|
Get AfricaFocus Bulletin by e-mail!
Print this page
|
Note: This document is from the archive of the Africa Policy E-Journal, published
by the Africa Policy Information Center (APIC) from 1995 to 2001 and by Africa Action
from 2001 to 2003. APIC was merged into Africa Action in 2001. Please note that many outdated links in this archived
document may not work.
|
Nigeria: Call for New Debt Deal
Nigeria: Call for New Debt Deal
Date distributed (ymd): 011121
Document reposted by APIC
Africa Policy Electronic Distribution List: an information
service provided by AFRICA ACTION (incorporating the Africa
Policy Information Center, The Africa Fund, and the American
Committee on Africa). Find more information for action for
Africa at http://www.africapolicy.org
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: West Africa
Issue Areas: +economy/development+
SUMMARY CONTENTS:
This posting contains a press release and selected excerpts from a
new report from Jubilee Plus (UK) entitled "Drops of Oil in a Sea
of Poverty - the case for a new debt deal for Nigeria." The full
report, in PDF format with tables, graphs, and other additional
data, is available at:
http://www.jubileeplus.org/analysis/reports/Nigeria.pdf
Despite its massive debt burden, Nigeria is not one of the
countries included in the creditor initiative for debt reduction
for Heavily Indebted Poor Countries (HIPC). It was excluded from
the list of HIPC countries in 1998 on the grounds that it was a
"blend" country eligible for non-concessional as well as
concessional loans.
For additional background and sources on Africa's debt, see
http://www.africapolicy.org/action/debt.htm
+++++++++++++++++end profile++++++++++++++++++++++++++++++
Jubilee Plus Press Release
Drops of Oil in a Sea of Poverty - the case for a new debt deal
for Nigeria
13 November 2001 Contact: Kwesi Owusu tel: 0207 089 2838
[email protected]
Jubilee Plus, Cinnamon House, 6-8 Cole Street, London SE1 4YH, UK
tel: 0207 089 2865; fax: 0207 407 6473;
e-mail: info.jubilee@neweconomics. org;
web: http://www.jubileeplus.org
The demands of past debt on the democratic government of Nigeria
is handicapping its capacity to resolve growing internal social
and ethnic tensions, says Jubilee Plus, in a new report.
In a report to be issued on 16th November 2001 - "Drops of Oil in
a Sea of Poverty - The case for a new debt deal for Nigeria" -
Jubilee Plus notes that debt service payments of US$1.4 billion
per annum is crippling Nigeria's capacity to confront critical
socio - economic and political challenges. Nigeria ranks 151st
out of 174 countries in the HDI poverty index but its creditors
are still demanding 15 times in debt service what it is able to
spend on poverty reduction. For Nigeria to meet poverty reduction
targets set by the United Nations for the year 2015, it needs to
spend about US$11 billion per year on social services - well
above present levels and nearly double what we consider to be
reasonable given the taxing capacity of its poor population.
The report notes that whilst Nigeria's oil revenues have provided
welcome relief to the country's hard-pressed finances, they
cannot be said to enrich Africa's most populous nation. "Revenues
net of production costs and foreign company earnings are
approximately US$11 billion, which for a population in excess of
111 million equates to net revenues of only US$100 per person,
per annum or 27 cents a day" says Kwesi Owusu, head of Jubilee
Plus' Africa programme and author of the report.
Nigeria's democratic government is carrying US$14 billion of debt
racked up by previous dictatorships and large amounts of Nigerian
reserves are deposited in foreign banks as a result of capital
flight. General Abacha alone stole and deposited US$4 billion in
Western banks - in London, Washington, Frankfurt and Zurich. Oil
companies such as Shell, Mobile, Texaco and Chevron also owe huge
ecological debts to Nigeria as a result of the degradation of the
Niger Delta, the main oil producing area, according to the
report.
Jubilee Plus is proposing a new concordat between Nigeria and its
creditors, based on an independent and transparent process
overseen by civil society. "The essential elements of the deal
must include a public agreement on what proportion of the
outstanding debt must be immediately cancelled, what resources
Nigeria should realistically devote to servicing the debt, what
losses creditors should bear, including an equitable distribution
of the costs amongst all creditors and arrangements to protect
the environment" says Kwesi Owusu.
Notes for editors;
- The report "Drops of Oil in a Sea of Poverty - The case for a
new debt deal for Nigeria" is available from www.Jubileeplus.og
- Nigeria is Africa biggest debtor and owes US$28.5 billion to
its external creditors, according to the Debt Management Office
(DMO), set up by the Nigerian government. The IMF puts the stock
of debt at US$31.9 billion.
- Nigeria's GDP per capita is US$853 per capita compared to
US$22,093 for the UK, US$26,251 for Canada , and US$24,575 for
Australia. Maternal mortality is amongst the highest in the
world, with 700 women dying out of every 100,000. 10% of infants
die at birth.
