Lagos — The euphoria that accompanied the news of the $18 Billion debt cancellation granted Nigeria by the Paris Club has elicited very vibrant and robust debates across the country. While some feel it calls for jubilation, a few are of the view that there is more to it than meets the eye. Akpo Mudiaga-Odje examines the terms and conditions applicable to the debt relief

Nigerians woke up on June 30, 2005 to the resounding and reverberating tunes of debt relief of $18 billion US Dollars for Nigeria. Just like that? I asked myself. Thereafter, our respected President Olusegun Obasanjo and his very able Finance Minister, Mrs. Ngozi Okonjo-Iweala, speaking on a live NTA phone-in programme on Sunday, July 10, 2005, also tried to give us the impression that the debt relief was indeed just like that! That is to say, without any terms or conditions attached thereto. But this article seeks to debunk that legal sophistry by accentuating lucidly that by whatever name they choose to tag it, be it "debt relief" or "debt buy-back", they obviously contain inherent terms and conditions with serious legal implications for Nigeria.

$18 Billion Debt Relief by Paris Club is in Principle.

The letter from the Paris Club as produced in THISDAY Newspaper of 1/7/2005 at page 12 pungently asserts that its offer is in principle, by stating thus: "Paris Club Creditors Agree In Principle On Comprehensive Debt Treatment for Nigeria." I must therefore also in principle congratulate the President and his team for a job well done. Having said that, I will like to address the issue from the perspective of a renowned international Professor and scholar, Dr. Alex Akinyemi, titled: "Celebrations Over Debt Cancellation Premature" published in the Punch Newspaper of 12/7/2005 at page 42. The sagacious Professor succinctly made the point thus:

"Let us now look at why the celebration is premature. First, the announcement by Paris Club is not a blank agreement. In fact, there is still a lot ahead that we will still need to negotiate. Negotiation has lots of road bumps that still lie on the way especially when it comes into the details. Therefore, we should not be talking about having an agreement. If you like, we have an agreement to talk but not yet ready for signature."

No doubt, there are concrete and vicious conditions still attached to the so-called debt relief especially in the eyes of the law relating to offer and acceptance in the realm of the law of contract. It is incontestable that the debt arrangements and understanding between Nigeria the borrower and the Paris Club which is the lender, is regulated and governed by law. That being the case, any condition listed for its enforcement, amendment or modification including any debt relief therein, must be religiously complied with before the benefit can accrue to the borrowing party, i.e. Nigeria as in this case. So, we cannot unilaterally change, modify or waive the terms because of political expediency or gains.

This view, albeit being axiomatic, has nevertheless been firmly upheld in the case of MAIDARA v HALILU [2003] 13NWLR (pt. 684) 257 paras. C-D, wherein Salami, JCA observed thus:

"It is settled that parties are bound by the conditions and terms of their contract and it is not open to one of the parties thereto, in the absence of a variation, to unilaterally change or vary the terms of the contract........."

To Chief Femi Falana (see infra), he pungently stated the true position thus:

"....the Federal Government misinterpreted the decision of the Paris Club to negotiate with Nigeria in principle to mean outright cancellation of 60 percent of debt burden."

But the amiable, intellectual and very hardworking Governor of the Central Bank of Nigeria, Professor Charles Soludo, offers a glimmer of hope on this issue by asserting confidently that:

"The is no country in the world that has an approval in principle without eventual approval. If you get this approval in principle, it is really like you have crossed the rubicon."

(See The NEWS Magazine of 18/7/2005 at page 34 captioned: Debt Deal: The Big Lie."

However, in jurisprudence, we are warned that pragmatism is usually the enemy of principle. Consequently, until a formal legal agreement is signed and the benefiting party fulfills its obligations therein, the law will not even recognise any previous principle. Put succinctly, there was simply never a contract in the first place.

Terms and Conditions Attached to our Debt Relief

Be they expressed in technical words or in esoteric lingos, the point is lucid that Nigeria from the documents relating to this transaction is expected to pay "almost immediately" i.e. six months, a US $6 billion dollars arrears with an obligation to further pay the balance US $6 billion by a "debt-buy back" arrangement on a discounted basis.

This view is premised on their calculation that the 60% debt relief granted in principle by the Paris Club represents US $18 billion, thus leaving a balance of 40% i.e. US $12 billion.

The President in his broadcast to the nation on 30/6/2005 was more emphatic when he declared that:

"What we have now been given assurance to expect by the Paris Club is that Nigeria will clear its arrears of $6 billion of the $30 billion owed, following which there will be a stock reduction on Naple's Terms while we will have to buy back the reminder."

