The Premium Times of Nigeria reported Friday that the Nigerian government has decided not to borrow any more money from China for railroad construction, apparently because the Nigerians are growing nervous about their $3.4 billion in debt to Chinese banks and were reluctant to add another $14.4 billion to complete several large railroad projects.
“We’ve moved away from China in some of our projects,” Nigerian Transportation Minister Rotimi Amaechi said last week, adding that the finance ministry is seeking alternative funding arrangements with Standard Chartered, a British-based multinational finance company that has been doing business in Nigeria for 22 years.
According to the Premium Times, the Nigerian government still intends to let the state-owned China Civil Engineering Construction Corporation (CCECC) complete the work on the railways, as previously agreed.
Observer’s of China’s “debt-trap diplomacy” consider Nigeria among its worst victims. Some Nigerian lawmakers have expressed concerns their country could lose its sovereignty if it defaults on its massive Chinese debts – a danger written into the loan agreements with China.
When legislators called for deeper probes of Chinese loans, Amaechi told them any such investigation could stall Chinese-funded construction projects and make Nigeria’s finances even worse. Default is possible, as the projects China finances in Nigeria and other developing countries often stand little chance of generating enough profit to pay off the loans that were taken to construct them.
The Nigerian government maintains that even its recently expanded public debt limit, raised from 25 percent to 40 percent of GDP in February, is still below World Bank and International Monetary Fund (IMF) recommendations for nations in Nigeria’s “peer group.”
Cautious economists warn that Nigeria’s revenue stream is highly vulnerable to outside factors such as fluctuating oil prices, and there are many plausible scenarios in which the government could quickly find itself without the money to pay its debts or be forced to sacrifice important economic growth objectives in order to make loan payments.
India’s WION noted in February that not only has Nigeria indebted itself to China for at least 20 years under the most optimistic repayment projections, putting its oil fields and ports at risk if the Nigerians default on their loans, but Chinese influence is also inflicting tremendous ecological damage on the country.
Even as Beijing buries the Nigerians under mountains of debt, Chinese fishing trawlers are raiding the Nigerian coastline, depleting fish stocks and swiping an estimated $70 million in revenue from Nigerian fishermen.