Nigeria, other African Countries’ huge debt profile worries United States
U.S Secretary of State, Rex Tillerson
By FRANCIS EZEM
The United States of America has expressed deep worries over the increasing debt burden by Nigeria and many other African countries, especially less than 10 years after they were granted relief by international financial institutions.
Recall that former President Olusegun Obasanjo secured a debt relief for Nigeria to the tune of about $12 billion in a deal that saw the country repay about $18 billion, being one of the few countries that benefitted from debt cancellation then.
The U.S. Department of State, during a background briefing on the first trip of Secretary of State Rex Tillerson to Africa, said such loans were unhelpful to the continent, reports Premium Times.
Mr. Tillerson would meet with Nigeria’s President Muhammadu Buhari and also leaders of Chad, Djibouti, Ethiopia and Kenya during his travels from Tuesday, March 6 to 13.
To date, debt reduction packages under the Heavily Indebted Poor Countries (HIPC) Initiative have been approved for 36 countries, 30 of them in Africa, providing 76 billion dollars in debt-service relief over time.
In 2005, to help accelerate progress toward the UN Millennium Development Goals, the HIPC Initiative was supplemented by the Multilateral Debt Relief Initiative (MDRI).
The burgeoning debt by the Nigerian government since then especially during the Muhammadu Buhari administration has been of concern to observers. Vice President Yemi Osinbajo, however, allayed the fears in an interview on Friday where he said the borrowed sums were judiciously being utilised for massive infrastructural projects across the country.
MDRI allowed for 100 per cent relief on eligible debts by three multilateral institutions – the International Monetary Fund, the World Bank, and the African Development Fund – for countries completing the HIPC Initiative process.
The department said: “in the Africa region, we are going to have a heart-to-heart discussion with the Chinese. We’ve invited the Chinese to come to Washington to talk about their programmes in Africa.
“And so on the one hand, the unhelpful role is the providing low-interest but really concessionary loans which really indebts the country.
“So for all of us who worked on HIPC – in other words, getting African countries post-colonial period off of debt – to see these countries re-indebted again is not only outrageous but terrible.
Unconfirmed sources say Nigeria has borrowed over N16 trillion in the last three years, thus heightening observers’ worries that the country might be heading towards a huge debt burden crisis.