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Nigeria can do with China’s free funds

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May 22, 2015 : ’Tunji Ajibade

’Tunji Ajibade
’Tunji Ajibade
ChinA wants to open its own World Bank. Well, that’s not exactly what the Asian giant calls its proposed bank. Asian Infrastructure Investment Bank is the name it has in mind. It’s a novel idea, nevertheless, one that catches the fancy of many but attracts the envy of others, making them insist the AIIB is a rival to the World Bank. The reader can imagine the audacity of any nation setting up such a bank where the United States of America is ever on the prowl, looking over everyone’s shoulder. The more important thing to state at this point though is that in spite of the bank’s name, every nation is welcome. Days back, Egypt declared its interest to become a founding member before the April 14, 2015 deadline set for founding members to join. But what position has Nigeria taken on the AIIB? That’s the main concern of this piece.
The Americans are uncomfortable about China’s bank, of course; so they have been grumbling like bees that suddenly found their honeycomb raided. They whisper into ears too, telling other nations not to follow China. But China was not the first nation to become rebellious with regard to operating rival financial institutions. The BRICS nations, for instance – Brazil, Russia, India, China and South Africa – walk here; they have been saying BRICS is more than an the acronym, that they can bark and bite in territories where Western nations traditionally consider themselves landlords. Last year, BRICS nations gathered for their annual summit and announced the creation of two financial institutions. One is the New Development Bank. It’s to finance infrastructure and sustainable development projects and it has $50bn in capital to start with. They also set up what they called Contingent Reserve Arrangement with a wallet containing $100bn with the aim to tide over members in financial difficulties. Note that China belongs to BRICS, but not many had raised their necks at that effort. When the Asian economic giant sent out invitations to nations, asking then to join the AIIB however, everyone looks up, and a few bear grudges.
The US, specifically, is known to have worked behind the scene to kill the AIIB before it is born. The Americans are sure China wants to use the AIIB as a means to diminish the regional influence of the World Bank and Asian Development Bank in which the US and Japan have huge presence. China intends to provide most of the $50bn in start-up funding for this bank, so everyone says Beijing wants to get smaller and medium-sized nations to sign onto a bank where it will dictate what happens. This has med the US to shuttle, lobbying Asian nations in order to persuade them not to join in the Chinese endeavour. Notable among such are South Korea and Australia. China and the US woo both at the same time. Beijing had wanted to get both Asian nations to sign on as founding members of the AIIB in time for China’s leader to announce the formation of the bank last December.
That the US tries to quash China’s bank surprises some. This is because it’s the same nation that has called on China to take on a greater role in global affairs. But now that China plays the part with an initiative such as the AIIB, the US whistles differently. That anyone is surprised however indicates that a few things in the US position are missed. It’s known that the Yankees accept that China’s rise is a good thing for the US because it allows Beijing to relieve the US of some of the burden of upholding the current global order. But this is based on the belief that China would use its power to reinforce the existing global order, and not to seek to create its own order. Now that China wanted to reshape the global order rather than reinforce the existing one, the Americans reacted negatively, as they had done to Russia which though a capitalist country had been making effort to reassert itself in its region in a way that challenged the inventors of capitalism. Of late, the optimism in Washington over the benefits it stands to have from China’s rise has diminished. It’s because China’s domineering posture especially in the South and East China Sea as well as initiatives like the AIIB has made it increasingly difficult to see a China that will continue to support the existing order as its power grows.
