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$3.48Bn Loan: Nigeria Risks Losing Assets to China – Experts
Economic and financial experts have warned the Federal Government that Nigeria risks losing key national assets to China in the event that it defaults in paying back loans obtained from China which is currently put at $3.48bn.
According to a report by Punch, the experts spoke against the backdrop of the possible takeover of Uganda’s only international airport and other key assets over the East African country’s inability to repay a $207m loan obtained on November 17, 2015 from the Export-Import Bank of China.
The loan has a maturity period of 20 years including a seven-year grace period.
According to the deal signed with the Chinese lenders, Uganda will have to surrender its only international airport.
The Uganda Civil Aviation Authority said some provisions of the financing agreement with China exposed the Entebbe International Airport and other Ugandan assets which might be taken over by Chinese lenders upon arbitration in Beijing.
China has reportedly rejected recent pleas by Uganda to renegotiate the toxic clauses of the 2015 loan.
This came as Rotimi Amaechi, minister of Transportation, in August 2020 hinted about the possibility of Nigeria forfeiting its assets to China in the event of loan default.
Amaechi reportedly said Nigeria had waived immunity on a loan, which means China could take the country to arbitration in the event of a default.
The minister, however, added that there would be no need for China to claim any infrastructure once Nigeria repaid its loans to the Asian country.
“We must learn to pay our debts and we are paying, and once you are paying, nobody will come and take any of your assets,” Amaechi said.
However, financial analysts hinted about the possibility of Nigeria forfeiting key national assets to China if the country defaulted on its $3.48bn loans.
They also advised the Federal Government to properly review the loan agreements with China to save the country from facing a situation similar to that of Uganda.
Idakolo Gbolade, chief executive officer of SD&D Capital Management, said Nigeria might forfeit certain assets in the event of a loan default.
Asked if Nigeria faced any risks on its China loans, Gbolade said, “Yes, it is very possible. If you remember about a year ago, there was serious concern in the National Assembly on the loans given by the Chinese Exim Bank to us, and I am sure the loan clause also includes forfeiture of national assets.”
The expert, however, expressed confidence that Nigeria was capable of paying back its debt.
Akpan Ekpo, economist and professor of Economics and Public Policy at the University of Uyo, said the development in Uganda was worrisome and exemplified some of the dangers of borrowing from external sources.
He, therefore, advised the government to ensure that loan agreements with China were properly appraised.
Ekpo said, “It is an issue of concern; that is why in any loan agreement with China, we have to read in between the lines. We have to make sure we really understand their agreements.
“We should make sure that Nigerians are involved in the loan negotiation process. Experts should be carried along so that they can properly understand both the agreement in English and in Chinese.
“If the loans have clauses that may cost us our assets or even our sovereignty – as the debate was earlier in the year – that would be disastrous.
“So they should take experts with them when they go to negotiate the loans they collect from China, not just people from foreign affairs.”
Sheriffdeen Tella, professor of Economics at the Olabisi Onabanjo University, Ogun State, equally expressed a similar view, stressing that all loan agreements between Nigeria and external sources should be properly studied by experts.
He said, “It could happen to any African country because they are all thinking of borrowing. But I think that since people have kept the conversation alive now, the government will be very careful with loans collected from China.
“There is, however, the need for an assessment of government external debt from different sources now. We have to start looking at it and there is a need to study the documents that contain the agreements of some of these loans to prevent a similar occurrence.
“We need to start asking ‘what are the contents or the conditions of the loans?’ There is also a need for the government to create a means for offsetting such debts.”
Johnson Chukwu, managing director of Cowry Asset Management Limited, said the country should not have a problem paying back the loan if the economy thrived sufficiently.
He said, “An interest of 2.5 per cent is not high. The key challenge is that did we invest the money in productive assets, and are we getting the value for the money? Was the project cost-optimal?
“It is important to note that investment in infrastructure should lead to an expansion in the country’s ability to generate revenue. If the economy thrives, paying back the loan should not be a problem.
“However, if certain reasonable conditions are not met, it may have a catalytic effect on the economy with the country finding it difficult to pay back the loan.”