On her own part, the quintessential Finance Minister, Mrs. Ngozi Okonjo-Iweala, declared in the Guardian Newspaper of 1/7/2005 at page 2 that:

"The whole package is such that we can expect debt relief of about 60 to 67 percent of our current Paris Club debt. We expect to pay off the balance of about 40 percent through a buy-back option. This effort would represent a write-off of between $18 to $20 billion for Nigeria."

The most dangerous aspect of this arrangement is a failure to complete the debt buy-back as directed by Paris Club. This was clearly adumbrated by the president and his Finance Minister during the NTA Live programme to the effect that:

"If we don't pay the remaining $12 billion, they will reschedule the debt to about $20 billion within a couple of years." (See also the Guardian Newspaper of 11/72005 at page 2).

Is this not a condition? So, why do they say that there are no conditions? In fact, these conditions are ipsisima verba with the stringent legal conditions relating to borrowing, overdrafts, mortgages and allied matters in municipal and international law of contract. There are always such conditions which trigger grave consequences for borrowing when he defaults or resiles from the contract. Thus, in the case of DANTATA v MOHAMMED [2000] 7 NWLR (pt. 664) 176 at 199 paras. F-G, the sagacious Ayoola, JSC declared thus:

"A party who has wholly or in part performed his side of the contract and not received the agreed counter-performance in full may sometimes be entitled to restitution in respect of his own performance. Where this consists of a payment of money, the payer will simply seek to get it back; where it consists of some other benefit, he will claim recompense."

There could even be more terms now added to the Paris Club statement. This view is reinforced by the contributions of Mrs. Oluremi Oyo, the Senior Special Assistant to the President (Media and Publicity) in her article titled: "Debt Relief: Let's Give The President His Due." In that work, she submitted that:

"Much of the skepticism and doubts being expressed in the mass media is supposedly based on the claim that the statement by the Paris Club on its offer to Nigeria only speaks of a readiness to enter negotiations with the country on a comprehensive debt treatment. This over-reliance on the statement by the Paris Club as the only source of correct information on the debt relief offered to Nigeria flies in the face of the obvious fact that other sources exist and that President Obasanjo and his economic team have direct channels of communication with the Club." (See THISDAY Newspaper of 17/7/2005 at the back page).

The second stanza of this statement is clearly an admission against self-interest in law! What it means is that there are indeed even more conditions still shrouded in secrecy, if not mystery, by our negotiators and the Paris Club through perhaps what is now tagged "other sources". No wonder the very vibrant and articulate senior lawyer, Chief Femi Falana, declared thus: "Debt relief, a trap." In that report, the fiery activist stated that:

"We don't know the terms of agreement with the Paris Club creditor countries."

(See the Punch Newspaper of 7/7/2005 at page 49.) God save Nigeria!

Arrears of Debt Servicing, Debt Buy-Back, National Assembly and our Foreign Reserve

Naturally, since the foreign reserve (which sources put at $23 billion as at the end of May 2005 (see the Punch Newspaper of 1/7/2005 at page 2), has been on the high side ever - (a big plus for the President and his team), the next bus stops for the US $6 billion arrears and subsequent debt buy-back arrangement is indeed the foreign reserve and the National Assembly. In fact, Mr. President proudly declared that: "With the savings we have, we will be able to pay" - (see the Guardian Newspaper of 11/7/2005 at page 2). This preemptive strike was manifested in the presence of and with the express participation and perhaps, the unilateral approval by the Speaker of the House of Representatives, Alhaji Aminu Bello Masari, during the live NTA phone-in programme of 11/7/2005.

In as much as one is not oblivious of the genuine efforts of Mr. President in pursuing the debt relief almost to a conclusion in principle, we could have, with due respect, appreciated him more if he had been a little bit more patient in complying with the conditions first before engaging in political razzmatazz and vainglorious advertisements.

Nigeria has an ugly reputation for always failing to fulfill its international monetary obligations or keeping faith with their conditions. That is why our debt profile was skyrocketing stupendously based on fines and penalties for non-compliance with borrowing terms! At one stage, our actual debt profile was a mirage. In fact, debt serving became another tool for national extortion and swindle.

Can Nigeria Fulfill the $12 Billion Payment Condition

One wonders if Nigeria in one fell swoop can afford to pay this $12 billion without a strangulating economic effect on the country and its people. Professor Jeffrey Sachs, the Special Adviser to the Secretary-General of the United Nations on Millennium Development Goals (MDG) who doubles as Nigeria's debt forgiveness arrowhead, believes it is not the best of conditions! As reported in the Vanguard Newspaper of 14/7/2005 at page 13, he observed that:

"It was not reasonable for the creditors to ask the country to pay the balance which is four times the budget of the Federal Government at once......the debt forgiveness is less good than it could be. The creditors are nasty and stingy to be extracting $12 billion cash immediately from a country with $3 to $4 billion annual budget".

