China’s influence over the Nigerian government through its loans has raised concerns, as highlighted in the US Department of State’s Integrated Country Strategies document.
This disclosure, obtained by journalists, reveals that China’s sub-prime financing for diverse infrastructure projects in Nigeria has the potential to burden the nation with unnecessary debt and enhance Chinese sway over its governance.
The document, initially sanctioned on April 6, 2022, underwent review and updates on June 23, 2023.
How China Is Using Loans To Dominate Nigeria – US
The US Department of State’s document on “Integrated Country Strategies,” dated June 23, 2023 following its authorisation on April 6, 2022 notes that China provided sub-prime provides funding for a number of infrastructure projects in Nigeria and submits that these loans could give China the ability to dominate and define policies for the Nigerian government. Independet checks reveal Nigeria is owing the Exim Bank of China $4.34 billion as of March 2023.
It underscores the implications of China’s involvement in sub-prime financing, a practice where loans are extended to individuals at higher interest rates compared to prime rates, typically for those unable to access conventional loans.
Experts have identified Nigeria’s debt to the Exim Bank of China at $4.34 billion as at March 2023. Chinese investment, particularly by the Chinese Civil Engineering Construction Corporation (CCECC), which received major rail projects worth billions, has elevated Chinese influence in Nigeria’s rail sector.
Despite other players being listed, CCECC’s dominance in rail construction, facilitated by Chinese financing, remains noteworthy.
The report delves into specific rail projects, such as the Lagos-Calabar coastal railway project and the Abuja-Itakpe-Warri rail line project, both involving substantial Chinese participation.
It read in part, “China Civil Engineering Construction Corporation has dominated the railway construction sector in Nigeria, supported by Chinese financing.”
The breakdown of the top rail projects handled by CCECC showed that the approved Lagos-Calabar coastal railway project covering 1402km was awarded to the Chinese company for $11.10bn.
Also, the Abuja-Itakpe-Warri rail line project with a contract value of $3.90bn, sponsored by China Railway Construction Corporation and EXIM Bank of China, was awarded to CCECC, Julius Berger and Sinohydro Corporation, another Chinese company, alongside General Electric. The project is still at the planning stage.
However, the US document also critiques Nigeria’s political and economic landscape, highlighting flaws in decision-making processes and coordination among ministries.
The absence of a cohesive civil service advisory mechanism and the prioritization of short-term personal interests over long-term stability and unity are cited as core issues.
As Nigeria continues to engage Chinese lenders for financial support in key infrastructure endeavors, these concerns underscore the complex dynamics between economic development and foreign influence in the country.
In a document titled, ‘Status of Chinese loans as at September 30, 2021’, the DMO disclosed that 15 projects were funded with Chinese loans. Four of the 15 projects were rail-related.
The US, in its Integrated Country Strategies document, also faulted the political and economic system in the country.
The document read, “Nigeria’s fundamental problem is patronage-based political and economic decision making, with little to no coordination between relevant ministries, and a disempowered civil service that does not sufficiently advise the Federal Government or sustain policy objectives over multiple administrations. Political and economic elites lobby for policy decisions that favour their short-term personal interests rather than the longer-term stability and unity of the state.”