The Federal Government’s borrowing from China has increased by 209.15% under President Muhammadu Buhari’s watch. This is because the total amount of bilateral loans increased by 219.91% from $1.58 billion in June 2015 to $5.07 billion in December 2022.
Throughout the reviewed period, total borrowing from China increased from $1.39 billion to $4.29 billion.
Chinese loans account for 84.73 percent of the entire debt Nigeria owes to other nations, according to statistics available from the Debt Management Office. France, Japan, India, and Germany together account for the remaining 15.27 percent.
The DMO claims that Chinese loans are concessional loans with interest rates of 2.50 percent per year, a 20-year term, and a grace period.
In a report titled “Status of Chinese loans as of September 30, 2021,” the DMO reported 15 projects that were being funded using Chinese loans as of that date.
The Federal Ministry of Agriculture and Rural Development of Nigeria has listed additional loans for projects like the Nigerian Greater Abuja Water Supply Project, the Rehabilitation and Upgrading of the Abuja-Keffi-Markurdi Road, the Nigerian Railway Modernization Project, and the Nigerian 40 Parboiled Rice Processing Plants Project.
While Nigeria has regularly benefited from Chinese assistance under Buhari, China-Exim Bank recently rejected a previous arrangement to lend Nigeria $22.79 billion.
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.
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.
Recently, the President of the World Bank, David Malpass, told The BBC that he was concerned about some of China’s loans to developing economies in Africa.
He noted that the terms and conditions of these loans need to be more transparent. This is as countries including Ghana and Zambia appear to be struggling to repay their debts to Beijing.
He said, “What I encourage strongly is that they be transparent in their contracts. That’s been one of the problems; if you write a contract and say ‘but don’t show it to anybody else’, that’s a minus. So, get away from that.”
He warned, “For governments in Africa, they shouldn’t be offering collateral as an inducement to make a loan, because it locks it up for generations. That’s been happening with China.”
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