On the other hand, China is convinced the Americans seek to contain it, viewing the US-led regional order in Asia as abnormal and a situation it likes to change if it is powerful enough. All of this partly explains why the US has been going about informing everyone that they are better off staying away from China’s latest pet project. But if rivalry is taken off the page, why should China desire to create the AIIB in a situation where many financial institutions that provide the same facilities already exist in the form of the ADB, AfDB, CAF, EBRD, IADB? Moreover, Asia already has a multilateral lender, the Asian Development Bank. China’s response to these questions is that there is a massive infrastructure funding gap: The ADB has put in place a seal of $8tn from 2010 to 2020. Existing institutions cannot undo this. Furthermore, the ADB has a capital base of $160bn while the World Bank has $223bn. Nevertheless, the AIIB will start with $50bn in capital which is barely enough for what is needed. But everyone agrees it’s a useful addition. In any case, the ADB and World Bank loans support all things on the global development agenda including environmental protection and gender equality, while the AIIB, according to China’s plan, will concentrate on infrastructure.
It must be noted that while at the AIIB’s inauguration ceremony late last year, Australia, Indonesia and South Korea were conspicuously absent, they had since indicated interest to join. Some serious thinking must have taken places in these countries with regard to what they stand to benefit. Is Nigeria doing any thinking, doing an assessment of the gains and therefore the need to join? It should be noted that by the end of March, all of Asia had shown interest. More than half of the Middle East and a quarter of the EU had joined. Half of South America is in. Lately, China welcomed Egypt’s bid to join. At the moment, the bank has 40 prospective founding members who have the right to make the bank’s governance and operation rules. Countries joining after the deadline will simply have voting right and less say in the rule-making process. The bank is expected to be established by the end of 2015. The IMF, the World Bank and other leading global lenders have all welcomed collaboration with the new bank to fill in Asia’s infrastructure gap. So, what’s Nigeria waiting for under a global economic scenario that has seen Britain and other EU countries join the bank? They join because every nation is under such pressure that it needs all the funds it can have access to. In a world that’s no more so ideologically polarised, where funds come from to spur economic growth in any nation has become of less importance.
One thinks now is the time for policymakers here to consider the merits and make a move. Nigeria needs all the assistance it can get from wherever it can get it. This is more so as the country crawls under the weight of a huge infrastructural deficit that it must shed if it wants to lift social and economic burdens off the shoulders of its citizens. At the moment, the US and Japan haven’t totally ruled out joining, but express concerns about how the bank will be run and what it will do to guarantee social and environmental standards. Most of the crucial details about voting rights and standards for loans will be worked out after the final list of founding members is announced. For the moment, one thinks the more important factor Nigeria needs to consider for it to make up its mind is that China has funds it wants to give out; every other nation wants a share of them; Nigeria has no justification to miss out on it.
Copyright PUNCH.
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from PUNCH.
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Friday 22 May 2015