- Nigeria's largest oil spill was an offshore well blowout in
January 1980 when an estimated 200,000 barrels of oil (8.4
million) spewed into the Atlantic Ocean from a Texaco facility
and destroyed 340 hectares of mangrove. Nigeria flares more gas
than any other country in the world - about 75% of its total gas
production, contributing a high percentage of the world's total
emissions of greenhouse gases.
Executive Summary
Jubilee Plus' exclusive report on Nigeria's foreign debt is
submitted for publication as the death toll mounts in the plateau
State capital of Jos, another tragic reminder of the incidences
of sectarian violence that threaten Nigeria's young and fragile
democracy.
Poverty is a significant root cause of the ethnic and religious
conflicts in Nigeria, as the struggles over scarce resources
intensify within local communities.
Nigeria is a very poor country with a GDP per capita of US$853
per person compared with US$24,575 for Australia, US$26,251 for
Canada and US$22,093 for the UK. Yet it is forced to to divert
US$1.7 billion of its meagre resources annually to rich western
creditors as repayment for US$28.5 billion debts.
Nigeria's oil revenues have provided welcome relief to the
country's hard pressed finances but they cannot be said to enrich
Africa's most populous nation. Revenues net of production costs
and foreign company earnings are approximately US$11 billion per
annum, which for a population in excess of 111 million people
equates to net revenues of only US$100 per person, per annum; or
27 cents per day.
Jubilee Plus has had exclusive access to data on Nigeria's debt.
This leads us to conclude that:
A massive 65% of projects, accounting for 76% of the value of
funds loaned to Nigeria in our survey have failed. These account
for loans totalling $2.6bn, approximately 10% of Nigeria's
outstanding debt value, or 20% of outstanding principle.
About 50% of the total debt (US$14 billion) can be attributed to
the cost of Nigeria falling into arrears. These are 'phantom'
debts, added to by creditors as punishment for non payment.
Oil companies such as Shell, Mobil, Texaco and Chevron owe huge
ecological debts to Nigeria as a result of the degradation of the
Niger Delta, the main oil producing area. Jubilee Plus is calling
for an internationally led scientific study of the long term
effects of oil pollution in Nigeria, as the basis for a fair and
adequate assessment of compensation claims for ecological damage.
Western consumers of Nigeria's high quality oil are heavily
indebted to Nigerians.
US$5.6 billion of Nigeria's debts, approximately 40% of the
outstanding principal of US$14 billion are the result of loans
given to Nigeria's military dictators; often given knowing that
the money would be siphoned off and deposited in British, Swiss
and US banks.
Large amounts of Nigerian reserves are deposited in foreign banks
as a result of capital flight. General Abacha, the infamous
dictator stole and deposited US$4 billion in Western banks in
London, Washington, Frankfurt and Zurich. His eldest son,
Mohammed Abacha and his associates are also on trial for
corruption and money laundering as part of a Swiss investigation.
Finally, Jubilee Plus is proposing a new concordat between
Nigeria and its creditors, based on an independent and
transparent process overseen by civil society. The concordat
should recognise the great ecological debt owed to Nigeria, and
the urgent need for a substantial and meaningful reduction of the
country's odious and unpayable debts. The essential elements of
the concordat must include a public agreement on what proportion
of the outstanding debt must be immediately cancelled, what
resources Nigeria should realistically devote to servicing the
debt, what losses creditors should bear, including an equitable
distribution of the costs amongst all creditors and arrangements
to protect the poor and the environment.
Jubilee Plus proposes that the new concordat must be negotiated
by the parties through an independent arbitrator committed to a
fair and just resolution of Nigeria's debt crisis.
Conclusion debtors must eat (African proverb)
This brief outline of Nigeria's debt, based on our exclusive
survey of a sample of the debts, leads us to the following
conclusions:
* Nigeria is a very poor country that needs a substantial and
meaningful debt cancellation to strengthen its nascent democracy.
* Debt service payments of US$1.7 billion a year must be diverted
towards poverty reduction, to ease the local and regional
tensions that threaten the stability of the country.
* Nigeria is a key peace keeper within West Africa. It is vital
for peace and security in the region that she continues to play
this role.
* Poverty is a significant root cause of the ethnic and religious
conflicts in Nigeria.
* The large amounts of Nigerian reserves deposited in foreign
banks as a result of embezzlement must be returned. Measures
against looted wealth and capital flight in general must be
supported by both creditor and debtor countries. Governments and
the international banking community must agree on effective
measures to recover monies obtained from debtor countries by
theft or embezzlement.
* A full and proper audit of Nigeria's outstanding public debt,
as currently being conducted by the Debt Management Office in
Abuja is critical to effective debt management. We are hoping
that the dispute over how much Nigeria owes to its creditors will
be resolved when the DMO completes its reconciliation exercise.
Failing that Nigeria must propose an independent arbitration on
the lines supported by Kofi Annan, United Nations Secretary
General and backed by the latest UNCTAD report, to resolve the
dispute.
*Nigeria needs a new concordat with its creditors, based on an
independent and transparent process overseen by civil society.
The concordat should recognise the great ecological debt owed to
Nigeria, and the urgent need for a substantial and meaningful
reduction in the country's debt service obligations. The
essential elements of the concordat must include:
What proportion of the outstanding debt must be cancelled.
