Why Chinese Government Stopped giving Nigeria loan Facilities.

It is no longer news that the Chinese government stopped giving Nigeria loan facilities, Although the news was a source of relief for Nigerians who have been worried that the country is drowning in debt. But the question remains Why?

Recall that the Chinese government loan refusal was revealed by the Minister of Transportation, Rotimi Amaechi, who noted that the refusal had led to delay in the country’s major projects, including railway construction.

Amaechi said that the Federal Government had started looking for loans in Europe following the refusal of the Chinese to fund Nigerian projects.

He said; “We are stuck with lots of our projects because we cannot get money. The Chinese are no longer funding. So, we are now pursuing money in Europe.”

Disclosing the reason why the Chinese government has stopped giving Nigeria loan facilities, the federal government through the Minister of Information and Culture, Lai Mohammed, noted that repeated reports claiming the Nigerian government will soon go bankrupt made the Chinese government stop giving the Federal government loans.

Speaking with DailyTrust on Monday, February 21, he said “When we started, we found the Chinese government more willing and their terms were much more acceptable and the speed with which the loans were completed and the speed with which we started working.

“Unfortunately, along the line, I can remember the Minister of Transportation complaining that the entire world takes its cue from what Nigerians say about their government.

“The issue of reports that the government will soon go bankrupt, I think made them stop. Yes, we’re not getting the loans again as we would have wanted.”

The downward spiral trend of the Chinese-Nigeria loan began after it was rumoured that the Chinese government was taking over the Ugandan International airport over the inability of the Ugandan government to meet its obligation to pay back the loan it collected from the Chinese government.

The rumour generated a debate over the possibility of Nigeria “losing” its sovereignty to China over its inability to back its debt. This debate led the House of Representatives to probe the loan agreements the country has with China.

In the lights of the debates Amaechi, however, revealed the clause of the loan agreement and described it as a waiver of immunity that would allow China to pursue paths, including arbitration, to settle possible disputes over overpayments.

”They (the Chinese) are saying, if you are not able to pay, don’t stop us from taking back those items that will help us recover our funds. And it’s a standard clause, whether it’s with America you signed it or with Britain or any country because they want to know they can recover their money,” he explained in a press release.

The Director-General of the Debt Management Office (DMO) Ms Patience Oniha has assured Nigerians that there is no threat to the nation’s assets. To ensure the safety of these assets, Oniha said: “Nigeria prioritises debt service. Several measures which operate seamlessly have been put in place to ensure that data on debt are available and that debt is serviced as at when due.”

She went on: “Provisions are made explicitly for Debt Service on External Debt and Domestic Debt in the annual budgets. The DMO maintains proper records of debts (Domestic and External), provide projections for Debt Service which are captured explicitly as Debt Service in the annual budgets, and processes the actual payments for the debt service in conjunction with the Office of the Accountant General of the Federation and Central Bank of Nigeria.”

According to the Debt Management Office,  Nigeria has borrowed a total of $3.121 billion from China, debt account, the debt accounted for 3.94% of Nigeria’s Total Public Debt which was  $79.303 billion as at then.

The $3.121 billion Chinese Loans are project-tied Loans. The projects include the Nigerian Railway Modernization Project (Idu-Kaduna section), the Abuja Light Rail Project, the Nigerian Four Airport Terminals Expansion Project (Abuja, Kano, Lagos and Port Harcourt), Nigerian Railway Modernization Project (Lagos-Ibadan section) and Rehabilitation and Upgrading of Abuja – Keffi- Makurdi Road Project.