Concern mounts as Nigeria’s dependency on China deepens
Nigerian President Muhammadu Buhari (L) and Chinese President Xi Jinping

Despite efforts by the financial authorities to downplay its magnitude, there continues to be some haunting concern in the public domain about Nigeria’s burgeoning debt profile, and more so, the component of it owed foreign creditors, with that of China attracting even more quizzing interest, BH has confirmed.
Nigeria’s total public debt (external and domestic) currently stands at N32.2trn($84bn). Many analysts consider this quantum of debt a huge burden on the country. What is most challenging is it’s servicing which gulps about 60% of the country’s revenues. However, of the huge debt on the shoulders of Nigeria, the Country owes China over $3.7bn. In fact, some unconfirmed sources have put Nigeria’s debt to China at between $5bn and $6bn presently.
Whereas Nigeria’s total debt stock is dangerously increasing by the day, discerning people are most worried by the country’s increasing exposure to the Chinese Government. China as a country, experts say is reputed to adopt a predatory loans strategy to hold strategic national assets of any weak country it can hold down.
Even Wikipedia describes China’s Debt-trap diplomacy as a powerful lending country or institution seeking to saddle a borrowing nation with enormous debt so as to increase its leverage over it. The debt trap theory has in fact, become one the hottest debates in Africa including Nigeria, Africa’s largest economy, many fear, may gradually be entering the Chinese debt trap and could be “losing” its sovereignty to China over bad debts. Given that Nigerians are fast losing confidence in the governments’ economic management strategy by the day, they are also not comforted by the fact that Chinese influence in Africa and Nigeria is on the increase.
Indeed at a point, there had arisen a widespread and controversial narrative that the sovereign guarantee clause in loan agreements with China could see Nigeria sign away its sovereignty in the event of a payment default. Though there is no concrete proof to this effect, there are no doubts that agreements on Chinese loans appear not to have always been very clear and transparent.
Despite Nigeria’s Transportation minister, Rotimi Amaechi’s attempt to clarify the purpose of the seemingly controversial clause and describe it as a waiver of immunity which would allow China pursue paths, including arbitration, to settle possible disputes over payments, many analysts believe China is smart and deliberate about its loan policies in Africa. There is a consensus that China understands the development deficit on the continent and it is strategically maneuvering this to wrap its arms around Africa’s economic future.
Notwithstanding China’s embassy’s own denial also of any plans to seize Nigerian assets in the event of any sovereign default, countries such as Zambia, Sri Lanka and Djibouti have reportedly already fallen into China’s debt trap and are at the moment grossly discomforted.
Analysts believe that the government has a very poor economic management framework that is not domesticated for growth but that suppresses and heaps pain onto the citizenry. They add that they cannot figure out where the huge borrowings have been deployed for infrastructure.
For the Managing Director of HighCap Securities limited, Mr. David Adonri, the recourse to these external borrowings which are supposedly designated for the development of domestic infrastructure, in itself is a very wrong financing strategy. According to him, no well organised nation takes foreign loans to develop infrastructure.
‘’What you do is to take domestic loans or domestic borrowing, long term domestic borrowing. You do not even borrow from banks or whatever but you float instruments in the capital market to borrow to develop infrastructure. Infrastructure is a long term project so it requires long term financing to finance them.’’
‘’Those loans are very dangerous and can put the sovereignty of the country into jeopardy because Nigeria is not likely to have the export capacity to earn hard currency to repay those loans into the future. And the way those loans are structured are to be repaid far into the future, so the burden has been offloaded to the future generation who may not be willing to pay and may not have the resources to pay. So those creditors may come for Nigeria’s assets to recover their loans so that is to the extent the Buhari of a man has mortgaged and is mortgaging the future of the country. He has already put Nigeria into a debt trap and made life unbearable for you and me. He has in fact come not only to destroy the present economic stability of the country but also the economic future of this country’’ he also said.
Recently, it was reported that the Zambian government which is hugely indebted to China may have handed over the country’s national electricity company, ZESCO to the Chinese due to the inability of Zambia to meet its loan repayment promises. China is, according to reports, already in control of the country’s broadcasting company, ZNBC. There are also rumours that Zambia’s main airport in Lusaka is also being targeted.
Recently too, with more than $1 billion in debt to China, Sri Lanka released its port to companies owned by the Chinese government. Now Djibouti, home to the US military’s main base in Africa, looks about to cede control of another key port to a Beijing-linked company, and the US is not happy about it.
Reports are that almost all major economies in sub-Saharan Africa today are massively indebted to China. And as days go by many more countries with poor economic projections that can service their debts join the numbers.
Report reveal that about 72 percent of Kenya’s $50bn bilateral debts are owed to China, with the East African country requesting an additional $3.8 billion extension. Nigeria also ramped up its debt to China by about $5billion China while Angola still owes about $212.2bn with a pending proposal for another $4.4 billion.
South Sudan is reportedly owing over $14.5billion to China. The same condition applies weaker economies like the Democratic Republic of Congo, Sudan, and Ethiopia have also incurred large debt from China.
‘’The reality in these figures is that the majority of the beneficiary countries will not achieve the intended goals of the loans. This primarily because of corruption and poor economic structure’’, said an analyst
Analysts have warned Nigeria to be cautious before it falls into the same debt trap as Zambia.
‘’China has made its intentions to dominate the global economy clear enough for any serious mind to realize. It knows the enormous potentials Africa possesses, and it will go the extra length to utilize them for its selfish mission. Just like Europe did with colonialism’’, they explained.

‘’The USD3.121 billion Loans are project-tied Loans. The projects, (eleven – 11 in number as at March 31, 2020), include: Nigerian Railway Modernization Project (Idu-Kaduna section), Abuja Light Rail Project, 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.
The impact of these Loans is not only evident but visible. For instance, the Idu – Kaduna Rail Line has become a major source of transportation between Abuja and Kaduna. Also, the new International Airport in Abuja, has improved air transportation for the populace, while the Lagos – Ibadan rail line when completed, will ease traffic on the busy Lagos -Ibadan Expressway.
The projects also have the added benefits of job creation, not only by themselves but through direct and indirect service providers, a number of which are Small and Medium Enterprises.
It is widely accepted that investment in infrastructure is one of the most effective tools for countries to achieve economic growth and development. Using Loans from China to finance infrastructure is thus in alignment with this position.’’
While the point has repeatedly been made that borrowing per se is not in itself offensive, the fact however remains that borrowing has to be strategic, targeted and ultimately value-driven to be substantially meaningful. Have the China loans passed the test? The jury is out.


Please enter your comment!
Please enter your name here