The Debt Management Office (DOC) has revealed the Buhari-led government has incurred a loan that totals $2.20 billion from the Chinese government since its inception in 2015.
According to the statistics obtained from the DMO, Nigeria’s total debt from China as of June 30, 2015, stood at $1.38bn. However, the country’s debt portfolio from China rose to $3.40bn on March 31, 2021.
The loans from China are tied to different projects. The projects, (eleven in number as of March 31, 2020) include the Nigerian Railway Modernization Project (Idu-Kaduna section), the Abuja Light Rail Project, Nigerian Four Airport Terminals Expansion Project (Abuja, Kano, Lagos and Port Harcourt), Nigerian Railway Modernization Project (Lagos-Ibadan section) and the Rehabilitation and Upgrading of Abuja-Keffi-Makurdi Road Project.
The debt office said that the terms of the loans were compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007.
While the loans are concessional between both parties, China’s loans come with an interest rate of 2.50 percent per annum, a tenure of 20 years and a grace period (moratorium) of seven years. This means the government has about 27 years to repay these loans. A period of time that outlives the present administration’s tenure.
There is also the possibility that the country may forfeit some of its infrastructures in the eventuality of loan defaults.
The Nigerian government have not been open with details of the loan agreement with China which has led many to believe the agreement may contain some unclear clauses that may breach the nation’s sovereignty.
However, the minister for transportation, Rotimi Amaechi has debunked the existence of any clause in the agreement while adding that there would be no need for China to claim any infrastructure as long as all debts were repaid.
“We must learn to pay our debts and we are paying, and once you are paying, nobody will come and take any of your assets,” he had said.
He disclosed that the administration of Major General Muhammed Buhari had paid $150m out of the $500m borrowed by the administration of President Goodluck Jonathan for the Abuja-Kaduna Rail project.
As of March 31, a total of $719.61m had also been made as a debt service payment to China since the third quarter of 2015.
In the first quarter of 2021, $102.19m was used to service debt to China. This is about 11 per cent of the total $1.0bn used to service external debts within the period.