Tuesday, the Senate approved China Development Bank as the substitute sponsor for Nigeria’s $973 million Kaduna-to-Kano rail project in 2020, after another Chinese lender withdrew from the project.
Before abandoning the project, the government had intended to borrow $22.8 billion from overseas, and in 2020, the Chinese Exim Bank was approved as the project’s lender.
The new lender, which will give a 15-year, 2.7%-interest loan for the railway project, has also been approved by the lower house of Nigeria’s parliament.
To reduce Nigeria’s dependency on oil exports, Nigerian President Muhammadu Buhari has prioritized updating the country’s transportation infrastructure and repairing its ancient electrical networks. Yet, a big barrier has been a shortage of funds.
The Nigerian government has sanctioned several billion dollars in project-specific loans from Chinese and other international lenders, but these funds have not yet been released.
Nigeria requested a loan from Standard Chartered Bank in 2022 in order to construct the Kano-to-Maradi line, which would connect the northern states of Kano, Jigawa, and Katsina. Yet, the government has once again sought financial backing from China.
For decades, Nigeria’s insufficient transportation and electrical networks have impeded economic development, preventing the equal distribution of money in Africa’s most populous nation, where forty percent of the population lives in poverty.
President-elect Bola Tinubu, who will take over when Buhari stands down in May, has committed to solve a variety of challenges, including double-digit inflation and industrial-scale oil theft, which have hindered an economy attempting to recover from the COVID-19 outbreak.
