China, Nigeria Seal $5.57bn Loan Agreements under Eight Years

 

Amid fiscal pressure that threatened its capacity to fund capital projects, the federal government sealed $5.575 billion loan agreements with the Export–Import Bank of China between December 10, 2010 and May 29, 2018, a Debt Management Office (DMO) document has revealed.

With Nigeria’s rising exposure to external debt valued at $27.676 billion as at March 2020, Transparency International (TI) has decried federal government borrowing spree despite huge resources wasted by ministries, departments and agencies (MDAs).

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Details about the loan agreements were contained in the DMO’s status of loans obtained from China EXIM between December 10, 2010 and May 29, 2018. The status x-rayed Nigeria’s debt exposure to People’s Republic of China as at March 31, 2020

Of the total $5.575 loan agreements wrapped up with this timeframe, the document showed that China EXIM bank had already disbursed $3.313 billion while the federal government was left with an outstanding loan of $3.121 billion.

Since the December 20, 2010 loan agreement was first closed, DMO’S document revealed that the federal government had paid $192.21 million as part of the principal and $269.68 million as interest on different loans obtained as at March 31, 2020.

The document showed that the facilities were sealed with the following terms of agreement: 2.5% interest rate; seven-year period of grace and 20-year period of maturity.

Under the administration of President Muhammadu Buhari, for instance, the DMO’s document revealed, the federal government applied for $2.591 billion between August 26, 2016 and May 29, 2018, a period of one year and nine months.

As shown in the document, the Buhari administration sealed a $325.67 million loan agreement with China EXIM Bank on April 26, 2016 for the purpose of developing 40 parboiled rice processing plants under the Federal Ministry of Agriculture and Rural Development

However, the document revealed that the bank never disbursed the $325.67 million loan, which the Federal Ministry of Agriculture and Rural Development proposed to develop 40 parboiled rice processing plants nationwide.

The document, also, revealed that of the $1.267 billion loan sealed for on August 18, 2017, the bank only disbursed $759.84 million, which according to the DMO, constituted about 59.96% of the value contained in the loan agreement.

Specifically, the document disclosed that the Buhari administration wrapped up the $1.267 billion loan agreement for the purpose of executing the Lagos-Ibadan section of the railway modernisation project.

Also, on August 18, 2017, the document showed that the Buhari administration agreed with China EXIM to borrow $480.82 million for the purpose of rehabilitating and upgrading Abuja-Keffi-Makurdi road project.

Of the $480.82 million the parties agreed upon, the document revealed that China EXIM had disbursed only $80.64 million, which DMO claimed, amounted to 17.5% of the total facility sought for the road project.

The document, further, revealed that on May 29, 2018, the Buhari administration applied for $157 million for the supply of rolling stocks and depot equipment for the Abuja light rail project and $381.09 million for the execution of Greater Abuja Water project. However, according to the document, none of these credit facilities have been disbursed. All the facilities, which have been disbursed, are payable with the period of 20 years, though with a grace period of seven years.

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