* Says China offers 1.5% interest on concessional
loans
Vice President Yemi Osinbajo has justified Nigeria’s preference
for China’s concessional loans, disclosing that the loans only
attract interests of between 1.5 per cent and two per cent.
Osinbajo stated this at a meeting with business magnates and
strategic investors at the Council for Foreign Relation (CFR), New
York. The meeting held during his recent visit to US Vice President
Mike Pence.
The CFR, a US non-profit think-tank specialising in foreign
policy and international affairs, organised the meeting under the
theme, “Nigeria’s Economic Prospects: A Conversation with Vice
President Yemi Osinbajo.”
Chinese credit accounts for 80 per cent of all bilateral loans
to Nigeria, according to recent data from the Debt Management
Office (DMO). China provides loans for Nigeria to build railways,
power plants and airports, helping to bridge a huge infrastructure
gap in the country. Lending from China makes up only three per cent
of Nigeria’s total debt stock of $81 billion, the DMO had
disclosed.
However, with the interest rate not exceeding two percent in
most cases, Osinbajo insisted that China’s concessional loans were
more competitive, progressive and development-driven, compared with
about eight per cent that sovereign lenders from other regions
offered.
The conversation, which was moderated by a Consumer News and
Business Channel (CNBC) contributor, Michelle Caruso-Cabrera, had
prominent US investors in attendance. Most of them were seeking
more clarification on Nigeria’s business environment and ease of
doing business.
In a transcript of the conversation at the council, the Nigerian
vice president acknowledged that Nigeria subscribed to China’s Belt
and Road Initiative, a global development strategy the Chinese
government adopted, which involves infrastructure development and
investments in 152 countries in Africa, the Americas, Asia, Europe
and the Middle East.
With respect to China’s Belt and Road Initiative, Osinbajo said
Nigeria, “Subscribes to it. We are part of that initiative. With
respect to infrastructure, we want competitive capital. Our
preference is to have private capital doing infrastructure,
especially where they can see an income stream.”
The vice president emphasised Nigeria’s search for cheap
concessional loans, which according to him, China offered to a
large extent. Unlike other regions that offered between seven and
eight per cent, Osinbajo said China offered Nigeria relatively
“cheap loans for infrastructure.”
However, he acknowledged that sometimes there “are difficulties
with negotiations because when you are offering a cheap loan, you
want a few extra conditions here and there. What we have found is
that it works for us in the areas where the Chinese have given us
concessional loans.”
In railways, for example, the vice president cited the case of
the Lagos-Kano railway, which he claimed China’s concessional loan
had made possible.
He stated, “It is a good example. We think it works for us when we
compare with what other regions offer or when we look at what the
competition is, especially in areas where private capital does not
want to go.
“Nobody wants to build a railway for you. No private capital is
going to do that. They want to take the concession when you build
the railway and you put on the rolling stock. So, we find that it
is a good option for us.
“It is a good option. Of course, however, we try as much as
possible to be as savvy as possible in the negotiations. For one
thing, the Chinese would prefer that a Chinese company executed the
project. There are several good Chinese.
“But we have Executive Order 5 where we insist that unless you
cannot find Nigerian engineers who can do the work, we will not
accept engineers from other countries, whatever those countries may
be.
“What you tend to find is that where you are dealing with fairly
complicated construction work, we will give what we call expatriate
quarters to some of their own engineers. But we insist in a lot of
our agreements, following Executive Order 5, that we must have the
participation of Nigerian engineers.”
Asked to expatiate on the competitiveness of China’s offers,
Osinbajo said it was hard “to say because it just depends on what
sort of money. It is hard to make those comparisons. For example,
if you look at generally the sorts of loans you would get, it would
most likely be commercial loans if you are not going through a
multilateral institution.
“Very few governments would be like the Chinese government. Very
few governments will give us 1.5 percent or two percent. So, you
are most likely going to find something in the region of seven
percent, perhaps even higher. But these days, I think, with
increasing competition we can negotiate, maybe better concessional
loans.”
When further probed on the interest issue, Osinbajo insisted
that China’s concessional loan “is much cheaper. It is much
cheaper. But you also find, again, that if you throw it open to
competition, you might be able to get not just necessarily a better
deal, but also, you know—depending also on technology – you might
find that this is the technology you prefer.
“You may not be able to afford it, but it’s a better technology
and all of that. So there are factors that have to be weighed. It
is not always about the cheap money, if you see what I mean. I
mean, it is not always about the cheapest.
“We might be prepared to pay a little more because this is where
we will find the best technology. By and large, if you are offering
me good, cheap money, I’m more likely to be friendly.”
On the fifth generation cellular network technology, Osinbajo
disclosed that the federal government had not rolled out 5G
technology, but observed that it had nothing to do with any
complication.
The vice president also noted that the federal government “will
welcome every company that wants to do business with us. Huawei are
in Nigeria as well. But all the other technology companies are
welcome to compete for it.”
He, however, said the indigenous industry “is going to do 5G. I
don’t think we will be using Huawei. As a matter of fact, we think
that we are going to do the 5G ourselves. I don’t think…”
Ultimately, the vice president told his audience that the Federal
Executive Council (FEC) had not come “to any kind of point of great
decision-making in terms of whether or not 5G or who will do
5G.”
On the anti-graft war, Osinbajo acknowledged that the country’s
rating on the global corruption index had been stagnant despite
Buhari’s war on corruption. He, however, pointed out that the
country “has not dropped. I think that the most important issue
with respect to that is the work that we’re doing. I mean the
anti-corruption work we are doing. Everyone would probably
appreciate that one of the major planks of our policies is the
anticorruption war.
“We have done tremendously in that respect, especially with
respect to grand corruption, official corruption, etc. This is
borne out by the fact that President Buhari was recently nominated
as the anti-corruption champion for Africa. There is still a lot
that needs to be done.”
He explained, “We are working through, especially processes that
require interaction with bureaucrats. President Buhari, almost two
years ago, signed Executive Order 1, which basically speaks to the
question of timelines for ensuring that a delivery on whether you
are processing documents or approvals and those sorts of
things.
“Now, part of what we’re trying to achieve is to remove whatever
bottlenecks may encourage petty corruption. That is why Executive
Order One was signed. We’re also looking at how to ensure that
there is less interference or less discretion, which is why we’re
doing a lot of stuff.
“We’re going electronic in so many different things—company
registration, approval processes, etc.
“I think when we are next assessed we are bound to do much,
much, much better, especially on the anti-corruption index.”
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