Nigeria is looking to Europe for funding to complete infrastructure projects such as railways, with a senior official in the West African nation saying Chinese loans are drying up.
Analysts say Nigeria’s situation reflects a broader Chinese move away from funding these expensive projects in Africa, where China has provided hundreds of billions of dollars in loans to develop infrastructure as part of its Belt and Road Initiative.
Last weekend, Transport Minister Rotimi Amaechi told Nigerian newspaper The Guardian that the country was “stuck with lots of our projects because we cannot get money”. “The Chinese are no longer funding,” he said. “So, we are now pursuing money in Europe.”
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In Abuja on Wednesday, Amaechi said Nigeria had approached Standard Chartered Bank for funding of two existing rail projects, Reuters reported.
He had said in July that Standard Chartered had agreed to provide US$3.02 billion for the Port Harcourt-to-Maiduguri railway project and that Credit Suisse was expected to fund the Kano-to-Maradi line, according to the report.
“We have gone to Standard Chartered Bank. They have not done financial closure but they have approved some level of funding for Kano-Maradi,” Amaechi was quoted as saying on Wednesday.
Nigerian Transport Minister Rotimi Amaechi said the country was pursuing funding from Europe. Photo: AFP alt=Nigerian Transport Minister Rotimi Amaechi said the country was pursuing funding from Europe. Photo: AFP
Nigeria’s funding difficulties indicate a wider trend of Chinese policy banks becoming more risk-averse, according to analysts.
Tim Zajontz, a research fellow with the Centre for International and Comparative Politics at Stellenbosch University in South Africa, said lenders were more cautious in assessing projects now.
That included more realistic feasibility studies and consideration of the potential reputational damage for China, particularly with regard to potentially unsustainable debt, he said.
In Nigeria, the administration of President Muhammadu Buhari has for some time been trying to diversify funding – including looking to European lenders – for its ambitious railway development programme.
Zajontz said that for projects such as Kano-Maradi, Port Harcourt-Maiduguri and the remaining phases of the Lagos-Kano railway, the government had sought to combine commercial loans with concessional funding to keep debt servicing manageable.
But he said European lenders had tough requirements for the economic feasibility of projects, as well as their social and environmental impact. “I am therefore not entirely convinced by Minister Amaechi’s optimism about securing funding…
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