The Nigerian Debt Management Office's response to concerns about Nigeria borrowing from China is the equivalent of one saying "God forbid" to the possibility of a car crash... and then proceeding to drive without a seat-belt.
Saying the possibility of a failure to default does not exist is an extremely naive statement. It's just like saying the possibility of a recession did not exist because Nigeria was the largest economy in Africa. Also the Zambia example is not yet ancient history.
The question the DMO needs to answer is, what happens if there is a default?
The reason concessional loans exist is because they come with certain conditions that favour the lender directly or indirectly. They either influence your policy-making or tie you into agreements that significantly hamper the potential for independent economic growth in future with severe penalties in case of a default.
The question I ask is where did China, Singapore or South Korea borrow from to become economic giants they are today? Perhaps African leaders should borrow lessons from these countries rather than money.
The gradual takeover of Zambian public assets by China due to unpaid debt should serve as a cautionary example for the Nigerian government. Particularly when we constantly borrow to fund a bloated civil service, an overpaid House of Assembly and extreme government excesses. While our leaders can only see 4 years into the future, China has actively been charting its future for the past 65 years with clear plans for the next quarter of a decade. If China truly wants to be benevolent, it should teach Africa to fish instead of building fishponds all over the continent.
Saying the possibility of a failure to default does not exist is an extremely naive statement. It's just like saying the possibility of a recession did not exist because Nigeria was the largest economy in Africa. Also the Zambia example is not yet ancient history.
The question the DMO needs to answer is, what happens if there is a default?
The reason concessional loans exist is because they come with certain conditions that favour the lender directly or indirectly. They either influence your policy-making or tie you into agreements that significantly hamper the potential for independent economic growth in future with severe penalties in case of a default.
The question I ask is where did China, Singapore or South Korea borrow from to become economic giants they are today? Perhaps African leaders should borrow lessons from these countries rather than money.
A book I recommend for any one interested in public service is Bad Samaritans by Ha-Joon Chang. The book highlights how South Korea actively ignored the influence of the World Bank and IMF in shaping its economic policies and future. African leaders should borrow a leaf and apply the same caution to accepting aid from the East.
The other question the DMO needs to answer is, what are the conditions to which the loans are tied?The gradual takeover of Zambian public assets by China due to unpaid debt should serve as a cautionary example for the Nigerian government. Particularly when we constantly borrow to fund a bloated civil service, an overpaid House of Assembly and extreme government excesses. While our leaders can only see 4 years into the future, China has actively been charting its future for the past 65 years with clear plans for the next quarter of a decade. If China truly wants to be benevolent, it should teach Africa to fish instead of building fishponds all over the continent.
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