Nigeria’s Minister for Foreign Affairs, Geoffrey Onyema, announced on Monday that Nigeria is in talks with several countries to return money stolen under the late Nigerian dictator, General Sanni Abacha’s regime. From 1993 to 1998, Abacha allegedly stashed away $5 billion in different western nations including Switzerland, United Kingdom and the United States.
Over the past decade, these nations have returned approximately $1 billion dollars in total to the country from accounts that belonged to Abacha. However, Switzerland has only recently shown its preparedness to return $300 million this year after $380 million was returned last year.
In light of unusual interest rates in Switzerland’s banking sector at the moment, Ventures Africa spoke with Kemi Akinde, the Chief Economic Officer of Meristem Securities Limited, to find out if there is a relationship between these interest rates and Switzerland’s preparedness to return Nigeria’s money.
Ventures Africa (VA): Is the Swiss Central Bank obligated to release Abacha’s loot with interest to Nigeria?
Kemi Akinde (KA): There is no obligation by the Switzerland government to release the loot with interest. Obligation will arise out of a mutually agreed stance which will be legally binding but, this is not the case. The accounts where these funds have been frozen hitherto, so ‘technically’ they did not enjoy the liquidity to earn yields. The repatriation of the funds came at the conclusion of the comprehensive agreement between the Federal Government of Nigeria and the Abacha family in July 2014 and there was no negotiation with any Swiss bank on a rate on the funds. So it makes sense to make recourse to the Swiss National Bank rate which was 0 percent then and it dropped to -0.75 percent in 2015. So, technically, we should be getting a discount to face value. In summary, there is absolutely no obligation to pay interest on the funds.
VA: Nigeria received some of Abacha’s loot from Switzerland last year and will be receiving some more this year. Could the Swiss government’s readiness to return stolen money be related to its new and sudden interest rates, considering that the original plan to return money was every 10 years?
KA: Ironically, their current yield environment is even an incentive for them to hold on to the funds since there is a charge on it. It seems they are being generous to Nigeria by returning the money.
VA: Would that amount of money (about $300 million) have any effect on Nigeria’s economy, especially its current foreign exchange rates?
KA: $300million will have an effect but when placed in the context of an over $500billion economy and $30billion budget, we shouldn’t be too optimistic. The loot is inconsequential to the exchange rate. By the way, in the defense of the currency, the CBN has released $332million so far in Forex reserve in 2016, which are less than ten business days. Putting this in perspective, the $300million recovered loot is no solution. The Forex issues currently plaguing the country are rooted in deep structural misalignments to which monetary policy is constrained in resolving, considering its policy toolkit. It can only kick the can down the road until the structural issues are addressed on the fiscal side.
