Debt Relief For Nigeria: A Dividend of Democracy

It is with great joy that I address you today on one of the pillars of success of this Administration. It is the debt relief already announced. I address you on it for several reasons. First, it is important that, as always, I bring to your attention issues of national importance. Second, it has far-reaching implications, in a positive sense, for our reform agenda. Third, we have collectively worked very hard for it and now that the results are evident, we should all savour it and draw strong lessons from the profligacy of the past. Fourth, it vindicates the steadfastness, sacrifices and tenacity of this government in its struggle to win relief from the global community in order to give us the required breathing space to make more progress. 

Six years into the present democratic dispensation, we have definite achievements and dividends of democracy to report. Since April 1999, after my success in the election of February 1999 and pending formal inauguration, I was opportuned to travel to some important countries of the world to meet with their leaders in preparation for assumption of office. As early as that time, I was already asking world leaders for debt relief for Nigeria in addition to wooing investors. What we have now been given assurance to expect by the Paris Club is that Nigeria will clear its arrears of $6 billion of the $30 billion owed, following which there will be a stock reduction on Naples Terms while we will have to buy back the remainder. This will represent, for the first time, a total exit, if you like, total freedom from Paris Club debt.  

The package in final terms that we are to expect would yield debt relief of about 60% on our current Paris Club debt. We shall pay off the 40 percent balance through a buy back operation. The total write off is close to $20 billion which compares very favourably with the recent $40 billion write off of debts for the 18 highly indebted and poor countries of the world by the developed nations.

This, debt relief offered to us, I am pleased and proud to say is the direct product of our relentless and persistent endeavour over the past six years. The point to bear in mind is that whereas negative things can be done by an individual or a group in a country to mar or diminish the integrity and progress of the country or of a community, it is often a consistent, long, arduous and painful task to bring about reversal or positive change. What we have achieved now is worth celebrating because what we will expect at the end of the exercise will be close to a relief of $20 billion which is well beyond the total revenue of Nigeria for one year. 
Fellow Nigerians, how did we get to the point where our debt burden became a challenge to peace, stability, growth and development? Without belabouring the point we can identify political rascality, bad governance, abuse of office and power, criminal corruption, mismanagement and waste, misplaced priorities, fiscal indiscipline, weak control, monitoring and evaluation mechanisms, and a community that was openly tolerant of corruption and other underhand and extra legal methods of primitive accumulation.  

These all took place in this country, before our very eyes, and at times in active complicity by many of us. Even community leaders and religious bodies accommodated corrupt individuals and exalted them. Money replaced traditional values, money took over our souls, and we came to believe in the Machiavellian philosophy of the end justifying the means. State governments contracted huge loans with outrageous conditions and interest rates and failed to perform with the funds, most of it being squandered on white elephant projects or simply looted. We often forget that stolen and wasted funds were monies meant for growth and development especially education, health, roads, water, electricity and other social services.  
Contracts became the only basis for determining transactions and engagements within the public and private spheres. We pray to God that we get beyond these debilitations and develop a collective conscience that is anchored on transparency, accountability, probity, value-for-money and due process. 

How did we work to get out of this debt quagmire? We did it by resolving and working hard to break with the past; by identifying new voices and new leaders; and by rejecting business as usual and voting for new values of accountability, transparency, fair competition, social justice, and the upliftment of the living standards of Nigerians. We revamped our institutions and put in place an economic reform agenda that reduced the role of the state in the economy while strengthening the place and role of private investors. We mounted a vigorous global campaign to make a good case for debt relief. We contended that in spite of being an oil producing country, Nigeria was not a rich nation with a population of about 150 million. With such a population, on a per capita basis, oil receipts came to less than 50 cents per Nigerian per day. What we would gain from the expected debt relief will allow us to put additional $1 billion or N130 billion into human welfare budget of health, education, food security and infrastructural development. 

We were not defensive about the past but we were optimistic and proud of our future. We mounted an unprecedented war against corruption in all its ramifications also with unprecedented results. We drew attention to our numerous sacrifices in West Africa and Africa at large in peace keeping and conflict resolution, a task that has saved billions for the UN and developed countries. We spent time in traveling to numerous world capitals, meetings and conferences making the case for debt relief for Nigeria and Africa. We also put in place an economic reform programme and development strategy championed by a strong Economic Management Team (EMT) that was home grown but globally recognized and endorsed, and argued that if we did not get relief, it would be very difficult to sustain, much less deepen the reforms and there was no way we could hope to meet any of the Millennium Development Goals. The Economic Management Team is led by a woman of indomitable character and courage Mrs. Ngozi Okonlo-Iweala. 

