That China has offered Nigeria a $6 billion loan to fund infrastructure projects is no longer news, loans of this nature are expected to be taken by Nigeria as it has a 2016 budget deficit of N2.2 trillion ($11.1 billion) which it plans to fund through borrowing. What surprised me and warranted a second look is a quote about the loan credited to the Minister of Foreign Affairs Mr. Geoffrey Onyema. The Minister was said to have told reporters travelling with President Muhammadu Buhari that “It is a credit that is on the table as soon as we identify the projects,” “It won’t need an agreement to be signed; it is just to identify the projects and we access it,”
According to reports the confirmation by Onyema “coincided” with an agreement reached between Nigeria and China yesterday on a currency swap deal. In addition to the Yaun being included in the foreign exchange reserve of Nigeria, the deal is meant to give the renminbi (yuan) free flow among Nigerian banks and set a framework to foster trade settlements in Yaun.
The quote credited to Nigeria’s Foreign Minister immediately makes one wonder as to the kind of Nation or Economic team that would go to access such facility without a clear application blueprint. Although the President initially went to China for a loan of USD 2bn the least Nigeria should have had is a list of its key infrastructure needs in order of priority. On the other side of the table, no lender puts such an offer on the table unless there is a catch or commensurate value to trade.
From all indications, it seems President Buhari and his team were ambushed with an offer they could not refuse. The only plausible explanation for them not having any projects attached to the USD 6bn infrastructure loan is that they did not have prior knowledge of the deal and were ambushed with the offer.
A look at the other activity that was said to have “coincided” with the loan offer gives an indication to the value that was exchanged for the USD 6bn. Of course there is no coincidence in finance deals such as this one. By pushing for the free flow of the yaun in the Nigerian financial system and an increase of the Yaun in Nigeria’s FX holdings, China just took another bite at the USD hegemony and another step towards dethroning the Dollar monopoly in International trade.
The US dollar maintaining its place as the global reserve currency is the foundation of the American empire and the US would go to any extent to protect it. In the dollar hegemony lies the US economic, military and political dominance of the entire planet. The battle to protect the dollar hegemony is a key reason US has gone to such extremes in its attempt to tame or break Russia even with the attendant uncertainty, risks and costs to Europe and the European Union.
There is no limit to the height that the US would go and when I say no limit I leave it to your imagination to picture how far the US would go to protect the dollar as the global reserve and trade currency. The unfortunate angle to all of this is that Nigeria has unwittingly thrown itself into the middle of this battle.
Many countries have been careful not to involve themselves in the raging battle concerning the global reserve currency but in our bid to collect a morsel we seem to have unwittingly fallen into the lion’s den. Nigeria has volunteered itself as the grass on which two elephants (US & China) would fight. By pure economics the agreements could be good business but on this issue the border between economics, finance, politics and war are almost non-existent.
Nigeria’s position would not be taken lightly because the outcome of Nigeria’s choice is a very powerful influence for other African nations to decide if they would risk entering similar agreements with China or not. This can in turn have a domino effect that would reach other continents.
The response from the Western press seems to have been quite swift, an article was put up in the UK Telegraph accusing Nigeria of using UK aid to persecute President Buhari’s political foes rather than to fight Boko Haram
The article reminded me of the vicious blows that the Western media gave to Former President Goodluck Jonathan in the run up to the election that he lost.
The article immediately made headlines because it is a far deviation from the usual western media kids glove approach to issues that affect Dr Buhari. That the Nigerian government immediately responded to the article is no longer news but the Nigerian press simply does not have the coverage or the credibility to counter the effect of an article from The Telegraph. This has quickly been followed up with the release by the US Bureau of Democracy,
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