The President, Major General Muhammadu Buhari (retd.), presides over a Federal Government borrowing portfolio that has expanded dramatically under his administration. Bilateral loans have risen by 219.91 percent, increasing from $1.58 billion in June 2015 to $5.07 billion in December 2022. Specifically, borrowing from China grew from $1.39 billion to $4.29 billion during the same period, accounting for 84.73 percent of Nigeria’s total external debt, according to data from the Debt Management Office (DMO). The remaining 15.27 percent is owed to France, Japan, India and Germany.
Chinese loans are concessional, carrying an interest rate of 2.50 percent per annum, a tenor of 20 years and a seven‑year grace period. As of 30 September 2021, the DMO listed fifteen projects funded by Chinese loans, including the 40 Parboiled Rice Processing Plants Project (Federal Ministry of Agriculture & Rural Development), the Lagos–Ibadan segment of the Nigerian Railway Modernisation Project, the Abuja–Keffi–Markurdi Road Rehabilitation and Upgrading Project, the supply of rolling stock and depot equipment for the Abuja Light Rail Project, and the Greater Abuja Water Supply Project.
Despite a consistent flow of Chinese financing under Buhari, the China Exim Bank recently declined a previously approved $22.79 billion loan. The loan had been sanctioned under the 2016–2018 Federal Government External Borrowing (Rolling) Plan by the Senate on 5 March 2020 and by the House of Representatives on 2 June 2020. This setback could affect the Kaduna–Kano segment of the Nigerian Railway Modernisation Project, for which the contractor CCECC Nigeria Limited and the Federal Ministry of Transportation were seeking a $973.48 million loan from the China Development Bank. Nevertheless, China still extended $658.72 million to Nigeria in 2022.
In 2021, former Minister of Transportation Rotimi Amaechi claimed that China had become skeptical about lending to Nigeria due to a National Assembly probe into the government’s repayment capacity. Amaechi told Channels Television’s “Politics Today” that the probe had discouraged further Chinese loans, but that the combined efforts of the Senate President and the Speaker had halted the investigation, thereby easing the situation.
David Malpass, President of the World Bank, recently expressed concerns to the BBC about the opacity of some Chinese loans to African nations. Citing the debt struggles of countries such as Ghana and Zambia, he urged greater transparency in loan contracts, warning against secretive agreements and the use of collateral that could bind future generations. “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,” Malpass said. He cautioned African governments against offering collateral as an inducement for loans, noting that such practices have been prevalent in dealings with China.
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