China is known for its debt-trap diplomacy and Nigeria has to be careful not to lose valuable natural assets and sovereignty to that country.
The Nigerian press has been awash with concern about the terms of some loans contracted with or about to be contracted with China. The Minister of Transport, Rotimi Amaechi, even called on legislators to “look the other way” rather than conduct their due diligence on the loans, or else China will withdraw its support.What is the status of China loans to Nigeria?showed that between 2010 and March 31, 2020, 11 loan facilities have been obtained from the China Exim Bank.
Details revealed that the National Public Security Communication system Project of $399m and the Nigerian Railway Modernization Project of $500m were both obtained in December 2010 and are due to mature in September 2030. Funds for both projects have equally been fully disbursed at 100 per cent and Nigeria has an outstanding of $322m and $403m to pay upon the Security and Railway projects, respectively.
For the project on Supply of Rolling Stocks and Depot Equipment for Abuja Light Rail Project and the Nigeria Greater Abuja Water Supply Projects, no amount has been disbursed as of March 31, 2020, and no interest has been paid. Most of China’s financing is in the form of commercial loans tied to projects, often at onerous terms. Unlike multilateral and bilateral organizations’ lending, Chinese loans are collateralized by strategically important natural assets with high long-term value . This is because China chooses its projects according to their long-term strategic value, and so they may yield short-term returns that are insufficient for countries to repay their debts.
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