Nigeria’s debt to China rose by $800 million in just one year, from $3.93 billion on June 30, 2022, to $4.73 billion on June 30, 2023. Based on a review of the Debt Management Office’s external debt stock data, there was a 20.36 percent rise from the second quarter of 2022 to the second quarter of 2023.
The DMO has already made certain remarks on the details of the deal pertaining to the Federal Government’s loans to China, despite the fact that they have been mostly kept secret.
The DMO stated in a statement released in June 2020 that the $3.121 billion in total borrowings from China as of March 31, 2020, are concessional loans with a 20-year tenor and an annual interest rate of 2.5 percent.
The terms, in the opinion of the DMO, comply with the requirements of Section 41 (1a) of the Fiscal Responsibility Act of 2007. Additionally, the government pays less in interest because to the low interest rate, and the lengthy tenor allows the principal amount of the loans to be repaid over an extended period of time.
15 projects were supported by the loans obtained from China, according to information provided by the DMO in a document titled “Status of Chinese loans as at September 30, 2021.” These projects include everything from agricultural processing to water supply, electricity generation, railroads, airport terminals, and communication.
On January 12, 2006, a $200 million loan agreement for the Nigerian Communications Satellite project was made. On June 29, 2018, the loan that had a five-year term came to an end. Nigeria effectively paid off the loan, which had an interest rate of three per cent per annum, leading to the payment of $40.02m as the interest rate.
The second loan was for the Nigerian national public security communication system project with $399.50m agreed on December 20, 2010, and disbursed. The third loan was for the Nigerian railway modernisation project (Wu- Kaduna section) with $500m agreed on December 20, 2010, and disbursed.
While the fourth loan was for the Abuja light rail project with $500m agreed on November 7, 2012, and disbursed, the fifth loan was targeted at the Nigerian Information and Communication Technology infrastructure backbone project with $100m agreed on January 5, 2013, and disbursed.
The sixth loan was meant for four airport terminals’ expansion projects (Abuja, Kano, Lagos, and Port Harcourt) with $500m agreed on July 10, 2013, but $455.28m was disbursed, which is 91.06 per cent of the agreed amount.
The seventh loan was for the Nigerian Zungeru hydroelectric power project with $984.32m agreed on September 28, 2013, but only $518.24m was disbursed, 52.65 per cent of the agreed amount. The eighth loan was for the Nigerian 40-parboiled rice processing plants project (Federal Ministry of Agriculture and Rural Development), with $325.67m agreed on April 26, 2016, but nothing was disbursed.