Although the Federal Government has been mostly secretive about the terms of the agreement of its China loans, the Debt Management Office has made some statements on them in recent times.
In a statement in June, 2020, the DMO said, “The total borrowings from China of $3.121bn as at March 31, 2020, are concessional loans with interest rates of 2.5 per cent per annum, tenor of 20 years and grace period (moratorium) of seven years.”
According to the DMO, the terms are compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007.
In addition, the low interest rate reduces the interest cost to government while the long tenor enables the repayment of the principal sum of the loans over many years.
Eleven projects, ranging from water supply, power generation, railways, airport terminals, communication to agricultural processing are funded by the loans acquired.
Patience Oniha, director-general, DMO, had in February said, “So far, let’s be very clear that there has not been any default, whether of local or international debt.”
The earliest of the funding agreements between Nigeria and China was signed in 2010 with an interest rate of 2.5 per cent yearly, a repayment period of about 20 years and a grace period of seven years.
If Nigeria is unable to pay its first debt by 2038, the country may have to lease out any of the Chinese-funded projects in Nigeria to China.
The first loan project was for the Nigerian national public security communication system project with $399.50m agreed on December 20, 2010 and disbursed.
The second loan was for the Nigerian railway modernisation project (Wu- Kaduna section) with $500m agreed on December 20, 2010 and disbursed.
While the third loan was for the Abuja light rail project with $500m agreed on November 7, 2012 and disbursed, the fourth loan was targeted at Nigerian ICT infrastructure backbone project with $100m agreed on January 5, 2013 and disbursed.
The fifth loan was meant for the Nigerian four airport terminals’ expansion project (Abuja, Kano, Lagos and Port Harcourt) with $500m agreed on July 10, 2013 but $455.28m was disbursed, which is 91.06 per cent of the agreed amount.
The sixth loan was for the Nigerian Zungeru hydroelectric power project with $984.32m agreed on September 28, 2013 but only $518.24m was disbursed, which is 52.65 per cent of the agreed amount.
The seventh loan was for the Nigerian 40 parboiled rice processing plants project (Federal Ministry of Agriculture and Rural Development), with $325.67m agreed on April 26, 2016, but nothing was disbursed.
The eighth loan was for the Nigerian railway modernisation project (Lagos – Ibadan section), with $1.27bn agreed on August 18, 2017 but only $759.84m was disbursed, which is 17.50 per cent of the agreed amount.
The ninth loan was targeted at the rehabilitation and upgrading of Abuja-Keffi-Markurdi road project with $460.82m agreed on August 18, 2017 but only $80.64m was disbursed, which is 59.96 per cent of the amount agreed.
The 10th loan was meant for the Nigeria supply of rolling stocks and depot equipment for the Abuja light rail project with $157m agreed on May 29, 2018, but nothing was disbursed.
Lastly, the 11th loan was for the Nigeria greater Abuja water supply project with $381.09m agreed on May 29, 2018, but nothing was disbursed.
In terms of repayments, Nigeria paid $102.68m to China in the first six month of 2021, while it still owes about $3.48bn
Nigeria also paid a total of $102.68m to the Exim Bank of China in the first half of this year.
Nigeria paid an interest fee of $42.54m, which is 73.76 per cent of the principal fee of $57.67m as debt service to the Exim Bank of China in the first three months of 2021
Alongside commitment charges of $1.98m, Nigeria paid a total of $102.20m.
In the second quarter of 2021, Nigeria paid an interest fee of $306,050, without paying the principal fee, as debt service to the Exim Bank of China in the second three months of 2021
Alongside commitment charges of $170,680, Nigeria paid a total of $476,730 in Q2 2021.
According to Punch reports, Nigeria has spent about $591.11m in five years on servicing the debts owed to the Exim Bank of China.
Nevertheless, Nigeria still owes China $3.48bn as of the end of June 2021.
Punch
African law enforcement agencies arrested 651 suspects and recovered over $4.3 million in a joint operation targeting investment fraud, mobile money scams, and fake loan applications.
