US Raises Alarm Over Unnecessarily Debt Burden On Nigeria By China

US Raises Alarm Over Unnecessarily Debt Burden On Nigeria By China

OpenLife Nigeria reports that the United States has said China is executing deliberate plans to perpetually put Nigeria under its control.

This was stated in the Integrated Country Strategies document by the US Department of State.

The document was originally approved on April 6, 2022, but was reviewed and updated on June 23, 2023.

According to the document, China offered sub-prime financing for various infrastructure projects in the country.

The Corporate Finance Institute described a subprime loan as a loan offered to individuals at an interest rate above prime, who do not qualify for conventional loans.

The document reads in part, “Meanwhile, China offers sub-prime financing for a range of infrastructure projects, with the potential to add unnecessarily to Nigeria’s debt burden and increase Chinese influence over the Nigerian government.”

Checks shows that Nigeria owed the Exim Bank of China $4.34bn as of March 2023.

Reports have it that in January 2022, a Chinese company, Chinese Civil Engineering Construction Corporation, handled the majority of railway projects in Nigeria worth over $25.51bn (N10.5tn), according to the United States-based Fitch Solutions’ latest report on Nigeria’s railway system.

The report, titled ‘Nigeria Rail: Near-term focus on Northern region with long-term upside for Southern projects’, said Chinese financing had enabled CCECC to handle most rail projects in the country.

It reads 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.

The Federal Government had sought loan facilities from Chinese lenders to implement several infrastructural projects, including standard gauge rail lines.

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 reads, “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.”