Obasanjo seeks nod for N6.3b loan to Ghana, Sao Tome
From Alifa Daniel,
Abuja
NIGERIA may offer Ghana and Sao Tome and Principe a N6.3 billion lifeline to boost their economies and tackle other national problems.
The Presidency, which has already held consultations with the leaders of the two countries, wants the National Assembly to be magnanimous by endorsing the package.
President Olusegun Obasanjo in a letter to the Senate and House of Representatives, which was read on the floor of both Houses yesterday, said that Nigeria cannot afford to turn its back on the two countries in their moment of need.
Obasanjo explained in the letter that Ghana needed N5.6 billion ($40 million) or 89 per cent of the total package to execute the West African Gas Pipeline project while Sao Tome and Principe will use its share of N700 million ($5 million) or 11 per cent to meet emergency needs.
He told the lawmakers that his action was in line with Nigeria's "belief and commitment to the spirit of good neighbourliness and assistance to our African brothers."
The President in the letter reminded the lawmakers of their "collaborative support" in the past, saying that the leaders of both countries had put "persuasive facts on the table on their emergency situations and they (needed) these loans."
On the support he had received from the legislature in the past, he wrote: "The sustenance of such co-operation will in good time facilitate the realisation of our collective goals and aspirations for our beloved country.
"In the case of Ghana, the loan is needed to complete Ghana's share in the financing of the West African Gas Pipeline project, which is designed to sell Nigeria's gas to neighbouring West African countries. With regard to Sao Tome and Principe the loan will help meet emergency needs of the country pending access to their revenues from the licensing fees of the Joint Development Zone (JDZ)."
Obasanjo remarked that it was not surprising that both countries turned to Nigeria in their hour of need, adding that the JDZ treaty between the Federal Government and Sao Tome and Principe points to excellent ties between them.
The President sought the lawmakers' understanding since he had approved that the loans be sourced through the Central Bank of Nigeria (CBN). He stated that the loans would not adversely affect the government's financial programme for 2004.
Apparently to allay the legislators' fears that the loans are largesse in disguise, Obasanjo wrote: "In the case of Sao Tome, the loan will be deducted from the proceeds of the Sao Tome's share licensing fees from the JDZ oil blocs when these become available. With regards to Ghana, repayment will be within three years on terms and conditions to be agreed between the Minister of Finance and her Ghanaian counterpart."
Immediately the Senate ended its session yesterday, Senator Isa Mohammed hailed the President's decision.
Other senators asked for time to study the President's request before commenting when the Senate resumes next week.
Ghana is well endowed with natural resources. It has roughly twice the per capita output of the poorer countries in West Africa. Even so, Ghana remains heavily dependent on international financial and technical assistance. Gold, timber and` cocoa production are its major sources of foreign exchange. The domestic economy continues to revolve around subsistence agriculture, which accounts for 36 per cent of GDP and employs 60 per cent of the workforce, mainly small landholders.
The neighbouring country opted for debt relief under the Heavily Indebted Poor Countries (HIPC) programme in 2002. Its priorities include tighter monetary and fiscal policies, accelerated privatisation, and improvement of social services.
Its President, John Agyekum Kufuor in April charged the Ghana Investor Advisory Council (GIAC) to work hard to bring up innovative ideas that would eventually enable the country attain a per capital income of $1,000.
He said: "We need necessary domestic and foreign investments, which will enable us achieve growth in the range of 8-8.5 per cent per annum to enable us attain that per capital vision."
Kufuor gave the charge while addressing the fourth GIAC meeting at Akosombo in the Eastern Region. While Foreign Direct Investments (FDI) has gone down world-wide, investments into Ghana are going up slowly, but steadily the President said.
The Ashanti/AngloGold merger has created the largest gold mining company in the world and will bring $500 million into Ghana.
A 2002 study put Nigeria's exports relationship with Ghana at 4.8 per cent. The other partners are The Netherlands (14.8 per cent), UK (9.9 per cent), U.S. seven per cent, Germany (6.6 per cent), France (5.8 per cent), Belgium (4.4 per cent) and Italy (4.2 per cent)
Sao Tome and Principe is a small poor island economy, which has become increasingly dependent on cocoa since independence 28 years ago.
Its cocoa production has, however, substantially declined in recent years because of drought and mismanagement.
Sao Tome has to import all fuels, most manufactured goods, consumer goods, and a substantial amount of food. Over the years, it has been unable to service its external debt and has had to depend on concessional aid and debt rescheduling.
The country benefited from $200 million in debt relief in December 2000 under the Highly Indebted Poor Countries (HIPC) programme. Its success in implementing structural reforms has been rewarded by international donors, who pledged increased assistance in 2001. Considerable potential exists for development of a tourist industry, and the government has taken steps to expand facilities in recent years. The government also has attempted to reduce price controls and subsidies. Sao Tome is optimistic that substantial petroleum discoveries are forthcoming in its territorial waters in the oil-rich waters of the Gulf of Guinea; production could begin as early as 2004.
Its GDP purchasing power parity as at 2002 is estimated to be $200 million, while that of the real growth rate is four per cent. The country's purchasing power parity is put at $1,200 while on composition by sector, its agriculture is 25 per cent, industry 10 per cent, services 65 per cent as at 1999.
The AllRefer Reference, a global analysis organisation put Nigeria's economy far below that of Ghana. Also, another global resource group, the Household Archives, scored Nigeria low in human development. In its "Poverty Assessment Summaries," the organisation said that Nigeria is a classic case of poverty in the midst of plenty.
The group queries the reliability of Nigeria's national income statistics, citing "meagre industry-wide information (especially for domestically consumed commodities), the questionable validity of data, and quantification based on subjective judgments by state officials."
It added, however, that despite deficiencies in aggregate economic statistics, "a few general tendencies concerning growth, income distribution, prices, wages, and the employment rate could be discerned."
The body estimated Nigeria's GDP growth per person at 4.0 per cent in the late 1950s and early 1960s, 3.0 to 3.5 per cent in the mid-1960s, -3.5 to -4.0 per cent during the civil war, roughly seven per cent in the early to late 1970s, -6.0 per cent from the late 1970s to the early 1980s, and -2.5 per cent for the balance of the 1980s.
The organisation said: "Nigeria's decline in real GNP per capita by 1988, to US$290, relegated the nation to low-income status below India, Pakistan, and Ghana."
The AllRefer Reference added: "Other indicators of development - life expectancy, for which Nigeria ranked 155th out of the world's 177 countries, and infant mortality, for which Nigeria ranked 148th among 173 countries - were consistent with the country's low ranking in income per capita."
