The Guardian Nigeria

By Sunday Obidigbo

1st August, 2001

The ever growing foreign debt burden of Nigeria and other heavily indebted countries has been attributed to a trap and desire for easy interest income by the Bretton Woods financial institutions, World Bank and International Monetary Fund (IMF).

The accusation was made by Managing Director of International Trust Bank Plc, Alhaji Abdulkadir Idris, at the Money Market Association of Nigeria's July monthly meeting in Lagos last week. Idris emphasised that most of the loans taken by the nation were simply unpatriotic and unprofessional.

He, however, insisted that only a free banking financial model complemented by risk sharing between both creditors and debtors could compel the financier to give due consideration to viability of the projects for which such loans are secured. His words: "I think it was a cruel trap to enslave this country and its posterity driven by greed for easy, unearned income that interest on loans provides." I think it was both which underlines our thesis that only an interest-free financial model, which insists on the sharing of risks and rewards of enterprise would compel the financier to give due consideration to the strength of the project, thus making it possible for even the poor but competent entrepreneurs to get financing if they have worthwhile project."

Idris said that both the Bible and Quran condemn interest taking in every disguise, saying that it is agasint God's injunctions.Quoting Exodus 22:25-27 in the Bible, he said: "If you lend money to any of my people with you who are poor, you shall not be to him as a creditor, and you shall not exact interest from him. If ever you take your neighbour's garment in pledge, you shall restore it to him before the sun goes down; for that is his only covering, it is his mantle for his body, in what else shall he sleep. And if he cries to me, I will hear, for I am compassionate."

And in the Quaran, he said Suralu Aali Imraan 3:130, he said "O you who believe! devour not interest, doubled and multiple but fear Allah that you may (really) prosper. And guard (yourselves) against that fire which has been prepared for those who disbelieve.

He referred to the Bretton Woods as heathen and unrepentant believers who use interest on loans granted most of the debtor nations to perpetually control, plunge, plunder and impoverish the already poor countries through their debt traps.

The managing director said that many developing countries, including Tanzania, Mozambique, Uganda and Nigeria, are currently groaning under the pain of foreign debt overhang, some of which some of the countries have paid 10 times the principals as interest, with more unpaid interest outstanding.

He said globally, the aggregate debt in developing countries rose by $150 billion to a new total of almost $2.5 trillion, "thus unconscionable situation of the rich nation getting richer at the expense of the poor nation, in a potentially endless process."

For example he said Somalia's debt is nearly four thousand times its yearly export earnings, that of Sudan is more than two thousand times, and that of Rwanda is about one thousand, four hundred times its earnings. Overall, he said, only $400 billion of the staggering $2.5 trillion was actually borrowed by the Third World countries while the rest is due to runaway compound interest.

He, therefore, urged the debtor countries to form a common front to press forward their inability to repay the loans."But if the debtors come together in a united effort, especially if a large number of the larger debtors are involved, the mere coming together will serve notice that the stability of the global system and integrity of the balance sheet of the creditor banks are in danger of being shaken, he said.