As INTERPOL revealed on Wednesday, Operation Red Card 2.0 identified 1,247 victims between December 8 and January 30 while targeting cybercrime operations linked to over $45 million in financial losses.
Authorities across 16 countries also seized 2,341 devices and took down 1,442 malicious websites, domains, and servers during this joint action coordinated by the African Joint Operation against Cybercrime (AFJOC).
In Nigeria, police officers dismantled an investment fraud ring that was recruiting young people to run phishing, identity theft, and fake investment schemes, taking down over 1,000 fraudulent social media accounts in the process.
They also arrested six members of a Nigerian cybercrime gang that used stolen employee credentials to breach a major telecom provider.
Kenyan investigators also apprehended 27 suspects while investigating fraud networks that used social media and messaging platforms to lure victims into fake investment schemes.
In Côte d’Ivoire, 58 suspects were arrested as part of a crackdown on predatory mobile loan apps that targeted victims with hidden fees and abusive debt-collection practices.
“These organized cybercriminal syndicates inflict devastating financial and psychological harm on individuals, businesses and entire communities with their false promises,” said Neal Jetton, the head of INTERPOL’s Cybercrime Directorate.
“Operation Red Card highlights the importance of collaboration when combatting transnational cybercrime. I encourage all victims of cybercrime to reach out to law enforcement for help.”
One year ago, African law enforcement arrested another 306 suspects in the first stage of this INTERPOL-led operation targeting cross-border cybercriminal networks.
This is the latest INTERPOL operation targeting African cybercrime, with thousands of arrests and multiple multimillion-dollar operations disrupted or dismantled in recent years, following Operation Serengeti and Operation Africa Cyber Surge.
Lagos State Government has commenced the implementation of a 5% Withholding Tax (WHT) deduction on gaming winnings, in line with applicable Nigerian tax laws and regulatory directives governing the gaming industry.
The deduction applies to net winnings from licensed gaming platforms operating within Lagos State and is deducted at the point of payout. All licensed gaming operators in Lagos have been directed to comply immediately with the framework.
Under the new arrangement, 5% of qualifying gaming winnings will be automatically deducted before payment is made to players and remitted to the Lagos State Internal Revenue Service (LIRS) as the statutory tax authority.
According to the State Government, the measure forms part of Lagos’ broader drive to strengthen tax compliance, transparency, and accountability in the rapidly expanding gaming sector.
Players are required to provide their National Identification Number (NIN) in compliance with KYC (know your customer) rules, while all deductions and remittances will be handled by licensed operators in line with regulatory requirements.
Players will receive their winnings net of the statutory deduction, with proper records maintained for transparency. The WHT deducted also serves as a tax credit to the player.
All licensed gaming operators in Lagos State have now been formally directed to commence the deductions with immediate effect.
Federal High Court in Abuja, on Tuesday adjourned the $150 million dollars suit filed by Chianugo Peter, a Nigerian, against Google LLC and GoDaddy.com LLC over shutdown of his YouTubeAudio.com domain name until April 22 for hearing.
The case, which was before Justice Obiora Egwuatu, could not proceed due to the absence of the judge in today’s proceedings.
Although Emmanuel Ekpenyong, Peter’s lawyer, and Mark Mordi, who is counsel to Google LLC, were in court, Justice Egwuatu was said to be in another official assignment.
The matter was consequently fixed for April 22 for hearing.
Peter had filed the suit over allegations bordering on the shutdown of his YouTubeAudio.com domain name after eight years of promotional and marketing efforts in breach of the contract.
Peter, through his lawyer, named GoDaddy.Com LLC and Google LLC as the 1st and 2nd defendants in the suit filed on April 14, 2023 and marked: FHC/ABJ/CS/238/2023.
In his earlier originating summons filed by Ekpenyong of the law firm of Fred-Young & Evans LP, the Nigerian sought a $150 million in compensation from Google LLC and GoDaddy.com LLC for the alleged cyberspace contract breach.
The plaintiff alleged that the defendants shut down his domain and business name: YouTubeAudio.com and transferred the rights over the name to Google LLC, an American multinational technology company.
