Chinese loan warning delayed, Nigerian government shifts focus on European banks as fundraising continues

  • The Nigerian government appears to have finalized plans to open fundraising as China delays disbursement of requested loan
  • For the past few years, China has been the first point of call for the Nigerian government when seeking funding for its infrastructure project.
  • However, in response to claims of colonization, China has rethought its strategy and opted to provide more loans to SMEs and people in the agricultural and technology sectors.

Following the delay in the disbursement of loans in China, the federal government is currently trying to obtain new loans from Europe, reports Dailytrust.

Over the years, Chinese loans have proved helpful to the Nigerian government in its drive to build railway infrastructure, which is recognized as one of the significant achievements of the current administration.

However, at a meeting in December 2021, China announced its intention to cut loans to African leaders following backlash across the world.

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China decides to stop giving loans to African leaders, Nigerian government focuses on European countries
Muhammadu Buhari with Chinese Premier Li Keqiang during a meeting. Photo by: Kyodo News
Source: Getty Images

Chinese president discusses plan to cut government loans

Chinese President Xi Jinping, during an interview with the triennial China-Africa Cooperation Forum, held in Senegal, stressed that over the next three years, his country will reduce by one third (1/ 3) the amount of money it provides to African countries at $40. billion.

China said it instead wants to focus on funding projects for smart young Africans in technology, agriculture and other sectors.

Ameachi hints at getting loan from European countries

Transport Minister Rotimi Amaechi announced the difficulties in obtaining loans from China in recent months.

He told reporters after the Federal Executive Council meeting that the delay in some infrastructure projects is because China has not yet disbursed requested loans.

Amaechi said:

“Actually, that’s why there’s a delay. We were waiting for the Chinese to grant us the loans we had requested and until today they have not responded. They kept delaying us – will the delay prolong our term?

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“The answer is no. We went to Standard Chartered Bank and although they have completed financial close, they have approved a certain level of funding.

“We are also pursuing the Port Harcourt-Maiduguri line with Standard Chartered Bank. The Lagos-Kano will come partly from Standard Chartered Bank and partly from some commercial banks in China.

When asked to divulge the amount of money coming from Europe, he said the figure was not readily available.

“I don’t have that number here, I have to go back to the office. But remember we have about three railway projects that have not yet started construction and they include Port Harcourt-Maiduguri, Kano-Maradi and then Abuja-Warri.

List of 15 projects for which Nigeria has accepted a loan of 2.50 billion naira with China previously reported that the Debt Management Office (DMO) announced that Nigeria’s overall public debt had risen to N38 trillion as of September 30, 2021.

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China’s lending is an area of ​​interest to many Nigerians amid stories of assets seized from countries unable to repay their debt.

DMO has published an in-depth analysis of loans received from China over the past 13 years, including how much has been repaid and for which projects the funds have been obtained