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 increase from the second quarter of 2022 to the second quarter of 2023.
The DMO has previously made certain statements regarding the details of the deal pertaining to the Federal Government’s loans to China, despite the fact that they have been primarily kept secret.
“The total borrowings from China of $3.121bn as of March 31, 2020, are concessional loans with interest rates of 2.5 per cent per annum, tenor of 20 years, and grace period (moratorium) of seven years,” the DMO stated in a statement released in June 2020.
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 due to the low interest rate, and the long tenor allows the principal amount of the loans to be repaid over an extended period of time.
15 projects were funded 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, power 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 successfully repaid the debt, which came with a three percent annual interest rate. As a result, the interest rate was $40.02 million.
The second loan, for $399.50 million, was agreed upon and disbursed on December 20, 2010, for the Nigerian national public security communication system project.
The third loan, for $500 million, was agreed upon and disbursed on December 20, 2010, for the Nigerian railway modernization project (Wu- Kaduna section).
The fifth loan was intended for the Nigerian information and communication technology infrastructure backbone project, with $100 million agreed on January 5, 2013, and disbursed; the fourth loan, for the $500 million Abuja light rail project, was agreed upon on November 7, 2012, and disbursed.
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The sixth loan, for $500 million, was agreed upon July 10, 2013, for the expansion projects of four airport terminals (Abuja, Kano, Lagos, and Port Harcourt). However, only $455.28 million, or 91.06 percent of the agreed amount, was actually disbursed.
The seventh loan, for the $984.32 million hydroelectric power project in Zungeru, Nigeria, was agreed upon on September 28, 2013, however only $518.24 million, or 52.65% of the agreed upon sum, was disbursed.
The seventh loan, for $325.67 million authorised on April 26, 2016, was for the Federal Ministry of Agriculture and Rural Development’s (FMARD) 40-parboiled rice processing plant project in Nigeria. However, no money was actually disbursed.
On August 18, 2017, a $1.27 billion loan was agreed with for the Nigerian railway modernization project (the Lagos – Ibadan segment). Of this money, only $759.84 million, or 17.50 percent, had been disbursed. This was the ninth loan.
On August 18, 2017, a $460.82 million agreement was made for the renovation and upgrading of the Abuja-Keffi-Markurdi road project. Of that sum, only $80.64 million—or 59.96 percent—was disbursed as part of the 10th loan.
On May 29, 2018, a $157 million loan was agreed upon for the Nigerian government to supply rolling stocks and depot equipment for the Abuja light rail project. However, no money was ever issued for this loan.
The 12th loan, which was agreed upon on May 29, 2018, for $381.09 million for the Nigeria Greater Abuja water supply project, was never disbursed.
On December 27, 2019, a $183.62 million loan was agreed upon for the Nigerian Four Airport Terminal Expansion Ancillary Project; however, no funds were disbursed. This was the thirteenth loan.
Nothing was paid out of the $208.90 million loan for the Nigerian Four Airport Terminal Expansion Incremental Project, which was agreed upon on December 27, 2019.
The fifteenth loan, for ¥2.3 billion signed on September 5, 2018, was intended for the Nigerian ICT Infrastructure Backbone Phase II Project; however, only ¥480.40 million had been issued.
