaining their viability, regularising and renegotiating them.

According to the House, the National Assembly had been put in the dark on how most of the Chinese loans were collected and utilised by the federal government. Lawmakers argued that there was a need to subject all subsisting Nigeria/ China contractual loan agreements to forensic fiscal scrutiny and review, particularly in view of the widespread global concern about the fraudulent, irregular and underhand characteristics of Chinese loan contracts with African states.

At the moment, there are at least 17 Chinese loans that have been taken out to fund different projects across the Nigeria. The House stated that the loans had almost resulted in a new form of economic colonialism foisted by China on the Africa continent.

A motion to this effect, titled Urgent Need to Review and Renegotiate Existing China/Nigeria Loan Agreements, was moved at yesterday’s plenary by Hon Ben Igbakpa from Delta State and considered. Adopting the motion, the House resolved that henceforth, the need for loans should be in tandem with statutory obligations as prescribed by the Fiscal Responsibility Act.

Hon  Igbakpa the House is aware that records from the DMO revealed that the People’s Republic of China emerged as Nigeria’s major creditor under the bilateral deals and that the Exim Bank of China is Nigeria’s biggest bilateral creditor having lent a total of $6.5bn since 2002. Last week, Nigeria took out a $3.4bn loan from the International Monetary Fund to help execute this year's budget.