Debt Relief for Nigeria: The Moral Imperatives and the Hazards

Relationship between debtor and creditor nations, the former being among the poorer nations and the latter among the richer or multinational financial institutions has remain critical in modern diplomacy. With the return of civilian rule in 1999 after a prolonged military rule, Nigeria’s new President Olusegun Obasanjo embarked on a relentless campaign for debt relief for the country. This was in line with his pronouncement at inauguration that he would give priority to campaign for debt relief. In fact, as at December 2004, Nigeria's external debt stood at US$35.94 billion. However, Nigeria This chapter contributes to the debate in Nigeria’s history of Economic Diplomacy. Obasanjo’s administration unlike the previous Nigerian administration that prioritized debt servicing and debt rescheduling in their relations with creditor nations and financial institutions. This generates debates among scholars of Economics and International Relations, especially that the Nigeria is not being regarded as a Heavily Indebted Poor Country (HIPC), as its riches in both human and material resources have not been fully tapped to project the country’s economy in the manner that it should have been. The chapter examines the assiduous campaign for debt relief for Nigeria under the President Obasanjo. It argues that though economic diplomacy of the new administration paved way for Nigeria to negotiate for debt relief from her creditors following the frequent travels of the President to several influential countries, while also cultivating the support and confidence of the UN, G8 counties, the Commonwealth as well as African Union. While Nigeria was able to negotiate an entire debt relief amounting to $21 billion, or a 65 percent write off in return for over $14 billion repayment of arrears and buyback. The chapter argues that Nigeria’s debt is sustainable but it became a crisis because largely because the country’s leadership could not manage the nation’s resources effectively due to monumental corruption and profligacy. It posits that with debt servicing consuming 40 per cent of Nigeria’s foreign earning, there was the need to campaign for debt relief, however, within the framework of global realities, there are hazards that must be addressed.