Sometime in February, Rotimi Amaechi, Nigeria’s minister of transportation told CNBC Africa the paucity of funds was hindering the government from completing or starting a number of rail projects across the country.
“The problem with what we do is, (that) it is capital intensive and the funds are not just there. Currently, we’ve borrowed $1.4 billion to commence and complete work on the Lagos -Ibadan. We’re borrowing $5.3 billion to complete the work from Ibadan to Kano, out of which we are paying a billion-dollar. So, actually what we borrowed is about $4.3 billion. We are also going to borrow from Port Harcourt to Maiduguri,” he said.
In response to a question about the government’s dream of completing its planned rail network across the country Mr Amaechi responded:
“We can talk about dreams. I call it “dream” because, yes, we have the ambition, but what about the money? Resources are essential to determining whether we are progressing or not.”
The minister said the government was looking for money to begin work on the Lagos to Calabar rail line and the Port Harcourt to Maiduguri rail line. He said though a lot of foreign investors have shown interest in the Nigerian rail network, apart from the Chinese, they all developed cold feet when it comes to actually investing in infrastructure. Mr Amaechi even added that the Chinese too may be getting tired of lending money to the country.
“You just can’t plan now because there is no money anywhere. The only place you can get money is China. But I think they have loan fatigue because they are lending to everybody.”
So, though the government plans to build a network of rail lines across the country (and connecting neighbouring countries like the recently approved Kano-Maradi in Niger Republic), realistically, the Buhari administration can only deliver two of such rail lines – Lagos/Ibadan and Warri/Itakpe
The completion dates for these two have been shifted so many times that even Mr Amaechi has stopped making promises.
To achieve its rail line dreams, as Mr Amaechi called it, the government needs to figure out why it has failed to woo investors to the sector and obtain loans from elsewhere apart from China. This is even more so as other African countries are able to attract foreign investments in their rail sector, something Mr Amaechi suggested was almost impossible to do at the moment during his interview with CNBC Africa.
For instance, in November 2019, the Ghanaian government signed an African Development Bank (AfDB) backed concession agreement with South African Ai Sky Consortium Holdings for a $2.6 billion high-speed railway in Accra.
Earlier in April, Ghana also reached a build-operate-transfer concession agreement for 340 kilometres Accra- Kumasi railway project with a Ghana European Railway Consortium. The consortium which includes groups like Keteke Group (Ghana), Arisu, Ralf Bankenbach, Havellandische (Germany), Voestalpine (Austria), Ipimed (France) and Salcef (Italy), defeated 44 other bidders for the rail project locally known as the Eastern Railway Line from the Tema Ports in Accra to Kumasi in the north of the country. The project will be constructed over 36 months.
The Chinese Conundrum
Even the Chinese loan that the government seems only capable of attracting is not without problems. After it emerged that a clause in the loan agreement waived the sovereignty of Nigeria over the projects the loan is used to construct, many Nigerians criticised the government for accepting the loan with such a clause.
This fear follows the recent forfeiture of their stakes in key national asset in countries such as Sri Lanka, Tanzania and Zambia after they defaulted on the repayment of the loans they obtained from China in building the asset.
One expert described it as the “Chinese Debt Trap.” Bongo Adi, the director of Centre for Infrastructure Policy Regulation and Advancement (CIPRA), Lagos Business School, told Channels Television that Nigeria lacks accountability, transparency, and responsibility to repay the loans.
“We have to look at the total debt and the capacity to repay not just to China but to our creditors. Our debt independent revenue is at 96 per cent now. That means for every N1 we earn, 96 kobo is used to refund loans. That has passed a critical threshold.
“What it means is that we lack the ability and we don’t have the headroom anymore to repay because our independent revenue has been strangled by our enormous debt hanging over the Federal Government as it stands now,” he said.
Mr Amaechi, however, dismissed the concerns raised by Mr Adi and other Nigerians over the ability of the country to meet its debt obligations to China. He explained that the controversial clause is in tune with international standards and that Nigeria intends to pay and has been repaying the loan it got from China.
“There is no contract without an agreement and that agreement must contain some terms and one of the terms that this one contains, is not that you’re signing away the sovereignty of the country. No country will sign away its sovereignty. What you do is, you give a sovereign guarantee; and I’m ashamed of those who interpret it the wrong way.
“Now, when you say ‘I give you a sovereign guarantee and I waive that immunity clause, the immunity clause is that, if tomorrow I’m not able to pay you and you come to collect the items that we’ve agreed upon, that these are items I have put down as guarantee, I can use my immunity and say no, you cannot touch our assets, we are a sovereign country. Is China our father that will give us money for free? They (the Chinese) are saying, if you are not able to pay, don’t stop us from taking back those items that will help us recover our funds. And it’s a standard clause, whether it’s with America you signed it or with Britain or any country because they want to know they can recover their money. What the clause does is to say to you, I expect you to pay according to those terms and conditions. If you don’t pay, don’t throw your immunity on me (the lender) when I come to collect back the guarantee you put forward, that’s all.
