Nigeria payment of foreign debt: The Largest Transfer of Wealth in Modern Time
Nigerian government in the year 2006 paid almost $20 billion to two giant international syndicates: Paris Club and London Club of Creditors to settle her foreign debts. This transfer of wealth by a relatively poor nation contradicts the entire prudent financial judgment and rudimentary economic disposition preached to Nigeria by the rich donor nations that babbles about the ills of capital flight in developing nations.
The government of President Obasanjo, the Nigerian ex-Head of state made
the arrangement and secured the purported $18billion debt relief for
Nigeria from the Paris Club of Creditors, which became the inducement for
the country to pay off her $36 billion foreign debt. Nigeria's total
foreign debt stood at $35.916billion as of June 2005. The largest chunk of
the debt $31billion was owed to 15 of the 19 creditor-countries of the
In addition, the federal government of Nigeria finally paid off the last batch of outstanding debts owed to the London Club amounting to $2.15 billion. For the settlement of both Paris Club and London Club of Creditors, Nigeria paid off almost $20 billion. This is one of the largest transfers of wealth by a third world nation to the first world nations.
On the global financial scale and rating, there is no doubt that Nigerian payment of her debts makes her a credit worthy nation with - BB- rating from Standard & Poor's. But for a country with enormous internal economic problems; with 70% of the population mired in penury poverty with increasingly educational and health challenges to repatriate such a wealth to the west is not a prudent decision. Without doubt, Nigeria was compelled to do so by those nations that supposedly are the partners in fighting poverty in Africa.
In 1985, Nigeria owned $8 billion to Paris club creditors, out of $19
billion of its foreign debt.
Britain the former Nigerian
colonial ruler was the largest creditor of the debt; she received $3
billion from Paris Club. United Kingdom declined the request of Archbishop
Desmond Tutu and development charities including The Jubilee Debt Campaign
to return the share of her debt payment to Nigeria. Britain was criticized
for accepting the payment from developing country Nigeria. (To finalize
the debt payment deal, Nigeria made the total payment of $12.4 Billion to
Paris Club and Britain the largest creditor received $3Billion).
It's perplexing to comprehend why
Britain's former Prime Minister Tony Blair refused to adhere to the appeal
from eminent personalities of Desmond Tutu and Trisha Rogers caliber. The
then Prime Minister Tony Blair had good credentials on Africa. He
highlighted Africa in his leadership of G8 in 2005 and said that Africa's
plight was "a scar on the conscience of the world." He also championed the
cause of Africa with the formation of the Commission for Africa. During
his leadership of G8 he recommended massive aid and debt remission for
Africa, which has not been fully implemented due to the reluctance of
some of G8 nations to oblige to their pledges. Africa is a continent beset
with dire problems - Diseases, wars and instability are ravaging the
continent. The least thing Africa needed is enormous capital flight. Every
penny is needed to curb the problems and alleviate quality of life in the
most populous nation in Africa. Britain and Blair understood Africa's
political landscape and indeed Nigeria; particularly its
sociological-economic needs more than the rest of the G8 and Paris Club
members because of her colonial rule in Nigeria. Yet they participated in
sharing the wealth from poor Nigeria.