Chinese loans hit $4bn Under Buhari, DMO

The Federal Government loans from China rose from $1.39bn to $4.29bn indicative of 219.91 per cent increase from $1.58bn as of June 2015 to $5.07bn as of December 2022 under the President Muhammadu Buhari led administration.

The Debt Management Office revealed that Chinese loans make up 84.73 per cent of the total amount Nigeria owes to other countries of the world. The remaining 15.27 per cent is spread across France, Japan, India, and Germany.

According to the DMO, loans from China are concessional loans with interest rates of 2.50 per cent per annum, have a tenor of 20 years, and grace period (moratorium) of seven years.

Projects Funded with Chinese Loans

The DMO listed 15 projects 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.

Decline in Chinese Funding

Recently, the China-Exim Bank 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.

It is speculated that this will impact the Nigerian Railway Modernization 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 had hinted that China was becoming skeptical 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.