Nigeria can do with China’s free funds

May 22, 2015 : ’Tunji Ajibade

’Tunji Ajibade
’Tunji Ajibade
ChinA wants to open its own World Bank. Well, that’s not exactly what the Asian giant calls its proposed bank. Asian Infrastructure Investment Bank is the name it has in mind. It’s a novel idea, nevertheless, one that catches the fancy of many but attracts the envy of others, making them insist the AIIB is a rival to the World Bank. The reader can imagine the audacity of any nation setting up such a bank where the United States of America is ever on the prowl, looking over everyone’s shoulder. The more important thing to state at this point though is that in spite of the bank’s name, every nation is welcome. Days back, Egypt declared its interest to become a founding member before the April 14, 2015 deadline set for founding members to join. But what position has Nigeria taken on the AIIB? That’s the main concern of this piece.
The Americans are uncomfortable about China’s bank, of course; so they have been grumbling like bees that suddenly found their honeycomb raided. They whisper into ears too, telling other nations not to follow China. But China was not the first nation to become rebellious with regard to operating rival financial institutions. The BRICS nations, for instance – Brazil, Russia, India, China and South Africa – walk here; they have been saying BRICS is more than an the acronym, that they can bark and bite in territories where Western nations traditionally consider themselves landlords. Last year, BRICS nations gathered for their annual summit and announced the creation of two financial institutions. One is the New Development Bank. It’s to finance infrastructure and sustainable development projects and it has $50bn in capital to start with. They also set up what they called Contingent Reserve Arrangement with a wallet containing $100bn with the aim to tide over members in financial difficulties. Note that China belongs to BRICS, but not many had raised their necks at that effort. When the Asian economic giant sent out invitations to nations, asking then to join the AIIB however, everyone looks up, and a few bear grudges.
The US, specifically, is known to have worked behind the scene to kill the AIIB before it is born. The Americans are sure China wants to use the AIIB as a means to diminish the regional influence of the World Bank and Asian Development Bank in which the US and Japan have huge presence. China intends to provide most of the $50bn in start-up funding for this bank, so everyone says Beijing wants to get smaller and medium-sized nations to sign onto a bank where it will dictate what happens. This has med the US to shuttle, lobbying Asian nations in order to persuade them not to join in the Chinese endeavour. Notable among such are South Korea and Australia. China and the US woo both at the same time. Beijing had wanted to get both Asian nations to sign on as founding members of the AIIB in time for China’s leader to announce the formation of the bank last December.
That the US tries to quash China’s bank surprises some. This is because it’s the same nation that has called on China to take on a greater role in global affairs. But now that China plays the part with an initiative such as the AIIB, the US whistles differently. That anyone is surprised however indicates that a few things in the US position are missed. It’s known that the Yankees accept that China’s rise is a good thing for the US because it allows Beijing to relieve the US of some of the burden of upholding the current global order. But this is based on the belief that China would use its power to reinforce the existing global order, and not to seek to create its own order. Now that China wanted to reshape the global order rather than reinforce the existing one, the Americans reacted negatively, as they had done to Russia which though a capitalist country had been making effort to reassert itself in its region in a way that challenged the inventors of capitalism. Of late, the optimism in Washington over the benefits it stands to have from China’s rise has diminished. It’s because China’s domineering posture especially in the South and East China Sea as well as initiatives like the AIIB has made it increasingly difficult to see a China that will continue to support the existing order as its power grows.
On the other hand, China is convinced the Americans seek to contain it, viewing the US-led regional order in Asia as abnormal and a situation it likes to change if it is powerful enough. All of this partly explains why the US has been going about informing everyone that they are better off staying away from China’s latest pet project. But if rivalry is taken off the page, why should China desire to create the AIIB in a situation where many financial institutions that provide the same facilities already exist in the form of the ADB, AfDB, CAF, EBRD, IADB? Moreover, Asia already has a multilateral lender, the Asian Development Bank. China’s response to these questions is that there is a massive infrastructure funding gap: The ADB has put in place a seal of $8tn from 2010 to 2020. Existing institutions cannot undo this. Furthermore, the ADB has a capital base of $160bn while the World Bank has $223bn. Nevertheless, the AIIB will start with $50bn in capital which is barely enough for what is needed. But everyone agrees it’s a useful addition. In any case, the ADB and World Bank loans support all things on the global development agenda including environmental protection and gender equality, while the AIIB, according to China’s plan, will concentrate on infrastructure.
It must be noted that while at the AIIB’s inauguration ceremony late last year, Australia, Indonesia and South Korea were conspicuously absent, they had since indicated interest to join. Some serious thinking must have taken places in these countries with regard to what they stand to benefit. Is Nigeria doing any thinking, doing an assessment of the gains and therefore the need to join? It should be noted that by the end of March, all of Asia had shown interest. More than half of the Middle East and a quarter of the EU had joined. Half of South America is in. Lately, China welcomed Egypt’s bid to join. At the moment, the bank has 40 prospective founding members who have the right to make the bank’s governance and operation rules. Countries joining after the deadline will simply have voting right and less say in the rule-making process. The bank is expected to be established by the end of 2015. The IMF, the World Bank and other leading global lenders have all welcomed collaboration with the new bank to fill in Asia’s infrastructure gap. So, what’s Nigeria waiting for under a global economic scenario that has seen Britain and other EU countries join the bank? They join because every nation is under such pressure that it needs all the funds it can have access to. In a world that’s no more so ideologically polarised, where funds come from to spur economic growth in any nation has become of less importance.
One thinks now is the time for policymakers here to consider the merits and make a move. Nigeria needs all the assistance it can get from wherever it can get it. This is more so as the country crawls under the weight of a huge infrastructural deficit that it must shed if it wants to lift social and economic burdens off the shoulders of its citizens. At the moment, the US and Japan haven’t totally ruled out joining, but express concerns about how the bank will be run and what it will do to guarantee social and environmental standards. Most of the crucial details about voting rights and standards for loans will be worked out after the final list of founding members is announced. For the moment, one thinks the more important factor Nigeria needs to consider for it to make up its mind is that China has funds it wants to give out; every other nation wants a share of them; Nigeria has no justification to miss out on it.
Copyright PUNCH.
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from PUNCH.
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