Chinese loans rise by 209% under Buhari, hit $4bn

PUNCH

Federal Government’s borrowing from China has grown by 209.15 per cent under the Major General Muhammadu Buhari (retd.) administration.

This is as total bilateral loans rose by 219.91 per cent 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 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.

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.