Google LLC, in its initial statement of defence dated Nov. 9, 2023, and filed Nov. 10, 2023, by its lawyer, Mr Mordi, SAN, of the law firm of Aluko & Oyebode, urged the court to dismiss Peter’s suit as being unmeritorious and lacking in merits.
Justice Egwuatu had, in April 2024, gave Chianugo Peter the go-ahead to amend his originating processes after his lawyer moved the application for same and it was not opposed by the defence counsel.
In his amended statement of claim dated April 29, 2024, Peter sought ten reliefs.
He sought a declaration that GoDaddy.com was wrong to shut down the YouTubeAudio.com domain name on Dec. 7, 2022 and that Google was wrong to remove “YTAudio” with its website youtubeaudio.com from its Google PlayStore on Dec. 25, 2023 without adequate compensation to him.
He said this is notwithstanding that YouTubeAudio.com domain and business name is different and distinct from YouTube trademarks.
Chianugo Peter wants the court to declare that he is entitled to compensation from the defendants for the loss of the YouTubeAudio.com brand and goodwill which has accrued on the brand and domain name for eight years of promotional and marketing works from July 2, 2015 to Dec. 7, 2022.
He sought an order directing the defendants to pay the sum of $50 million to him for promotional and marketing works on the YouTube Audio business name and YouTube Audio.com domain name for eight years from July 2, 2015 to Dec. 7, 2022.
He sought a $100 million in damages for loss of anticipated profits associated with the brand equity and goodwill of YouTube Audio and YouTube Audio.com domain name.
Peter also sought from the defendants, the sum of 50 million naira to enable him to carry out fresh registrations of its new name and secure an alternative domain name to host its application to attract users.
The Nigerian sought an order directing the defendants to pay the sum of 10 million naira to him for prosecution of the suit.
Alternatively, Peter prayed the court for an order for GoDaddy.com to reinstate and hoist the YouTubeAudio.com domain name which was shut down on Dec. 7, 2022 and for Goggle to also reinstate YouTubeAudio.com on its Google PlayStore platform which was unilaterally removed on Dec. 25, 2023.
Chianugo Peter submitted that he acquired rights over YouTubeAudio.com domain name from Go Daddy.com LLC who conducted a search before confirming that he could make use of the name.
The plaintiff averred that he promoted the domain and business name from 2014 to 2022 and even wrote to Google to introduce YouTubeAudio’s services and to partner with it in 2014 and 2021 but received no response from it on both occasions.
He said in February 2021, he applied for and YouTubeAudio.com was registered on Google Adsense platform for displaying advertisement on the website.
Besides, Peter said in August 2021, the domain and business name was registered on Google Playstore.
According to him, the plaintiff consistently paid GoDaddy.com LLC for registration and use of the domain name from 2015 to 2022.
But Google LLC, in its amended statement of defence and counterclaim dated and filed May 31, 2024, averred that its registration of the YOUTUBE trademarks at the Trademarks Registry gives it the exclusive night to the use of the said trademarks.
It submitted that it has incurred expenses in the sum of 24,040 64 dollars in dealing with Peter’s “deliberate infringement of the counterclaimant’s YOUTUBE trademarks.”
The company, therefore, sought a declaration that Peter’s registration and use of the YouTubeAudio business name with BN 2395035 at the CAC is an infringement of its YOUTUBE registered trademarks.
It prayed the court for an order directing Peter to pay the company the total sum of $24,040.64 being the expenses incurred in dealing with his infringement of the YOUTUBE registered trademarks.
It equally sought an order directing the plaintiff to pay the company the cost of defending the suit.
In his amended reply to Google’s amended statement of defence dated 12th July 2024, Peter responded that it is not in doubt that Google LLC owns YouTube trademarks, however, YouTubeAudio is distinct and different from YouTube trademarks.
Chianugo Peter submitted that Google LLC, being a foremost search engine in the world, knew that he had earlier written to it, that he was making use of the YouTubeAudio domain name for the past eight years without any objection or caveat by either GoDaddy.com or Google.
“Hence, Google LLC is estopped from claiming any right over the YouTubeAudio domain name,” he said.
GoDaddy.com LLC had neither filed any process nor represented in court.
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