The United States has voiced apprehensions regarding China’s potential to wield influence over the Nigerian government by means of Chinese loans, as per the recently disclosed Integrated Country Strategies report from the US Department of State. While originally sanctioned on April 6, 2022, the document underwent revision on June 23, 2023. According to this report, China has extended sub-prime financing for diverse infrastructural ventures within the nation.
Referred to by the Corporate Finance Institute as loans extended at an interest rate surpassing prime levels, targeting individuals not eligible for conventional loans, these subprime loans have raised concerns. The document’s excerpt emphasized, “China offers sub-prime financing for a range of infrastructure projects, with the potential to add unnecessarily to Nigeria’s debt burden and increase Chinese influence over the Nigerian government.” An assessment reveals that Nigeria’s outstanding debt to the Exim Bank of China was $4.34 billion as of March 2023.
A notable instance from January 2022 highlighted the involvement of the Chinese Civil Engineering Construction Corporation, which managed the lion’s share of Nigerian railway projects valued at over $25.51 billion, according to a report by Fitch Solutions based in the United States. Although other entities also played substantial roles in the Nigerian railway sector, the China Civil Engineering Construction Corporation stood as the dominant player, with substantial support from Chinese financing.
These revelations underscore concerns about the concentration of Chinese influence in Nigeria’s key infrastructure projects and raise questions about the nation’s economic and political decision-making processes. The US Integrated Country Strategies document underscores the challenges within Nigeria’s political and economic systems, pinpointing issues such as disjointed coordination among ministries and a civil service lacking influence. The document underscores, “Political and economic elites lobby for policy decisions that favour their short-term personal interests rather than the longer-term stability and unity of the state.”
