Buhari increases Nigeria’s Chinese loans 209% in 8 years
By Jeph Ajobaju, Chief Copy Editor
Muhammadu Buhari has increased Nigeria’s debt to China 209.15 per cent to $4 billion in the eight years he has been President.
Total bilateral loans rose 219.91 per cent from $1.58 billion in June 2015 to $5.07 billion in December 2022. Total loans from China alone rose from $1.39 billion to $4.29 billion.
China loaned Nigeria $658.72 million in 2022.
Debt Management Office (DMO) data shows Chinese loans comprise 84.73 per cent of foreign debt. The remaining 15.27 per cent is spread among France, Japan, India, and Germany.
According to the DMO, loans from China are concessional with interest rates of 2.50 per cent per annum, have a tenor of 20 years, and grace period (moratorium) of seven years.
The DMO listed 15 projects being funded with Chinese loans by the third quarter of 2021 (Q3 2021) in a document titled, “Status of Chinese loans as at September 30, 2021”.
The projects include:
- Nigerian 40 Parboiled Rice Processing Plants Project
- 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
- Nigeria Greater Abuja Water Supply Project
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Impact of Chinese loans
China-Exim Bank recently declined to fulfil an earlier agreement to grant Nigeria a $22.79 billion loan.
The loan had been approved under the 2016–2018 Federal Government External Borrowing (Rolling) Plan by the Senate on 5 March 2020 and the House of Representatives on June 2, 2020.
The PUNCH writes 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 a $973.48 million loan.
Former Transportation Minister Rotimi Amaechi alleged in 2021 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.
World Bank President David Malpass recently told the BBC that he was concerned about some of China’s loans to developing economies in Africa.
He said the terms and conditions of the loans need to be more transparent. Ghana and Zambia are currently struggling to repay loans to Beijing.
“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,” Malpass stressed.
“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.”