Nigeria’s debt to China swells to $5.33 billion with new rail loan

Nigeria’s debt to China has risen by 5.03% following the disbursement of a $254.76 million loan from the China Development Bank (CDB) for the Kaduna-Kano railway project.

This brings Nigeria’s total debt to China from $5.07 billion as of June 2024 to approximately $5.33 billion. Nigeria’s outstanding debt to China (China’s Exim Bank) stood at $5.07 billion as of June 2024, according to the latest figures from Nigeria’s Debt Management Office (DMO).

The loan is expected to boost the progress of the $973 million rail project, which has faced significant delays due to funding shortfalls. The 203-kilometre (126-mile) standard-gauge railway aims to enhance connectivity between Kano, the largest commercial hub in northern Nigeria, and the capital Abuja.

“The Kano-Kaduna railway, with a total length of 203 kilometers, is a standard-gauge railway. Once completed, it will provide direct rail connectivity between Kano, an important northern city in Nigeria, and the country’s capital Abuja, offering local residents a safe, efficient, and convenient mode of transportation,” CDB said in a statement on its website.

China’s Foreign Minister Wang Yi is scheduled to visit Nigeria this week as part of his annual New Year tour of Africa. His meeting with President Bola Tinubu and senior government officials is likely to include discussions on deepening economic ties and reviewing ongoing infrastructure partnerships under China’s Belt and Road Initiative (BRI), of which the Kaduna-Kano rail project is a part, Reuters reported.

Originally, the National Assembly approved China’s Exim Bank as the financier for the rail project in 2020. After the bank withdrew, the China Development Bank stepped in to provide the much-needed funding.

The loan is CDB’s first credit to Nigeria. Previous loans were provided by China’s Exim Bank.

The construction of the rail project is being handled by China Civil Engineering Construction Corporation (CCECC), a key player in several major infrastructure projects across Nigeria.

China remains one of Nigeria’s largest bilateral creditors, financing critical infrastructure in transport, energy, and other sectors.

While Chinese loans have facilitated several transformative projects, the growing debt burden has sparked debates over the sustainability of Nigeria’s borrowing practices, especially amid a struggling economy, soaring inflation, and high external debt servicing costs.