SOUTHERN VIEW ON ILLEGITIMATE DEBTS

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• SOUTHERN VIEW ON ILLEGITIMATE DEBTS
• BY
• REV. DAVID UGOLOR
• EXECUTIVE DIRECTOR, ANEEJ AND
• COORDINATOR, ECONDAD.
• AT THE
• EURODAD ANNUAL CONFERENCE
• BERLIN, GERMANY
•  OCTOBER 30, 2006
• CONTACT
• 
  Rev. David
  Ugolor
  
• 
  Executive Director,
  African Network for Environment and Economic
  Justice (ANEEJ),
• 123 First East Circular Road, Benin City, Edo
  State.
  
• Tel/Fax [phone]
• E-mail info_at_aneej.org, david_at_aneej.org.

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Introduction
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ABOUT NIGERIA

• Africas most populous, resource rich country
• Checkered in the past by incessant political
  instability, corruption, inadequate
  infrastructure, and macro-economic mismanagement
  
• Has about 36 billion barrels of crude oil
  reserves
  
• It is estimated that Nigeria has realized about
  US600 billion since 1956, from oil and gas

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ISSUE OF ILLEGALITY

• Issue of illegality is extremely important in
  dealing with the issue of foreign debt in Nigeria
  
  
• Since Independence in 1960, Nigeria has been
  ruled by elected civilians for 17 years between
  1960 1966 (6 yrs), 1979 1983 (4 yrs) and 1999
  present (7 yrs)
• Un-elected military ruled for 28 years from 1966
  1979 (13 yrs) and 1984 1999 (15 yrs)

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ISSUE OF ILLEGALITY CONT.

• Military rulers were not elected by the people
  therefore, their activities were not in the
  interest of the public illegal rulers, illegal
  activities
• They accumulated the highest chunk of loans
  (except General Buhari administration who did not
  borrow any money)
  
• General Sanni Abacha did not borrow but also did
  not service the loans - accrual of huge penalties
  and late fees

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ISSUE OF ILLEGALITY CONT.

• 1997 budget speech by Abacha 145 projects
  financed with a total of US13.6 billion sourced
  from International Capital Market, 18 of them
  worth about US836 billion were never completed
• Ministry of finance out of all projects financed
  with foreign loans as of 1966
  
• Only 2 of the projects were successful
• 25 are merely functional
• 64 failed
• 9 were outrightly fraudulent

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PUTTING ILLEGITIMACY ON THE POLITICAL AGENDA

• The issue of illegality is important in the
  political agenda, rather than merely talking
  about debt sustainability and meeting MDGs
  requirement
• A lot of energy should be devoted to dealing with
  the issue of illegality
  
• If debt is determined to be illegitimate, it must
  be unilaterally repudiated
  
• This will discourage the lender from illegal and
  unethical business practices
  
• This is in line with the G8 anti corruption
  stance
  
• Also in line with the World Bank Group call for
  transparency and accountability

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LEGAL IMPLICATION OF ODIOUSNESS

• The doctrine of Odious debts says that if a
  despotic power incurs a debt not for the needs or
  in the interest of the state, but to strengthen
  its despotic regime, to repress the population
  that fights against it, etc this debt is odious
  for the population of all the state

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LEGAL IMPLICATION OF ODIOUSNESS CONT.

• Focusing on the legal implication of odiousness
  could be a double edged sword because
  
• If the loan is used to provide services for the
  population and the citizens benefit and use such
  services, a legal contract may be binding.
  
• The loan therefore becomes legal
• The question of illegitimacy therefore may be the
  politically accepted argument

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NIGERIAN EXPERIENCE WITH DEBT RELIEF

• In early 2005, the Nigerian House of
  Representatives passed a resolution calling on
  the President to unilaterally repudiate the Paris
  Club debt
• The debt, though odious in nature, was partially
  used for projects that benefited the citizens
  
• The argument odiousness could have led to some
  G8 countries who are members of the Paris Club to
  vote against debt relief

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NIGERIAN EXPERIENCE WITH DEBT RELIEF CONT.

• Though Nigeria has escaped the clutches of the
  Paris Club debt, she is still bleeding from
  parting with a whopping US12.14 billion
  
• This money could have been used for micro-credit
  schemes for the poor, infrastructure development,
  health, education, agriculture and development of
  the solid mineral sector to diversify the
  Nigerian economic base.

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Thank you