One cannot agree moer with the Professor, vis-a-vis the pandemic level of poverty and hunger now ravaging the country; and our creditors still want us to dole and spirious debts! That money can really, be paid over a much longer period if they are sincere, whilst in the meantime investig same inpower and energy, building new refineries, engagine in infrastrucutal development and of course, rebuilding the battered Niger Delta wherein all the billions of dollars from oil conme from in the first place! Ironically, it is the neglected niger Delta that even supplied the $23 billion foreign reserve from where the whoopping $12 billion also supplied by the Niger Delta oil resources. Yet, the people still live in squalor and pandemic poverty. What a shame!

Can Nigeria Meet the Conditions Before 2007?

Again, this is avery germane question. Our politicians and their cohorts have not been able for six years to enacta new revenue sharing formula for Nigeria amongst the tiers of government as directed under section 162 of the 1999 constitution. What we have is still a thirteen-year old law promulgated in 1992 under military fascism in Nigeria and amended! Ye, the constitution provides a life span of 5 (five) years review of such a revnue sharing formula! (see item N to the proviso to section 32(b) of the constitution.

In view of thses bureaucratic and sometimes crimnal delays in our polity, one wonders how and when Nigeria will or can fulfill its obligations under this debt relief contract! In point of fact, part of the paris club statement on this issue reads thus:

"The representatives of the Paris Club creditor countries met in Paris on June 29 2005 and expressed their readiness, consistent with their national laws and regulations, to enter into negotiations with the Nigeria authorities in the months to come towards a comprehensive debt treatment." See the Punch Newspaper (supra) at a page 2

Also, the sun newspaper of 1/7.2005 at page 1 declared regarding our biggest creditor that:

"The United Kingdon's chancellor of the Exchequer Gordon brown said the debt relief countries with teh debt but-back would "mean there is 100 per cent debt rellief for Nigeria possible over the next six months."

On her part, the Finance Minister declared that:

"The President will soon be convening a meeting of all stakeholders including State Governors, so that we can find money together to make the necessary parments."

Is it the Nigeria thatf ro six years has been unable to enact a law to share its national revnue, that is expected to complete the debt relilef arrangement within the next six months? However, as we are quick to always assert for political expediency, it has been reported that the Finance Minister has declared (even before the stakeholders' meeting) that: "Nigeria pays Paris Club $6 billion in September." (se the Punch Newspaper of 14/7/2007 at page 6_. We pray this is not just another boasting signal!

The president by his broadcast on debt rellief jumped the gun.

So, this is the true psosition of our debt relief. Everything is still in futuro! Nothing has really materialised in law and in fact. It is still a principle and projection! It is on this basis that I respectfully contend thata national broadcast on this matter was simply an overkill! A mere press release from the Finance ministry intimating us of the extent of the debt relief and its terms and conditions would be have sufficed. A national broadcast ought to have been reserved for the day and rtime when Nigeria and its leaders would have paid their staggering $6 billion arrears, as wella s fully paid up the discounted balance!

Agumenting the above contention from an economist's point of view, Dr. Ayo Teriba, an economist and former teacher at the Lagos business school, did not agree that:

"the relief issue is such a simple open and close affair. teriba pointed out that whereas the release from the Paris Club merely indicated the readiness of its members to enter into negotiation with the Nigeria government on a comphensive debt treatment, "the next thing the Nigeria government ddid was to make press statements from the two ends, the conomists maintained, did not say teh same thing. To Teriba, President Obasanjo's emphatic announcement on debt relief from the Paris Club was "jumping the gun" as the statement from the Paris Club was not worth any celebration.

While advising Nigerans to be cautions, he maintained: "We don't knw what terms the IMF policy or board instrument is going to impose on us. We don't know if we will find them acceptable. We don't know if the IMF bpard will approve it. There are som many uncertainties. We haven't got it yet, although we have a chance now. However, this is not the first time that did it. Buhari regime did it. Babagida regime did it, but they all collapsed. So why would the President go and read a speech because the Paris club has expressed willingness to open negotiations with us? . . . ."

See The NEWS magazine of 18/7/2005 at apage 31 under the caption" "Nigeria's Debt Deal" A Bridge Still Far."Interntional Monetary Fund (IMF) and the debt relief)

As for the further uncertainties invloved in this arrangement, the magzine again posits further that:

"The Paris Club statement purports to have written off 60 per cent of Nigeria's debt to the creditor memebers of the club. The entire debts are estimated at $30.4 billion. Interpreted, the Paris Club is writing off $18 billion of Nigeria's debts to its members. the write-off is contingent upon the green light from the IMF. Nigeria is expected to conclude a policy suport instrument, PSI, which would be approved by the board of the IMF.

