Headache For Nigeria As China Announces Plan to Reduce Loans to African Leaders in 2022, Focus on Others
- Nigeria’s plan to take more loans from China might come to a halt as the country reaches a conclusion to reduce how much it gives to African countries
- The decision comes on the back of troubling African countries rising debt profile and worried defaults
- However, not many believe China would cut off one of the major through which it establishes importance over other countries
As Nigeria prepares to borrow over N5 trillion to pay its 2022 budget deficit, China has declared a commitment to reduce lending to African leaders.
This was disclosed by Chinese President Xi Jinping while speaking with the triennial Forum of China-Africa Cooperation, held in Senegal.
Jinping indicated that over the next three years, his country will would slash the amount of money it supplies to Africa by a third (1/3) to $40 billion.
Source: Twitter
Implication for Nigeria
Nigeria is expected to borrow over N5 trillion to cover the deficit of the 2022 budget of N17.1 trillion.
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China however has revealed a plan to its lending focus to SMEs, green projects and private investment flows rather than large infrastructure, which was the former norm.
China is Nigeria’s biggest bilateral creditor, and in 2021, President Muhammdu Buhari revealed a plan to further strengthen the relationship, BusinessDay reports.
Explaining the loans from China, Femi Adesina, special adviser to the president on media and publicity said:
”President Buhari came at a time of severe infrastructure deficit in the country and resolved to make a difference and he is making that difference with the assistance of China. Nigeria appreciates China a lot for these and will continue to collaborate with it.”
Breakdown of Africa loan from China
China is African countries' biggest creditor and accounts for one-fifth of the total lending to Africa, concentrated in a few strategic/resource-rich countries, some of which include Nigeria, Angola, Djibouti, Ethiopia, Kenya, Zambia, and Uganda.
In Nigeria, China accounts for the largest share of bilateral loans (81%) followed by France (11.9%), Germany (3.9%), Japan (1.6%), and India (0.7%).
List of 15 projects why Nigeria agreed N2.50trn loan with China
Legit.ng had earlier reported that the Debt Management Office (DMO) announced Nigeria's overall public debt has risen to N38 trillion as of September 30, 2021.
The loan from China is one area many Nigerians are interested in amid stories of assets being seized from nations unable to repay their debt.
DMO has released a thorough analysis of loans received from China in the last 13 years, including how much has been returned and for what projects the funds were obtained
Source: Legit.ng
