Nigeria’s Indebtedness to China surged from $3.93bn as of June 30, 2022, to $4.73bn as of June 30, 2023, marking an increase of $800m within one year.
This represents a substantial 20.36% rise from the second quarter of 2022 to Q2 2023, as per an Analysis of the external Debt Stock Data from the Debt Management Office (DMO).
Despite the Federal Government’s relative silence regarding the specifics of its Loan agreements with China, the DMO has previously provided some Insight into these Arrangements.
A statement Issued by the DMO in June 2020 revealed, “The total borrowings from China of $3.121bn as of March 31, 2020, are concessional loans with Interest rates of 2.5% per annum, a tenor of 20 years, and a grace period (moratorium) of seven years.”
These terms, according to the DMO, adhere to the stipulations of Section 41 (1a) of the Fiscal Responsibility Act, 2007.
The relatively low-interest rate serves to curtail the Government’s Interest expenditure, while the extended tenor allows for the gradual repayment of the loan principal over numerous years.
In a report titled ‘Status of Chinese loans as of September 30, 2021,’ the DMO disclosed that a total of 15 projects were Funded by the loans obtained from China.
These projects encompass various Sectors, including water supply, power generation, railways, airport terminals, communication, and Agricultural processing.
