Nigerians fear that the landmark debt deal with the Paris Club places undue burdens on the country's poor, Nigerian Central Bank Governor Charles Soludo warned yesterday.
The deal, which amounts to an $18 billion debt write off for Africa's most populous nation, also requires that Nigeria makes a $12 billion upfront payment.
'What they are doing now is taking away from Nigeria $12 billion all at once,' said Soludo, in an exclusive interview with Emerging Markets.
'For a country with more than 50% of its population in poverty this raises quite some questions and you can understand why some Nigerians are crying foul.'
As part of the agreement, Nigeria has to pay an immediate $6 billion, followed by a discounted buy-back of the rest of the debt, amounting to another $6 billion. Critics argue that the upfront payment of such a huge sum is an enormous sacrifice to demand from a highly underdeveloped and impoverished country.
Soludo pointed out that public scepticism towards the deal, which has been acclaimed by official creditors, is mounting. 'After the initial euphoria and celebration, more recently you can find a much more cynical view,' he said.
All the same, Governor Soludo expressed high hopes that G7 finance ministers will firm up their support for Africa when they meet today. 'We are hoping that the G7 meeting can come up with a concrete plan to move in the required additional resources into Africa,' he said.
'We are really encouraged that in recent times the G7 seems to have become a body that not only barks but also bites.' He added that he was expecting that the G7 meeting 'will go much deeper' than the G8 meeting this summer did.
Arguing that Nigeria holds the keys to achieving the Millennium Development Goals in sub-Saharan Africa, Soludo said: 'Effectively it would have been embarrassing to the global community if they would not have reciprocated Nigeria's reforms with the kind gesture of debt relief.'
Soludo hopes to turn Nigeria into 'Africa's financial centre', and has shown his ability to move in that direction with a reform of both the Central Bank and the banking sector overall.
Nigeria has 89 banking institutions, and by radically raising banks' capitalization requirements, Soludo paved the way for consolidation. The reform of the sector's formerly 'heavily rotten' governance structure is on track and the creation of a microfinance structure is planned for this year.