It is healthy if well managed. The Chinese President said that the loan was not for frivolous projects. What the Chinese government is doing is to assist us to develop our infrastructure. So, it is left for us and some other African countries not to waste the money on vanity projects. We should invest in projects that will give us lifetime development. If we could not achieve the Millennium Development Goals due to problems associated with funding and now we have funding, we should do something for this country.
African leaders should begin to know that we hold ourselves responsible first for what we plan and for the future of our continent.
To me, it is a welcome development, if it us well managed, and well spent. It should not be loan to be spent on projects that will not be accounted for. I think the Chinese will ask questions on how the fund will be spent. I know they will not just give you cash to start buying luxurious and frivolous things that are not geared towards development. I know that they will insist that the loan be well managed and spent. The loan is not for free.
Unfortunately, our foreign reserve is being depleted regularly. There should be proper management of resources. We need to have statistics. If you say you want to spend money on poverty eradication or alleviation, do you have statistics of poor people? What is the basis of giving the money to the beneficiaries? What are they going to use it for? We need to have statistics for clear spending and result assessment. We need to have a database before we spend money. We need foreign loans to fast-track development. There are some projects that are being budgeted for every year and yet they are yet to be completed. These are the problems we have to analyze. Let us budget for projects and complete them and we move on to another project then leaving them to continuous yearly budget without completion. Otherwise, it may be difficult for us to achieve the desired development.
- Chijioke Ekechukwu (An economist and former Director-General, Abuja Chamber of Commerce and Industry)
I don’t have any problem with Nigeria borrowing from China. The only problem I have with Chinese borrowing is that the entire funds will eventually be repatriated to China.
This is so because when the Chinese Government gives you loans for infrastructure, they will insist that only Chinese companies handle the construction.
These funds end up going back to China instead of creating more wealth in Nigeria. Chinese loans are cheaper and better priced than loans from Europe and America.
We should ensure that as we borrow these funds, they must be adequately deployed to grow our infrastructure and economy in general. Conditions of these loans should be favorable to the overall interest of Nigeria.
We should put an eye on our debt to Gross Domestic Product ratio to ensure it does not go out of hand. The more our loan portfolio, the less our Global Credit rating.
- Dr. Frank Jacobs (President, Manufacturers Association of Nigeria)
I believe it all depends on what the loan is going to be used for. If it is going to be used for development purposes — maybe professional interest structure, reducing the interest rate to the productive sector which will help them to invest more, produce more and grow the economy — then there will be chances to repay that loan in the future. But if it is going to use for any other purpose other than that, then I see it as a time bomb waiting to explode. It may not be sustainable, but it depends on what the loan is being used for.
Though the President of China said it must not be used for frivolous purposes, one may say that we know the level of corruption in this country. If you say it must not be for frivolous issues, what is frivolous to you and I, may not be frivolous to somebody else in this country.
I think if it is going to be used for infrastructural development or things like that, then it is a welcome development. But if it is anything outside what will add value to our productive capacity, then it is not the correct decision to take.
The government should use it to develop our infrastructures, such as electricity, road, and railway. If these infrastructures are provided, Nigerians are hard working people and innovative. If the environment is made enabling, you will be sure that the economy will blossom and we will be among the top 20 countries in the world.
The Chinese Government should ensure proper monitoring of the loan and making sure it is used for the purpose for which it was given.
- Enang Udah, (Associate professor, Department of Economics, University of Calabar)
This will all depend on where we are using the loans for.t or service Getting a loan is not actually a problem, but where is it channeled to? Is it infrastructural developments that can pay back for domestic consumption? Whether we get the loan from the World Bank or the Chinese does not matter. In fact, Chinese loans attract lower interest rates, but we must be mindful of where we are putting the money. The money is not for politics or other frivolities, which of course will not yield any return. However, if the money is invested in structures that can guaranty returns and you calculate the payback period and the loan pays back itself, there is no problem. It is always difficult to see where they are investing it in. For instance, they keep telling you that they are investing in road construction, but it hardly translates to reality because we hardly see the roads. Where are the roads they have been constructing over the years? We have heard of billions of naira being spent on road construction year-in-year-out, where are the roads? We drive to all parts of the country, so, you will always wonder where the so-called massive road constructions are. The only good road you can locate in the southern part of Nigeria is Onitsha-Benin-Ore and Benin-Effurun-Ughelli. We need to see where the money is going into.
- Mr. Rislanudeen Mohammed (Managing Director, Safmur Investments Ltd)
At the FOCAC summit, the Chinese President came up with a proposed $60bn infrastructural loan and aid to Africa. The loans are at concessionary interest rates and longer-term tenure with no political conditionality other than the hidden fact that the core contractors will be Chinese firms.
YOU MAY ALSO LIKE TO SEE:The Shameful arrest of about 120 Owerri women
To that extent, it is good for us given our huge infrastructural gap and presents elevated foreign and local borrowings at huge interest rates, like the Eurobond and Nigerian fixed income market.
However, we need to be careful in always looking at our debt to revenue ratio and not only debt to Gross Domestic Product ratio, while accessing new loans.
We should also ensure that projects are produced with the potential multiplier effect on the real sector of the economy to support growth and employment generation, rather than a white elephant, vanity projects that will only satisfy ego and sentiments.
- Prof. Nyaudoh Ndaeyo, (Agricultural Economics, University of Uyo)
It is worrisome that the debt profile of Nigeria by way of loans keeps on rising without corresponding benefits. The most unfortunate situation is that some of these loans so taken have not been translated into changes in terms of infrastructure or being used to enhance the welfare of the masses. I agree with the fact that one could take a loan to develop a facility that can change the lives of the citizenry, but ours does not seem to be so. That is why all well-meaning Nigerians should be worried about the issues of government taking loans from outside. But having said that, at times certain people may say we want to take loans like the one we are talking about from China.
They may say, ok, we want to give you in kind or in cash or both, to the extent that they may say they want to send expatriates to come and do some work (maybe road construction or other infrastructure they want to develop), but before you know it, the very loan that has been so taken by the country may have to be taken away by way of bringing in the expatriates, amounting to giving with one hand and taking it with the other hand. So, if it is going to be so, I will not encourage it.
Let me emphasize also that when we talk about loans, it shall not be a unilateral thing. There should be a committee, a platform where people discuss effectively on the merits and demerits of taking a given loan. So, for me, if they are going to put it right by developing infrastructures like the Ajaokuta Steel Complex or some other projects, good, but if it will also go down the drains as we had seen in some past administrations, then I will not encourage them to take the loan.