“The waiving of immunity simply means in trade parlance that I’m not giving you this loan free. Just like if you go to take a loan from the bank, the moment you don’t pay, they go after the assets you put down. And people are politicising it. The Chinese can never come and take over Aso rock and become President or Minister,” he said during a programme on Channels Television.
The 100 per cent rise in the fare of the Abuja -Kaduna rail line despite the failure to solve the racketeering of train tickets and the failure to make the Abuja Metro rail viable are minuses in the minister scorecard.
While the minister’s achievement in the rail sector is largely hit-and-miss, he has been unable to move the needle in the maritime sector as very little has been achieved here.
During the CNBC Africa interview, Mr Amaechi also stated that the priority of the government here is the construction of three seaports – Lekki, Bony Island and Ibom seaports. While minimal work has commenced at the Lekki Seaport in Lagos, work is yet to commence at the Bonny Seaport, and Ibom seaport, which is being built in conjunction with the Akwa-Ibom State government. While Nigerians earnestly wait for work to commence on these proposed seaports, a huge percentage of the country’s imports still comes in from the over-burdened ports in Apapa, Lagos.
Maritime security in the country is still dicey. Piracy attacks on merchant vessels and kidnapping are still rife on waters. According to the International Maritime Bureau, in the fourth quarter of 2019, 64 seafarers were kidnapped in the waters of West Africa. Many of the pirate groups suspected to be behind the attacks were said to be operating from Nigeria.
In January, three seafarers were kidnapped and four security personnel killed by suspected pirates onboard a dredger off Forcados terminal.
The Integrated National Security and Waterways Protection Infrastructure, also known as the Deep Blue Project, which aims to tackle insecurity on Nigeria’s territorial waters, does not seem to have much traction following an uptick in pirate attacks and the kidnapping of seafarers.
Experts also frown at what they described as the commercialisation of maritime security where a private company, Ocean Marine Security Limited (OMSL), in collaboration with the Nigeria Navy charges each vessel as much as $1500 for berthing in the ports.
“We also have issues of naval collaboration with a private company running maritime security in such a way that vessels coming into Nigeria are made to pay as much as $1500 per day for security on our waters. Commercialising security on our waters is a big failure on the part of the Nigerian government,” said Ismail Aniemu, the publisher of Journal, a maritime magazine.
Mr Aniemu also chastised President Muhammadu Buhari for his “aloofness” in resolving the anchorage logjam.
“My disappointment here goes more to the president because the president stays aloof and seems not too concerned because the navy cannot be acting in isolation and the Navy cannot be acting as if they are not in sync with the appointee of the Commander-in-Chief. The minister of transport is an appointee of the Commander-in-Chief and I think the Commander-in-Chief is in charge of the navy. We have waters that are not very policed but commercialising the security of our waters puts Nigerian under additional pressure,” he said.
Meanwhile, Mr Amaechi is embroiled in a scandal over his decision to award a major maritime security contract to an Israeli firm, HLSI Security Systems and Technologies Limited.
The $195 million-contract was condemned by maritime and security experts which probably led to a presidential order for the contract to be terminated. President Buhari also ordered the company to supply equipment worth the $50 million upfront payment it received.
But, curiously Mr Amaechi somehow managed to reinstate the contract of the company.
In all, Mr Aniemu said the failure of Nigerian ports to evolve from the old ways of doing things is their greatest failing.
“If you are talking about modernisation in our port system, then I can blame the minister. The reality is that Nigerian ports are far from being modernised. I visited Tema Port (Ghana) about five years back, they had achieved electronic access control. They have a system that puts in place compartmentalisation of containers, cargoes and empty containers and stacking,” he said.
As if the controversy generated by the contract to the Israeli company was not enough, Mr Amaechi is also involved in another disagreement with Lagos State government over the control of inland waterways in the state.
While some may see the construction of the proposed University of Transportation in President Buhari’s hometown, Daura, as a plus, others have raised eyebrows over the unresolved conflict of interest in the project.
In fact, Mr Amaechi admitted that he coerced China Civil Engineering Construction Corporation (CCECC), which won the contract to build the Lagos -Ibadan rail, to build the university for free in the president’s hometown.
“I engaged the companies; the first engagement was when they were constructing Lagos-Ibadan. They were not so keen at spending their funds to build a university for Nigeria until I refused to sign the contract for the Lagos to Ibadan railway,” he said.