Nigeria’s debt to China hits N1.8trn ($4bn) as loans under Buhari’s government rise by 209%
Nigeria’s debt to China has hit N1.8trn ($4bn) as Federal Government borrowing from the country grew by 209.15 percent under President Muhammadu Buhari.
According to Punch Report on Monday, April 3, 2023, this is also as total bilateral loans rose by 219.91 percent from $1.58bn as of June 2015 to $5.07bn as of December 2022. Total borrowing from China rose from $1.39bn to $4.29bn in the period under review.
Available data from the Debt Management Office revealed that Chinese loans make up 84.73 percent of the total amount Nigeria owes to other countries of the world. The remaining 15.27 percent is spread across France, Japan, India, and Germany.
The DMO data revealed that loans from China are concessional loans with interest rates of 2.50 percent per annum, have a tenor of 20 years, and a grace period (moratorium) of seven years.
As of September 30, 2021, the DMO listed 15 projects there were being funded with Chinese loans in a document titled, ‘Status of Chinese loans as at September 30, 2021.
The more listed loans include the Nigerian 40 Parboiled Rice Processing Plants Project (Fed. Min. of Agric & Rural Dev.), Nigerian Railway Mordernisation Project (Lagos – Ibadan section), Nigeria Rehabilitation and Upgrading of Abuja – Keffi – Markurdi Road Project, Nigeria Supply of Rolling Stocks and Depot Equipment for Abuja Light Rail Project, and Nigeria Greater Abuja Water Supply Project.
While Nigeria has drawn consistently from China’s well under Buhari, China-Exim Bank declined recently declined an earlier agreement to grant Nigeria a loan of $22.79bn.
The loan 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.
Despite the recent hiccup in loan approval, China loaned Nigeria $658.72m in 2022.
In 2021, the immediate past Minister of Transportation, Rotimi Amaechi, alleged that China was becoming sceptical of borrowing Nigeria money because of a National Assembly probe of the Federal Government’s ability to pay back its loan.
While answering questions on Politics Today, on Channels Television, Amaechi alleged that the probe prevented China from granting more loans to Nigeria.
He added that the combined effort of the Senate President and Speaker had stopped the probe, which had helped.
Recently, the President of the World Bank, David Malpass, told The BBC that he was concerned about some of China’s loans to developing economies in Africa.
He noted that the terms and conditions of these loans need to be more transparent. This is as countries including Ghana and Zambia appear to be struggling to repay their debts to Beijing.
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.”