Finally, we demonstrated, through research, logic and empirical evidence that the debt overhang was almost another form of bondage with our feet and hands bound behind us while we are told to run. We also contended that debt repayments and debt servicing obligations take away money from development especially social policies, stifle creativity, deepen the vulnerability of governments, and challenge the processes of democratic consolidation. In other words, given that no African nation can fully service, much less repay its debt, development, stability, peace, growth, and democracy would not make progress or become consolidated in Africa, Nigeria inclusive. Under such conditions, governments would become vulnerable to all sorts of challenges and this would in turn precipitate suspicion, instability, violence, even civil war. Such situations would cost the creditors much more than the debts in the future. With the reformed and repositioned AU, the laudable programmes of NEPAD, and the progress of the African Peer Review Mechanism (APRM), this was the right time for debt relief. 

The recent 100 percent relief granted to 18 low income and heavily indebted countries in the developing world which included 14 African nations is a welcome development and positive response to our longstanding campaign for debt relief or cancellation. We are most grateful on behalf of these nations. But let me add that such relief should not be an excuse for withdrawal. These countries have been badly distorted and dislocated in virtually every respect by the debt overhang for decades. They still require a life-line to enable them get a real grip on their lives, futures, and developmental challenges. 

My fellow Nigerians, it was a tough process but today when we look back, we have no regrets. Of the four areas of resource flow identified by this Administration- trade, investments, ODA and debt relief, we have virtually settled the issue of debt relief. We have done very well on attracting investments though we need to do much more and we are working on the other two and making steady progress. The recent export of cassava products to China is a good example of new opportunities for trade that we are opening up. Earlier today (June 30th, 2005), President George Bush outlined his agenda for the forthcoming G8 Summit in Scotland which I will also be attending. He was very generous in his support for reforms in Africa and called for the doubling of foreign aid, better terms of trade and improved relations. We salute him and we believe that he will be true to his words. 

Fellow countrymen and women, these concessions are the outcome of our numerous campaigns, meetings, correspondences, and briefings on the new Africa and new Nigeria. It was on the basis of these efforts that the creditor nations saw with us. They had confidence in our country, its government, and its policies and programmes. They were satisfied that we had shown leadership on all fronts, developed the courage to take tough and at times unpopular decisions, but stayed the course on reforms.  

I can only say for those that doubted that we would ever get debt relief or those that felt that we were merely junketing around the world doing nothing, history and events have vindicated us. We are challenged by their position. But we urge them all, to change their attitudes and join hands with other Nigerians to build a new society that all Nigerians can enjoy. 

How about the future? We must learn from the past. We must all show collective responsibility to prevent a return to the past. We must all commit ourselves to protect, rather than squandering the future of our children. We must all agree not to remove the solid blocks on which our nation stands by accumulating debts that we cannot repay. May God never let us go through this painful path again.  

To prevent a recurrence, we must remain vigilant at community, local, state and federal levels of authority. No amount is too small or too big to be protected from being looted or wasted. The Federal Government is reviewing the remaining debts with a view to finding ways of settling them based on special repayment terms. In addition, the Federal Government is working on a bill that would regulate the process of obtaining foreign loans that are later dumped on citizens of Nigeria with no corresponding evidence of performance. This will include pegging the interest on such loans to ensure concession. 
It is clear evidence that with persistence, perseverance, focus, leadership, the support of the people and belief in God, battles, no matter how daunting they appear, can be won. I thank the National Assembly for its courage and support. I am most grateful to our creditors and development partners in the global community for their confidence and endorsement of our programmes.  
In particular, I thank the G8 members, the Paris Club Secretariat, and Prime Minister Tony Blair of the UK for his unwavering support for Nigeria and Africa. I must also thank Rt. Honourable Gordon Brown, the Chancellor of the Exchequer and his staff and Mr. Hilary Benn, Secretary for International Development and the UK for being there for Nigeria and Africa at this particular time. I thank God for His bountiful blessings for Nigeria. We thank friends of Nigeria. We salute all Nigerians who have taken the pain for us to have the gain.