New Telegraph

Nigeria’s debt to China hits N8.04trn

  • Loans stand at 11% of total external debts


In the wake of Senate’s approval of President Muhammadu Buhari’s latest loan request, Nigeria’s debt to China, which amounted to about N3.2 trillion in the first quarter of this year, will increase to N8.04trilion, findings by New Telegraph has shown.


Last Wednesday, the Senate had approved the foreign loan plans of the President Buhari, in which he sought to borrow the sum of $16.2billion, €1.02billion and a grant component of $125million to fund some “legacy projects.”


The Chairman, Senate Committee on Local and Foreign Debt, Senator Clifford Ordia, explained that out of the total amount approved by  the National Assembly, $5.07billion would be sourced from the China Exim Bank, $3.9billion from the Industrial and Commercial Bank of China, while $2.8billion would come from the China Development Bank.


This means that the country’s total debt to China would increase by $11.77billion, which is equivalent to N4.82trillion using the Importers and Exporters’ (I&E) FX Window exchange rate of N411.42/$1. Given that the Director General, Debt Management Office (DMO), Ms. Patience Oniha, had in February told a TV news channel that the nation’s Chinese loans amounted to about N3.2 trillion, it means that Nigeria’s debt to the Asian country would rise to N8.04trilion.


As at February, when she spoke on the subject, the DMO boss had dismissed concerns over Nigeria’s indebtedness to China, asserting that Chinese loans are not only project-tied but also configured to be concessional.


Oniha, who said at the time that at N3.2 trillion, the Chinese loans constituted just about 11 per cent of Nigeria’s total external debt stock, said that servicing such loans had not posed a challenge for the Federal Government.


She said: “All of the loans we have from China–the stock of bilateral credit (which is where China belongs) is low relative to the total public debt stock. oans from China are about N3.2 trillion, which was about 11 per cent of total external debt. Okay, that was small. But to add, those are all concessional loans.


No reasons to be worried about them. They are all project-tied, which Nigerians should be happy about. “You can see all the physical infrastructure – whether it is the airports or the rail lines or the roads; you can see them. So, we don’t see any reasons for concerns, and they are all project-tied and concessional.”


Despite the assurances given by the DMO D-G, concern persists about the terms and conditions attached to the Chinese loans which have not been disclosed by the government.


Analysts note that the Senate’s approval of President Buhari’s loan requests was accompanied by a resolution that the terms and conditions of the loans from the funding agencies be forwarded to the National Assembly prior to their execution for approval and proper documentation.


In August last year, a House of Representatives Committee raised the alarm over the alleged waiver of Nigeria’s sovereignty in loan agreements that the country entered into with China for about $500 million needed for the partfinancing of rail projects. New Telegraph reports that in his first public appearance as World Bank President, David Malpass had told China that it needed to be transparent about its lending to poor countries, as he warned that debt problems were once again on the increase.


“That number is growing as new contracts come in and are not transparent,” he said, adding that the key to making borrowing work for poor countries was to: “Have transparent disclosure as it is being created and to have quality projects. Bilateral donors can do better.”

Although the Federal Government continues to insist that despite a debt profile, which stood at N35.47 trillion in the second quarter of the year (Q2’21), the nation’s healthy debt to Gross Domestic Product (GDP) ratio, means it can accumulate more debt, many financial experts have expressed concern over Nigeria’s huge debt profile. Indeed, the Presidential Economic Advisory Council (PEAC), Professor Doyin Salami, in a presentation in September, stated that the country’ N35.47 trillion public debt was unsustainable even though the country’s debt-to- Gross Domestic Product (GDP) ratio at 35 per cent appeared healthy.


He stated that with debt service-to-revenue ratio at 97.7 per cent (January to May 2021), the country’s public debt profile was unmaintainable. He noted that the country’s debt stock was estimated to hit about N54 trillion when Ways and Means as well as the Asset Management Corporation of Nigeria (AMCON) liabilities and projected fiscal deficit for 2021 are put into consideration.

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