THE process of repayment of the foreign loans and debts to international creditors had resulted in the Federal Government taking on the role of a guarantor of the various debt contracted by state governments which became insolvent at a time and were failing in their obligations to repay their debts.
This gave rise to the imposition of mandatory deductions on the states, by the federal government with the idea that such deductions would be used to repay the loans “but in actual fact the federal government was not making any payment to the creditors, ”
What happened was that the federal government was not making any repayment, it kept the deductions without any time frame when the deductions will end. Being a military dictatorship, none of the Military administrators could raise questions of the loan deductions. Not even the democratically elected governors had the guts to ask questions on the deductions”.
It had a serious negative impact on development because while the deduction was assumed to be made on the statutory funds due to the states, the funds that were been taken actually belonged to the local governments and the fact that the local governments are closer to the people, the denial of funds for development, meant that projects on school, community hospitals, markets among others were halted.
A former Local Government Chairman for Oshimili South in Delta State Hon. John Efianya told VF that “it is even ironical that a country that has produced so much wealth since its existence has done little to make majority of its population benefit from the wealth in terms of meeting their welfare needs.
The problem, as already been pointed out, is not because the oil that brings in the money has dried up and even if we agree that there is a recession, the fact remains that there is no relating Nigeria’s present economic predicament to the prevailing poverty as a fallout of low price or sale of oil. The problem lies on leadership inefficiency and ineffectiveness of managing our financial resources, or more appropriately mismanagement of the country’s economy”.
By the time Dr.(Mrs.) Ngozi Okonji- Iweala came on board Nigeria’s external debt profile had bloated to $32billion. As a member of the Breton wood institute in Washington, she got the ears of her colleagues to get Nigeria of the hook. Nigerians were made to bear the burden of this foreign debt some of which had doubtful origin for which they did not enjoy the benefit.
The creditor nations were not as transparent in their dealings with Nigeria and other African nations as most people were made to believe. In the cause of verifying the status of the foreign loans, there were threats and hostilities.
The British were not cooperative, apart from threatening diplomatic actions against Nigeria, there were other threats such as calling off the debt exit talks “unless we stop our verification of the foreign debts, there were attempts to deny us access to vital documents to do our work, there was an offer of £500million bribe to make us back out from our investigations”.
Even Dr. Ngozi Okonji Iweala was not happy that were carrying out the verification because she felt this was impugning the integrity of colleagues at the World Bank. There were political pressures and the usual recourse to the use of the Economic and Financial Crimes Commission in a futile attempt to stop the verification of the loans and the repayment process.
Prince Nwoko recalled that “we took personal risk in 2005 when “we embarked on the verification of what was then ascribed to us by the creditors as the debt profile of the country, at the time when every Nigerian accepted the situation as totally hopeless and swallowed those figures as presented by the lending authorities.
Neither the governors nor the legislators thought it wise to verify these debts, the situation was the same during the military regime where the military administrators simply accepted the figures without questioning them, “but we challenged the federal government and the creditors to the dismay of members of the World Bank, the London and Paris clubs”. Said Nwoko.
“When we began to probe into the origins of some of these foreign loans the creditors became agitated, some threatened my life, others like Britain threatened to take diplomatic action against Nigeria, while some offered me bribe of up to £500 million, to persuade me to stop my investigation, but I refused”, According to him, some of them refused to give me access to information and I took them to court in London. Some of them used their contact with the Federal Government to exert political pressures on me but I had the support of former president Olusegun Obasanjo, they even caused the Economic and Financial Crime Commission to stop me but I remained resolute.
In the end, it was discovered that some of the foreign loans credited to Nigeria never existed. But some people somewhere cooked up documents to pass them off as loans and Nigerians were being made to repay such dubious loans.”
For instance, the old Gongola state where the sum of $104 million which was purported to have been taken from an Austrian bank to build an international hotel in Yola but it turned out that the said bank has no business interest in Africa. Hon. Nwoko said: “ the good thing however, is that we succeeded in establishing cases of over deductions made on states and local government, for which the governments of Adamawa and Taraba states are to get $444million including the sum of $104million nonexistent loan ascribed to the old Gongola state.