China-Exim Bank Refuses Nigeria’s $22.8bn Loan Request

Chinese Loans

An agreement to lend Nigeria $22,798,446,773 that had previously been approved by the National Assembly has been rejected by the China-Exim Bank. The House of Representatives granted the Federal Government’s request to borrow $973,474,971.38 from the China Development Bank on Tuesday.

Abubakar Fulata, the chairman of the House Committee on Rules and Commerce, made a proposal to the parliamentary chamber to change its resolution approving the botched business deal. Revocation of the 2016–2018 Federal Government External Borrowing (Rolling) Programme was the title of the motion.

Moving the motion, Fulata said, “The House notes that the 2016–2018 Federal Government External Borrowing (Rolling) Plan was approved by the Senate and the House of Representatives on March 5, 2020, and June 2, 2020, respectively.

“The House recalls that the National Assembly approved the sum of $22,798,446,773 only under the 2016–2018 Medium Term External Borrowing (Rolling) plan.

“The House is aware of the communications from the Federal Ministry of Finance requesting approval of modifications to the financing proposal for the Nigerian Railway Modernisation Project (Kaduna–Kano segment) occasioned by the COVID–19 pandemic, whereof China Exim Bank withdrew its support to finance the project.”

He added, “The House is also aware that to secure funds for the project, the contractor (CCECC Nigeria Limited), in collaboration with the Federal Ministry of Transportation, engaged China Development Bank as the new financier in the sum of $973,474,971.38 only.”

Fulata asked the House to “rescind its judgment on the financier and harmonised terms and authorize the change of financier from China Exim Bank to China Development Bank” in the given situation.

The prayer was overwhelmingly accepted by the MPs.

The House also agreed with the terms outlined in the unified term sheet: Segment: Kaduna-Zaria-Kano; lender: China Development Bank; loan type: commercial loan; maturity: 15 years; currency: Euro; interest rate: 2.7% + 6 months Euribor; commitment fee: 0.4%; and upfront fee: 0.5%.

Fulata moved the motion, and Nicholas Ossai, the chairman of the House Committee on Treaties, Protocols and Agreements, commented afterward. He claimed that the Executive branch of government had neglected to inform the National Assembly of the specifics of its commercial agreements with other nations.

Ossai added, “Secondly, we are now changing from China Exim Bank to China Development Bank, it then means an addition of another agreement. And if we are going to pass this resolution, it then means that members of this honourable House will not see those agreements.

“It is incumbent and important for the Minister of Finance (Budget and National Planning, Zainab Ahmed), when you are coming (to the National Assembly) on these issues to come with the agreements as agreed with the China Development Bank, so that members can be guided when approving such conditions for this loan.

“Mr Speaker, I believe that this motion should be stepped down while we ask the relevant authorities to forward all the agreements as agreed with China Development Bank.”

Speaker of the House, Femi Gbajabiamila, who presided over the session, however, argued that the substantive committees, especially Committee on Transport, had gone through the details.

Ossai, however, insisted that it was an external loan with an international commercial agreement, which should fall under the jurisdiction of his committee.

“I have also written to the Chairman (of the Committee on) Aids and Loans on this matter. I have also written to the Minister of Finance on this matter,” he stated.

While Gbajabiamila asked Chairmen of the Committees on Transport as well as Aids and Loans to see him immediately after the session, he went ahead to put the motion to voice vote and it was unanimously adopted.

The House has kept mum on the alleged abandonment of an investigation of commercial agreements and external borrowings by the Federal Government, which the Ossai-led committee carrying out the probe had said contained “dangerous” clauses.

The committee has yet to lay its report on the botched probe which began in 2020.

The immediate past Minister of Transportation, Rotimi Amaechi, on June 16, 2021, thanked President of the Senate, Ahmad Lawan and Speaker of the House of Representatives, Femi Gbajabiamila, for stopping an investigation.

While answering questions on Politics Today, a current affairs programme on Channels Television, Amaechi had alleged that the probe prevented China from granting more loans to Nigeria.

Amaechi said, “We are having a problem with the Ibadan-Kano because of the reaction of the committee of the National Assembly. The Chinese are asking how do they know that Nigeria wants to pay back when a committee of the National Assembly is questioning us (FG) about the terms of agreement. There is an impact. We have not gotten the loan from that time. We were supposed to get the loan within the period that happened but from that period till now, we have not gotten any loan.

“So, Ibadan-Kano, I will hang it in the National Assembly. But I must be grateful to both the Senate President and the Speaker for intervening. They intervened to stop the young man (Ossai), the honourable member who actually chaired the committee, and that helped a bit. Like I said, I’m grateful to the Speaker and I’m grateful to the Senate President because when I complained, they listened to the complaint and stopped the committee.”

Meanwhile, the House, also on Tuesday, approved the request to extend the implementation of the capital component of the 2022 Appropriation Act from March 31 to June 30, 2023.

The Executive had requested extension of the lifespan of the Federal Government budget from December 31 to March 31, which the National Assembly approved in December 2022.

Leave a Reply