A World Bank document has revealed Nigeria has so far borrowed $3.121 billion from China as of March 2020, an amount which represents only 3.94 percent of Nigeria’s total public debt of $79.21 billion as of September 2021.
Similarly, in terms of external sources of funds, loans from China accounted for 11.28 percent of the External Debt Stock of USD27.67 billion as of the same date, Sun News reports.
According to the World Bank, the total borrowing from China of USD 3.121 billion, equivalent to ₦1,126.68 trillion at USD/₦361 as of March 31, 2020, are concessional loans with interest rates of 2.50 percent per annum with a tenor of 20 years and a grace period (moratorium) of seven years.
”These terms are compliant with the provisions of Section 41 (1a) of the Fiscal Responsibility Act, 2007. In addition, the low-interest rate reduces the interest cost to the government while the long tenor enables the repayment of the principal sum of the loans over many years,” a newly released world bank document said.
”These two benefits, make the provisions for debt service in the annual budget lower than they would otherwise have been if the loans were on commercial terms.
”The $3.121 billion loans, the document explained are project-tied loans. The projects, (eleven in number as of March 31, 2020), include the Nigerian railway modernization project (Idu-Kaduna section), Abuja light rail project, Nigerian Four airport terminals expansion project (Abuja, Kano, Lagos, and Port Harcourt), Nigerian railway modernization project (Lagos-Ibadan section), and the rehabilitation and upgrading of Abuja, Keffi, and Makurdi Road project.
”The impact of these loans is not only evident but visible. For instance, the Idu-Kaduna rail line has become a major source of transportation between Abuja and Kaduna. Also, the new International Airport in Abuja has improved air transportation for the populace, while the Lagos-Ibadan rail line when completed, will ease traffic on the busy Lagos-Ibadan Expressway.
”The projects also have the added benefits of job creation, not only by themselves but through direct and indirect service providers, a number of which are small and medium enterprises,” the document, further explained.
Recall that recently, President Muhammadu Buhari wrote to the National Assembly, seeking approval to borrow the sum of $4,054,476,863 billion and €710 million, a move that generated uproar.
Although these loans are project-tied, Nigerians still rejected a request by President Buhari for a fresh loan, prompting the Minister of Finance Budget and National Planning, Zainab Ahmed, to assure the nation that the country’s debt is still sustainable.
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