Why China dominates Nigeria’s infrastructure market ― Ahmed

Nigeria’s quest for highly concessionary loans from multilateral institutions during the 2016 recession met many brick walls from many international lending financial institutions except the Chinese government which came forth, Minister of Finance, Zainab Ahmed, has said.

She said the Federal Government in its bid to shore up revenue to boost the nation’s infrastructure had approached the World Bank for loans after a long period of waiting, the World Bank advanced Nigeria $400 loan.

She said the need for more funds led the nation to China which was the only country willing to provide the long-tenured loan facility with an average moratorium of five years.

Ahmed said this at the Senate public hearing on local and foreign debts on Tuesday chaired by Senator Clifford Ordia.

The minister of finance said their willingness to support the country was responsible for the dominance of the Chinese in the Nigeria infrastructure market.

Ahmed was responding to an inquiry by Senator Obinna Ogba at the public hearing where some states and ministries appeared to defend their loan request.

Ogba had expressed concern over the huge nation’s borrowing from China and sought to know the reason for such a decision.

The minister said Nigeria needed to access a total of $22.7bn from the Chinese government for several projects across the country on health, power, education etc.

She said $4.9bn would be dedicated to Mambilla power project.

Ms Patience Oniha, director-general of the Debt Management Office said the nation’s foreign debt was still within the threshold of 25 per cent far lower than the 55 per cent threshold of debt to GDP set by the World Bank.

Oniha said Nigeria’s sustainability index in the last three years as at September 30, 2019, stood at 18.9 per cent and additional debt being sought when added to the existing debt would raise the debt sustainability to GDP to 20.9 per cent which is still safe for the economy.

Chairman, Senate Committee on Foreign Debts, Senator, Clifford Ordia, warned ministries department and agencies that have not appeared before the committee to know that their absence comes with its own consequences.

According to him the decision of the committee may not be favourable to MDA’s that fail to appear before the committee.

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Kaduna, Kogi, Katsina and the federal capital territory made representation on their loan request to the public hearing by the Senate.

Kaduna State said it is seeking a $350m loan from the World Bank performance for result support for the state.

The Chief of Staff to the Kaduna State governor, Mohammed Sani, said the loan will be dedicated to power, education housing water and security amongst others.

The committee tasked the state to update her proposals within 24 hours and return them to the committee for further assessment and recommendation.

A loan sum of $100m was the proposal by the Katsina State government to the Islamic Bank, Engr. Ibrahim Danja, commissioner for finance said to the Senate committee.

He said the fund would be channelled to infrastructure rehabilitation of substance abuse, maternal care and pointed out that the loans would have between 20 per cent – 50 per cent grant depending on the discretion of the Islamic Bank which would make it decision after the proposal has been received by them for approval.

Kogi State said it seeks to source, $100m to fund stable crop processing zone, which in its analysis would generate revenue for the state, expand employment.

The ministry of information, transport and works, were also present to defend their request for a loan facility to fund some critical projects to be funded by the loans.

While Lai Mohammed said the ministry seeks the $500m loan to fund digitisation of the Nigeria Television Authority (NTA), Babatunde Fashola said the loans would be deployed to funding road projects in the country.

Minister of State for Transport, Gbemisola Saraki, listed some projects to include rail lines from Lagos – Kaduna – Kano, Uyo – Aba – Portharcourt.

Those who did not turn up for the public hearing are ministries of Niger Delta, water resources, humanitarian and disaster management, education, health, communication and the digital economy.