The economists, who spoke to SUNDAY PUNCH in separate interviews, said Nigeria risked falling into a difficult debt trap if it did not curtail the country’s indebtedness to China, which stood at $678.91m (N106.9bn) as of September 2012.
Political economist, Prof. Pat Utomi, warned that if Nigeria was not strategic in its dealing with China, it would get into trouble.
He said, “Debt on its own is not bad, but how it is used will determine whether it will turn out good or bad. The question to ask is: Are we really strategic in borrowing from China? The last time we dabbled into borrowing from countries with large reserves, we got into a debt trap which we struggled to riggle our way out of.
“The Chinese are the main manufacturers in the world as a result of this, they have excess reserves and they are anxious to lend money to anybody that wants. But I think Nigeria needs to watch it carefully because if we are not strategic in the borrowing, we can get into more trouble with China than we were with the West. I don’t have anything against the Chinese. I’m only saying that if we are not careful, we may fall into a deeper debt trap.”
Another economist, Prof. Sherifdeen Tella, said rather than just borrowing from China, Nigeria should seek industrial partnership with the Asian giant.
Tella said, “It doesn’t matter so much that Nigeria is indebted to China, if that would lead to an industrial revolution in this country. It’s okay if we are importing machine from China to help our industries. But not just borrowing as usual.
“In dealing with China, we shouldn’t just do buying and selling. The Federal Government should work at creating a partnership between Chinese and Nigerian industrialists. The Chinese firms should be encouraged to set up plants in Nigeria.”
In the same vein, senior lecturer, Department of Economics, Dr. Usman Muttaka, advised the Federal Government to stop borrowing from China or any other country.
He said if well applied, Nigeria’s revenue from sales of crude oil and gas, could finance any project in the country.
“The managers of Nigeria’s economy have not been fair to us. They are trying to take us back to the debt trap we escaped from some years ago. We really have no business with taking any loan from any country,” he said.
Recently, the Debt Management Office stated that Nigeria was indebted to China by $678.91m (N106.9bn). The figure represented 99.95 per cent of the country’s total debts to bilateral and commercial creditors as at September 30, 2012.
According to the DMO, the total debt to bilateral and commercial creditors during the period under review stood at $679.22, of which $678.91m was from China.
There are indications that China’s credit facilities to Nigeria may rise due to fresh loan agreements signed by the two countries.
After September 30, 2012, the Federal Government signed fresh financing agreements with Chinese institutions, though details of the expected drawdown of most of the loans are not yet known.
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, had on September 11, 2012 in Beijing, signed three loan agreements with the China Exim Bank. The agreements are for $500m for the Abuja Light Rail Project; $500m for the construction of four airport terminals in the country and $100m for the Galaxy Backbone expansion of connectivity among government ministries, departments and agencies.