On the basis of the evidence presented here;
- US$5.6 billion of Nigeria's debts, approximately 40% of the
outstanding principal of US$14 billion (the remaining US$14
billion are largely interest arrears and penalties) are the
result of loans given to Nigeria's military dictators; often
given knowing that the money would be siphoned off and deposited
in British, Swiss and US banks.
- About 50% of the total debt (US$14 billion) can be attributed
to the cost of Nigeria falling into arrears ie these are
'phantom', added to by creditors as punishment for non payment.
- A massive 65% of projects, accounting for 76% of the value of
funds loaned to Nigeria in our survey have failed. This accounts
for loans totalling $2.6bn, approximately 10% of Nigeria's
outstanding debt value, or 20% of outstanding principal, as about
50% of current debt stock is interest arrears and penalties. 6
Projects appear fraudulent.
What resources the debtor country should realistically devote
to servicing the debt. Nigeria's foreign debt represents 75% of
GDP or 186% of export earnings. These ratios are too high for
Nigeria, a poor but highly strategic country in Africa.
Oil revenues have provided welcome relief to the country's hard
pressed finances but they cannot be said to enrich Africa's most
populous nation. Revenues net of production costs and foreign
company earnings are approximately US$11 billion per annum, which
for 111 million people equates to net revenues of only US$100 per
person, per annum.
What losses creditors should bear, including an equitable
distribution of the costs amongst all creditors.
We are also proposing an internationally led serious scientific study of the
long term effects of oil pollution in Nigeria, as the basis for a
fair and adequate assessment of compensation for ecological
damage. Statistics from the Nigerian Department of Petroleum
Resources indicate that between 1976 and 1996, a total of 4,835
incidents resulted in the spillage of at least 2,446,322 barrels
(102.7million US gallons), of which an estimated 1,896,930
barrels (79.7 million US gallons; 77% were lost to the
environment.25 Nigeria's largest spill was an offshore well
blow-out in January 1980 when an estimated 200,000 barrels of oil
(8.4million US gallons) spewed into the Atlantic Ocean from a
Texaco facility and destroyed 340 hectares of mangrove.
Arrangements that ensure Nigeria's access to the working
capital required for the continuation of its operations.
Nigeria's development partners have to recognise the different
requirements of the country's highly capitalised oil industry and
its social sector, which needs a certain level of 'soft' capital
financing.
Arrangements to protect the poor, including the exemption from
debt service of certain social service expenditures, such as
health and education.
The new concordat must be negotiated through an independent
arbitrator or body committed to a fair and just resolution of
Nigeria's debt crisis.
Ecological debt is owed to Nigeria.
Oil companies such as Shell, Mobil, Texaco and Chevron owe huge
ecological debts to Nigeria as a result of the degradation of the
Niger Delta, the main oil producing area. Environmental
degradation in Nigeria is estimated at US$5.1 billion. A great
proportion of this relates to the Niger Delta which has been
severely damaged by oil pollution.
Statistics from the Nigerian Department of Petroleum Resources
indicate that between 1976 and 1996, a total of 4,835 incidents
resulted in the spillage of at least 2,446,322 barrels (102.7
million US gallons), of which an estimated 1,896,930 barrels
(79.7 million US gallons; 77% were lost to the environment.
Nigeria's largest spill was an offshore well-blow out in January
1980 when an estimated 200,000 barrels of oil (8.4million US
gallons) spewed into the Atlantic Ocean from a Texaco facility
and destroyed 340
hectares of mangrove.
The small size of the oilfields in the Niger Delta with its
extensive network of pipelines between the fields, as well as
numerous small networks of flowlines has severely compounded the
rapid deteriorating ecology in a region inhabited by over 7
million people. It has brought brackish water into fresh water
areas and the flooding of farmlands and rain forest areas.
Together with the dredging of waterways by oil companies moving heavy equipment
to various operational locations, there is now cause for serious
concern. 'The Niger Delta is sinking' pleads Governor
Alamieyeseigha of Bayelsa State. Significantly, Nigeria flares
more gas than any other country in the world about 75% of its
total gas production, contributing a high percentage of the
world's total emissions of greenhouse gases.
By the end of February 1998, about 14,000 claims for compensation
for oil related damage had been submitted from individuals and
groups and communities to Nigerian courts, totalling an estimated
US$100 million. Considering the extent of ecological damage, this
is a gross underestimate of the potential claim. Jubilee Plus
is calling for a serious internationally led scientific study of
the long term effects of oil pollution in Nigeria as a basis for
a fair and adequate assessment of compensation claims. These
claims should be ruled by an independent arbitrator and set
against creditor claims for debt servicing.
This material is being reposted for wider distribution by
Africa Action (incorporating the Africa Policy Information
Center, The Africa Fund, and the American Committee on Africa).
Africa Action's information services provide accessible
information and analysis in order to promote U.S. and
international policies toward Africa that advance economic,
political and social justice and the full spectrum of human
rights.
|
