China loan and what it means for the Nigerian economy2 min read


China over the decades has been loaning 10’s of billions of dollars to some African countries, as one of its goals to foster a faster economic and social development in the continent. Nigeria has not been left behind at all, with the completion of the Abuja-Kaduna Railway, we are positive that our relationship with the Chinese government will be a win-win one. But how truthful can this be?

A look at the newly constructed Abuja-Kaduna Railway

The western governments have recently raised concerns over the large funds made accessible to Africans by the Chinese and their increasing presence in the continent describing it as a Debt Trap, Vanity projects, and New colonialism. Taking an objective look at the Pakistanis and Sri-Lankans, one would agree to these claims by the west. In the words of Sanusi Lamido Sanusi, the then CBN governor

“we must see China for what it is: a competitor, they are in Africa for their own interest like the other western countries”

China has used a form of financing that functions like a bartering system: they provide you with investment capital and infrastructural development projects, then they demand resource concessions or have an ownership stake in the newly constructed project. A good example is Sudan and Angola, who are the highest recipients of these china loans but in turn is also the major oil exporters to China.

Majority of Africans/Nigerians have welcomed this new development amidst the western governments warning, believing that it will hasten the growth of so many sectors in the continent. Persons like Paul Kagame (President of Rwanda), Cyril Ramaphosa (President of South Africa) and Muhammed Buhari (President of Nigeria) have clearly stood beside the Chinese. Ayo Johnson (founder, viewpoint Africa) reporting to RT stated that

“China and Africa has always been in a symbiotic relationship, the Chinese has been quite savvy and very clever, they make sure they don’t interfere in African politics, purely what can we give you and what can we get back in return”

He further stated that the west will give loans at bad rates and will still determine how well or fast your economy should grow.

The key challenge here is that Nigeria and Africa at large have little to no effective political/economic structure for such loans to be utilized properly. How well have the loans borrowed previously been utilized? These are the questions the Nigerian government should be asking itself so not put the economy of the country in the “Debt Trap” of China.

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