China gives stringent conditions for $20bn loan to Nigeria
• Demands Appointment Of Chinese Officials To Monitor Funds
• Government Sets Up Team To Study Demands
Apparently to secure firm repayment plan and to understudy viability or otherwise of key sectors for which Nigeria is seeking a $20b loan from the China EXIMbank, the Chinese government has listed certain demands to be met by the Federal Government.
Part of the conditions, The Guardian learnt, is for the Federal Government, through representatives from key ministries such as Finance, Budget and National Planning, Foreign Affairs, among others, to fine-tune terms and agreements, including possible repayment plan with the China Ministry of Commerce.
The Guardian learnt that correspondences between the two countries are also to fast-track the understudying of key areas Nigeria needs the concessionary loan for, and for the purpose of making advisory contributions on the way forward.
Other conditions include; appointment of key Chinese officials to closely supervise funds released to the Nigerian government on loan agreement.
It would be recalled that Minister of Budget and National Planning, Udoma Udo Udoma, recently led an inter ministerial delegation, comprising top officials of Commerce, Foreign Affairs, Finance ministries, among others to China to solicit a $20b concessionary loan.
It was further gathered that although, the Chinese government expressed willingness to support the Federal Government with a loan to finance capital budget deficits in the country, it however expressed concerns over how the loans will be managed to achieve maximum value, saying that its technocrats will of necessity first understudy Nigeria’s request and offer necessary advisory and financial assistance once the team finalize with the Nigerian government for onward transmission to China Exim bank for action.
Udoma, had in Beijing requested the Chinese government to assist Nigeria financially in funding critical infrastructure in the country. He presented a request for $20billion concessionary loan.
The minister was in China for the coordinator’s meeting on the implementation of the follow-up actions on the Johannesburg Summit of the Forum on China-Africa Cooperation (FOCAC).
At the Johannesburg Summit in South Africa, in December 2015, China had agreed to Assist African countries in ten strategic areas that will help their economy. It pledged $60b in aid, grants and concessional loans.
Udoma, while describing the mission of his delegation to China, said Nigeria is trying to get as much of the Chinese funding for projects in the form of grants, aids, investments and loans, promising that the Federal Government has constituted a team of experts to liaise with the Chinese government in order to make the loan come through.
The Chinese government is however mindful of logistics on ground to pull such a heavy loan through, repayment challenges but the minister gave assurance that Nigeria will not exceed limits of loans she can repay.
“The loan component will however be within the country’s debt sustainability limits. Projects proposed for the facility by Nigeria is in the region of about $20b,” the minister said.
Udoma said Nigeria would be in a better stead if the Chinese government agrees to assist with a substantial part of the funds required, even as he stressed the need for special consideration for Nigeria, given strategic relationship between the two countries, based on population and economic potentials.
During the Cooperation meeting attended by ministers from various countries in Africa, China’s President Xi Jinping said the meeting was an important step taken by China and Africa to implement the consensus of Chinese and Africa leaders and the outcomes of the FOCAC.
“It is a significant measure to boost China-African cooperative development. The meeting demonstrates to the world once again that no matter how the international landscape may change, the resolve of China and Africa to pursue unity and win-win cooperation will never change,” Jinping said.
The Guardian learnt that initial discussions have been successful, and a team from Nigeria and China Ministry of Commerce have already commenced sharing information to work out timelines before such is forwarded to China Exim bank, which is to provide the funds under the authority of the Chinese government.