Nigerian President Muhammadu Buhari is seeking approval from parliament for a proposal to borrow $5.85 billion from China to modernise the country’s rail network.
Growth in Nigeria – an OPEC member whose economy, the largest in Africa, has been hammered by low oil prices – has been stunted for decades by a lack of investment in the road and rail network.
Buhari urged parliament in a letter to approve the borrowing because China has a limit on the funds available to African countries from its China Africa Fund. The president wants to sign loan agreements as soon as China approves the project.
“These loans form part of the overall money for the rail strategy,” Buhari said in the letter. The loans are part of the government’s 2016-2018 foreign borrowing plan, he said.
Nigeria recently secured $1.5bn Chinese loan to commence Lagos-Ibadan rail project in February, this year. In March, the Federal Government concluded plans to borrow $6.1 billion from Chinese Exim Bank to complete all rail projects in the country by 2019. The Minister of Transportation, Rotimi Amaechi, disclosed this on Monday in Abuja.
According to a statement issued by Yetunde Sonaike, the Ministry’s Director of Public Relations, Mr. Amaechi was said to have made this known during the Ministry’s 2017 budget proposal defence at the National Assembly in Abuja.
Mr. Amaechi said that the Federal Government had targeted the construction of Lagos – Ibadan, Kano – Kaduna rail projects and the first phase of the Coastal Rail (Lagos-Calabar) in the 2017 budget.
He said that President Muhammadu Buhari insisted that all rail projects in the country that had been awarded by previous administrations must be resuscitated and completed on or before the December 2019.
Mr. Amaechi said that rail projects needed to be completed due to the economic importance of these projects and the benefits to be derived by the generality of Nigerians. “Our plan is to complete the rail projects in 2019.
“Once our borrowing plan of $6.1 billion from the Chinese EXIM Bank is approved by the National Assembly, we will be able to access the loan from the Chinese Government and work will commence in earnest. “The 2017 total capital budget of the Federal Ministry of Transportation is N243.74 billion. “The 2016 total capital budget of the ministry was N171. 65 billion out of which N42 billion was released, representing 24.5 per cent,” he said.