China offers Nigeria $6bn infrastructure loan

Nigerian President Muhammadu Buhari, left,  and Chinese President Xi Jinping shake hands during a signing ceremony at the Great Hall of the People in Beijing, China, on Tuesday. Picture: REUTERS/KENZABURO FUKUHARA

Nigerian President Muhammadu Buhari, left, and Chinese President Xi Jinping shake hands during a signing ceremony at the Great Hall of the People in Beijing, China, on Tuesday. Picture: REUTERS/KENZABURO FUKUHARA

BEIJING — China has offered Nigeria a loan worth $6bn to fund infrastructure projects, the Nigerian foreign minister said on Tuesday.

The announcement came as both countries signed a currency swap deal to boost trade. Nigeria has been in talks with China on an infrastructure loan for months.

Nigeria is one of Africa’s top oil producers. But its public finances have suffered as the price of crude oil dropped around the world.

Although President Muhammadu Buhari wants to triple capital spending in 2016, he also needs to plug a projected deficit of $11.1bn.

“It is a credit that is on the table as soon as we identify the projects,” Nigerian Foreign Minister Geoffrey Onyeama said after Mr Buhari met Chinese President Xi Jinping. “It won’t need an agreement to be signed. It is just to identify the projects and we access it.”

Lin Songtian, director general of the Chinese foreign ministry’s African affairs department, had earlier said Nigeria would be able to benefit from a $55bn package for Africa, which mostly consists of concessional grants or export lines.

The Industrial and Commercial Bank of China (ICBC), the world’s biggest lender, and Nigeria’s central bank also signed a deal on yuan transactions.

“It means that the renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,” Mr Lin said.

Nigeria had said it was looking at so-called panda bonds — yuan-denominated bonds sold by overseas entities on the mainland — to fund the deficit, saying they that would be cheaper than Eurobonds.

Trade

Nigeria’s central bank has said it plans to diversify its foreign exchange reserves away from the dollar by including more yuan. It converted up to a tenth of its reserves into yuan five years ago.

Mr Lin said a framework on currency swaps has been agreed with Nigeria, making it easier to settle trade deals in yuan. China has signed similar swap agreements with countries ranging from Kazakhstan to Argentina to promote wider use of its yuan.

Beijing also signed agreements to develop infrastructure in Nigeria, part of a drive to deepen its ties with Africa.

ICBC agreed a $2bn loan to Dangote, the company owned by Africa’s richest man, Aliko Dangote, to fund two cement plants it plans, he said.

Mr Xi told Mr Buhari there was huge potential for economic co-operation in areas such as oil refining and mining, according to Xinhua, China’s official news agency.

In a speech to business leaders, Mr Buhari said both countries wanted to work together in agriculture, fishing and the manufacturing of cars, construction materials and textiles.

CREDIT: Reuters

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Iheanyi Igboko is a social advocate, educator and journalist/blogger; working actively in the education and human development sector. He is passionate about promoting access to quality education, increasing youth active participation and engagement, and empowering young people to develop solutions to their problems. He craves unending hopes of a better Nigeria that will meet the hopes and aspirations of her citizens; and committed to building a nation that will seamlessly harness and develop her numerous human and capital potentials.

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