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Capital Markets

Nigeria's debt: Should it be waived?

Despite large oil revenues, Nigeria's governments have racked up massive external debts. Now the present administration is asking for forgiveness. Should the world listen?

Nigeria's leaders have been on a concerted mission in the last few months to persuade the country's international creditors to absolve it of its $36-billion debt burden.

With an election looming in 2007, they argue that the whole reform process could be at stake. After all, most Nigerians have trenchant views on the issue, often believing that they are being punished for the harsh misdeeds of past leaders. Why should they pay the odious debts to foolish foreign lenders?

On the other hand, some international creditors ask why Nigeria should be excused when other poorer countries have signed up to International Monetary Fund (IMF) programmes and made more significant attempts to heal their economies over a longer period of time.

"Negotiations with the Paris Club have not been easy-going, but people are thinking that debt forgiveness should happen, and we have to keep working at it," says Dr Ngozi Okonjo-Iweala, minister of finance and head of the economic team. As a former vice-president at the World Bank, she certainly knows the ins and outs of the protracted process.

Leading the camp in favour of relief is the UK, which plans to use its roles chairing both the G8 and the EU this year to put Africa at the top of the agenda.

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