Nigeria’s borrowing from China jumped a whopping 209.15 percent under President Muhammadu Buhari’s administration.
This startling revelation was disclosed by the Debt Management Office (DMO) which revealed that total bilateral loans rose by 219.91 percent from $1.58bn as of June 2015 to $5.07bn as of December 2022.
The data also revealed that Chinese loans make up a whopping 84.73 percent of the total amount Nigeria owes to other countries of the world, with the remaining 15.27 percent being spread across France, Japan, India, and Germany.
According to the DMO, loans from China are concessional loans with interest rates of 2.50 percent per annum, a tenor of 20 years, and a grace period (moratorium) of seven years.
These loans have been used to fund various projects across the country, including the Nigerian 40 Parboiled Rice Processing Plants Project, the Nigerian Railway Modernisation Project (Lagos – Ibadan section), the Nigeria Rehabilitation and Upgrading of Abuja – Keffi – Makurdi Road Project, the Nigeria Supply of Rolling Stocks and Depot Equipment for Abuja Light Rail Project, and the Nigeria Greater Abuja Water Supply Project.
Despite the recent hiccup in loan approval, China loaned Nigeria $658.72m in 2022. However, China-Exim Bank recently declined an earlier agreement to grant Nigeria a loan of $22.79bn, which had been approved under the 2016–2018 Federal Government External Borrowing (Rolling) Plan by the Senate and the House of Representatives on March 5, 2020, and June 2, 2020, respectively.
This may impact the Nigerian Railway Modernisation Project (Kaduna–Kano segment), with the contractor (CCECC Nigeria Limited) and the Federal Ministry of Transportation engaging China Development Bank for a loan of $973.48m.
In 2021, the immediate past Minister of Transportation, Rotimi Amaechi, alleged that China was becoming sceptical of lending Nigeria money because of a National Assembly probe of the Federal Government’s ability to pay back its loan.
Amaechi also alleged that the probe prevented China from granting more loans to Nigeria. However, the combined effort of the Senate President and Speaker helped stop the probe, which has assisted Nigeria in securing further loans from China.
Recently, the President of the World Bank, David Malpass, expressed concern about some of China’s loans to developing economies in Africa.
He said, “What I encourage strongly is that they be transparent in their contracts. That’s been one of the problems; if you write a contract and say ‘but don’t show it to anybody else’, that’s a minus. So, get away from that.”
He warned, “For governments in Africa, they shouldn’t be offering collateral as an inducement to make a loan, because it locks it up for generations. That’s been happening with China.”
