According to the United States, China may be able to sway the Nigerian government through loans.
This was revealed in the US Department of State paper titled “Integrated Country Strategies,” which The Platinum Times Nigeria was able to get.
The document was reviewed and amended on June 23, 2023, after being initially accepted on April 6, 2022.
The document claims that China provided sub-prime finance for numerous infrastructure projects throughout the nation.
A subprime loan, according to the Corporate Finance Institute, is one that is provided to borrowers who do not meet the requirements for conventional loans at an interest rate above prime.
The text of the letter stated, in part, that “Meanwhile, China offers sub-prime financing for a range of infrastructure projects, with the potential to… add unnecessarily to Nigeria’s debt burden and… increase Chinese influence over the Nigerian government.”
Nigeria owed the Exim Bank of China $4.34 billion as of March 2023, according to checks by the Platinum Times.
According to the most recent study on Nigeria’s railway system from the US-based Fitch Solutions, Punch reported in January 2022 that a Chinese business, Chinese Civil Engineering Construction Corporation, managed the majority of railway projects in Nigeria valued more than $25.51bn (N10.5tn).
According to the paper, “Nigeria Rail: Near-Term Focus on Northern Region with Long-Term Upside for Southern Projects,” CCECC was able to manage the majority of the nation’s rail projects because to Chinese financing.
However, the report also included a list of additional significant railroad stakeholders in Nigeria.
It read in part,
“China Civil Engineering Construction Corporation has dominated the railway construction sector in Nigeria, supported by Chinese financing.”
The authorized Lagos-Calabar coastal railway project, encompassing 1402 km, was awarded to the Chinese business for $11.10 billion, according to a breakdown of the top rail projects managed by CCECC.
Additionally, the $3.90 billion Abuja-Itakpe-Warri rail line project was given to CCECC, Julius Berger, Sinohydro Corporation, another Chinese company, and General Electric. The project was sponsored by China Railway Construction Corporation and EXIM Bank of China. Planning is still being done for the project.
For the implementation of many infrastructure projects, including standard gauge rail lines, the Federal Government had requested financing facilities from Chinese lenders.
15 projects were supported with Chinese loans, according to a report from the DMO titled “Status of Chinese loans as at September 30, 2021.” The 15 projects included 4 rail-related initiatives.
The political and economic structure of the nation was also criticized by the US in its document on Integrated Country Strategies.
The document read,
“Nigeria’s fundamental problem is patronage-based political and economic decision making, with little to no coordination between relevant ministries, and a disempowered civil service that does not sufficiently advise the Federal Government or sustain policy objectives over multiple administrations.
“Political and economic elites lobby for policy decisions that favour their short-term personal interests rather than the longer-term stability and unity of the state.”