PSI entails that Nigeria pay up its arrears on its debts to its creditor nations in the Paris Club. The arrears is put at $6 billion. Upon the payment which Okonjo-Iweala was positive would be done within the next two months, Nigeria is epcted to meet with the PAris Club in Paris in September for negotiations on modalities for payment of the remaining debt of N46.4 billion.

The talks in Paris, it is hoped, would crystallise into a Memorandum of understanding on "debt reduction." In simple terms, after paying about $6 billion of the estimated $30.4 billion, Nigeria is favoured to enjoy the 60 per cent reduction. It would then buy back the remaining debts. Soludo said the buy back is actually a technical term that does not pose any probe.

Nigeria, he said, would simply pay the remaining $6.4 billion next year to free it completely from any debt obligation to the Paris Club. Whatever modalities and exact figures on stock reduction and buy-back will be thrashed out at teh September meeting."

Even on a large interpretation of the Paris Club statement, one does not need the clairvoyance of a Nostradamus to submit as Fala na did that:

"There is no basis for celebration yet. As a matter of fact, the decision of the of the Paris Club to reopen negotiatiopns with Nigeria is anchored on the conclusion of a policy support instrument with IMF."

Just recently, the IMF has even threatened if not truncated the so-called G8 debt deal offered to Africa by its leaders. This devastating news was relayed on headline news by the Sunday Independent Nwespaper of 17/7/2005 thus: "G8 Debt deal under threat at IMF." It states further that:

"In a document that has been leaked to the activisty group Jubille debt campaign, Belgium IMF representative Willy Krerkers in quoted as telling the IMF executive board that rather than giving full, irrevocable and uncoditional debt relief.... countries would receive grants. The IMF would then be able to withdraw the grants if countries fail to meet IMF conditions such as implementing the Poverty Growth reduction strategy which is a prerequisite for receiving debt relief."

From the above and with our IMF experience of economic slavery over the years, it is certainly not yet Uhuru!

Debt Relief and the Legal principle of Accord and Satisfaction

By express agreement, parties may agree that their contract shall be terminated; and in that case, their respective obligations are to be totally or only partially discharged depending upon the terms of the agreement. If the original contract is wholly or partially executed, the consideration for discharging teh agreemen t is the mutual release of liability. But if it has been completely performed by one party, his discharged of the other must be under seal or must take teh form of an accord and satisfaction suported by a fresh consideration. The Latin maxim eodem modo quo oritur, eodum modo dissolutur applies.

Indeed, these are some of the legal formalities that the debt relief arrangement must fulfill in order for the law to formally recognise the so-called debt relief. This was responsible for the Caveat contained in the Paris Club statement inter alia that they:

"....... expressed their readiness, consistent with their national laws and regulations, to enter into negotiations with Nigeria authories in the months to come on a comprehensive debt treatment."

For this purpose, therefore, the accord in law is the Agreement in principle by the Paris club, whilst the satisfaction in law is the payment of the arrears and settling the buy-back option within the time stipulated or agreed upon.

The proficient Onu, JSC with succunct clarity defined accord and satisfaction in law in teh case of Chieke v Olusoga (1997) 3 NWLR (pt.494) 390 at 406 Paras. C-D thus:

"Accord and satisfaction is the purchase of a release from an obligations, whether arising under contract or tort, by means of any valuable considerations not being the actual performance of the contract itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operational."

No Legal Agreement yet in Respect of Debt Relief

However, an indication thata ctually, a legal agreement has still not been entered into was confirmed when the Minister of Finance supported my contention nby explaining further in the report that:

"The payment will be made after the signing of a Memorandum of Understanding with member-nations of the Club......." See the Punch Newspaper of 14/7/2001 at page 6).

There is therefore no contract signed, sealed and delivered as required by law. Thus Obadina, JCA in Idi v Yau (2001) 10 NWLR (Pt. 722) 640 at 656 paras.

"It is trite that for any contract to come into existence, there must be an unmistaken and precise offer and an uncondituional acceptance of the terms mutually agreed upon by the parties thereto ... There must be a concluded bargain which has finalised all the essential conditions that are necessary to settle, leaving no vital condition unsettled."

From the highlighted facts, as well as the above legal authority, it is lucid that a complete contract or agreement, in law, is yet to take off until we have met all the terms and conditions atatched to the debt relief offer and satisfied all formal legal requirements, especially those of the Paris Club. Little wonder the Paris Club made teh debt relief subject to their national laws and regulations. And like the articulate Prof. Bolaji Akinyemi rightly observed:

"... we have an agreement to talk, but not yet ready for signature."

Conclusion

It will be most prudent, and wise therefore, for our leaders and government officials in future to always study the legal implications of such arrangement before making sweeping whilst being overtly ignorant of their legal implications and consequences for the country.

Mr. Mudiaga-Odje is a Constitutional Lawyer based in Warri, Delta State.