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Chairman Spencer Bachus
Domestic and International Monetary Policy Subcommittee
Opening Statement
Hearing on
Nigeria inTransition

Nigeria stands at the crossroads of reform. It is a country richly blessed with abundant natural resources and over 120 million people in a country over twice the size of California. But ever since its founding in 1960, political instability, ethnic conflicts and widespread corruption have held back economic development in Nigeria. After suffering for years under weak or corrupt governments, General Obasanjo campaigned as a reformer and was democratically elected in May of last year. In his inaugural address the new President said he is prepared to restore confidence in government, deal with the growing economic crisis and tackle corruption. I want to affirm my support for President Obasanjo and state my agreement with the three goals for the new Nigerian government set by the President.

At the request of the distinguished ranking member, Rep. Maxine Waters, this hearing has been called to review what steps are necessary to achieve sustainable economic development in Nigeria. Since Nigeria is still very dependent on international support, this hearing will focus on the effectiveness of multilateral aid and debt restructuring.

I look forward to the testimony of the Treasury Department about what efforts are being made by the IMF and the World Bank to help promote economic development in Nigeria. Currently the IMF is negotiating an agreement with Nigeria to reschedule Nigeria’s external debt service burden, as opposed to actual debt relief. In return for debt rescheduling, the IMF is seeking a number of economic reforms from the Nigerian government, including more budget discipline and the build up of foreign exchange reserves.

One interesting aspect of debt rescheduling is the effect of such an agreement on private creditors. It appears that the IMF has agreed to President Obasanjo’s request to limit his country’s debt service payments to $1.5 billion a year. Currently their yearly debt service burden is $3.3 billion, with $2.3 billion to bilateral creditors, $700 million going to multilaterals, and $340 million to private creditors. There is a significant fear on the part of commercial creditors that if the voluntary offer to reschedule the private debt is not accepted that the IMF and Nigeria will agree to a compulsory commercial debt rescheduling. Given the importance of attracting private capital in the future, it seems that the IMF and Nigeria should be very careful before taking such a step.

After hearing from the Treasury Department witnesses, a second panel will discuss other options for economic growth and what steps need to be taken for Nigeria to recover the nearly $5 billion in national assets stolen by the regime of Sani Abacha.

In mid-December of last year, Swiss officials announced that they have frozen an estimated $551 million in Swiss bank accounts tied to former military leader Sani Abacha and his associates. Swiss officials said that about 120 accounts in Zurich and Geneva have been frozen. Recently President Obasanjo announced that as of May 2000 his government had recovered $200 million in public funds looted by former Nigerian dictator Sani Abacha. Unfortunately, this is a miniscule portion of the total amount of money that was stolen, and much more needs to be done by the international community and by other countries to help Nigeria recover its stolen wealth. I look forward to hearing from the private witnesses on how to recover the missing funds and also what can be done to prevent corruption in the future.

Only recently has the international community begun to realize the full impact of corruption on the economic growth of entire countries. It is becoming more apparent each day that more must be done to protect developing countries from the scourge of corruption. In order to discourage corruption, there must be some way to seize the ill-gotten gains of corrupt government officials. That is the only way to create a credible deterrent against the temptation to abuse public office. The hearing today should be the first step in designing a plan for the international community to help Nigeria fight corruption and achieve sustainable economic growth.

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