PUNCH NEWS
The Federal Government of Nigeria borrowed about $3.27bn from five countries between June 30, 2015 and September 30, 2022, according to documents obtained by The PUNCH.
Data from the external loans reports obtained from the Debt Management Office showed that within the period, Nigeria’s borrowings from the five countries rose by 206.96 per cent from $1.58bn in June 2015 to $4.85bn by September 2022.
The five countries are China, France, Japan, India and Germany.
In June 2015, Nigeria had borrowed $1.39bn from China’s Exim Bank of China, $140.25m from France’s Agence Francaise Development, $43.10m from Japan’s Japan International Cooperation Agency, $11.73m from Germany’s Kreditanstalt Fur Wiederaufbua and nothing from India’s Exim Bank of India yet.
By September 2022, the bilateral debt profile rose with Nigeria owing China $4.09bn. It also owed France $526.48m, Japan $57.11m, Germany $153.06m, and India $27.17m.
Based on available data, it seems that Nigeria first accumulated debt from India under the regime of the President, Major General Muhammadu Buhari (retd.), with $14.79m recorded as debt from India in 2018.
However, China has been Nigeria’s largest bilateral creditor over the years.
The Federal Government had sought loan facilities from Chinese lenders to implement several infrastructural projects, including standard gauge rail lines.
In a document titled, ‘Status of Chinese loans as at September 30, 2021’, the DMO disclosed that 15 projects were funded with Chinese loans. Four of the 15 projects are rail-related.
The PUNCH recently reported that the Federal Government spent $548.67m (N246.11bn) to service railway-related debts between 2016 and 2022.
Nigeria’s current bilateral debt was 12.24 per cent of the total external debt of $39.66bn, excluding States’ external debt.
The PUNCH recently reported that Nigeria’s total external debt rose from $10.32bn on June 30, 2015 to $40.06bn as at June 30, 2022. It covered external borrowings by the Federal Government and States. It showed that there has been an increase of 288.18 per cent in seven years.
Nigeria’s external debt ballooned as the naira lost value, increasing Nigeria’s debt service burden and worsening its ability to service debt.
The International Monetary Fund recently said that the long-term rate of the depreciation of the naira equated to a loss of 10.6 per cent of its value annually since 1973.
According to the IMF, this rate was 1.5 times higher than the long-term rate of the currencies of other emerging markets and developing economies at 7.2 per cent and sub-Saharan Africa at seven per cent over the same time period.
The IMF said, “Its exchange rate underwent more persistent depreciation. Nigeria’s long-term rate of currency depreciation (on average 10.6 per cent annually since 1973) was 1.5 times higher than both EMDE (7.2 per cent) and SSA (seven per cent). Given limited availability of long-term data, it is difficult to estimate the exact reasons.”
The Bank of America recently said Nigeria’s local currency unit was set to weaken further next year as its current exchange rate to the dollar was well above fair value.
