Nigeria dismisses talk of a possible takeover of its economy by China over the bilateral loan

The country's debt management office explained the issues surrounding the advantage of sourcing for finance from China.

  • The government said Chinese loans are cheaper compared to other international bodies and agencies.

The Nigerian government has dismissed insinuations of the possible takeover of the economy by the Chinese government if it defaults on loan terms.

The country's debt management office explained the issues surrounding the advantage of sourcing for finance from China in a statement issued on Tuesday, September 11, 2018, in Abuja, the nation's capital.

The government said Chinese loans are cheaper compared to other international bodies and agencies. It added that loans from China Exim constituted just one of the sources of multilateral and bilateral loans accessed by Nigeria and represented only about 8.5% of the country’s external debt as of June 30, 2018.

The statement reads, “The DMO has observed that there have been various comments in recent times about borrowing by developing countries from China. The DMO has therefore considered it necessary to inform Nigerians about the government’s borrowing from China.

“Firstly, it should be noted that based on need, and subject to the receipt of requisite approvals, the government may raise capital from several domestic and external sources to finance capital projects in order to promote economic growth and development as well as job creation.

“Regarding external borrowing, the Nigerian government accesses capital from several sources such as the World Bank and the African Development Bank, as well as bilateral loans from various countries such as France (through the Agence Francaise de Development), Germany (KfW), Japan (Japan International Cooperation Agency), India (India Development Bank) and China (China Export-Import Bank).

“Borrowing from China Exim is one of such means of ensuring that Nigeria has access to more long-term concessional loans. Given the country’s infrastructure deficit, which needs to be urgently addressed, the loans from China Exim, which provide financing for critical infrastructure in road and rail transport, aviation, water, agriculture and power at concessional terms, are appropriate for Nigeria’s financing needs and align properly with the country’s Debt Management Strategy.”

The debt office assured that Nigeria’s public debt was being managed under statutory provisions and international best practices, adding that there was no risk of default on any loan, including the Chinese loans.

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