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China Exim bank declines FG $22.8bn loan

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By Abraham Adekunle

House of reps has approved new loan request to China Development Bank.

On Tuesday, March 28, 2023, Nigeria’s House of Representatives approved Federal Government’s request to borrow $973,474,971.38 from China Development Bank. This is just after China Exim Bank has declined FG’s earlier agreement to grant Nigeria a loan of about $22 billion, which was earlier approved by the National Assembly. Chairman of House Committee on Rules and Business, Abubakar Fulata, moved a motion for the House to amend its resolution that granted approval to the failed commercial deal.

The motion was titled “Rescission of the 2016-2018 Federal Government External Borrowing (Rolling) Plan.” Fulata said the original plan was approved by the Senate and the House of Representatives on March 5, 2020 and June 2, 2020 respectively. He said that the House of Reps is aware of the communications from the Federal Ministry of Finance requesting approval of modifications to the financing proposal for the Nigerian Railway Modernization Project (Kaduna-Kano segment), which was occasioned by the COVID-19 pandemic. He said that China Exim Bank has also withdrawn its support to finance the project.

Fulata prayed the House to rescind earlier financier for the new one.

CCECC Nigeria Limited, which is the contractor for the project, has collaborated with the Federal Ministry of Transportation to secure funds for the project by engaging China Development Bank as the new financier in the sum of $973,474,971.38 only. Given the situation, Fulata prayed the House to rescind its decision on the financier and harmonized terms and approve the change of financier from China Exim Bank to China Development Bank. The lawmakers unanimously granted the prayer.

The lower legislative chamber also approved the conditions provided in the harmonized term sheet. They include the segment as “Kaduna-Zaria-Kano,” type of loan as “commercial,” its maturity at 15 years, an interest rate of 2.7 percent, among other conditions. After Fulata’s motion, Chairman of House Committee on Treaties, Protocols and Agreements, Nicholas Ossai, stated that the executive arm of government failed to present details of the country’s commercial agreements with other countries to the National Assembly.

Ossai said some agreements are being hidden from the house.

Because of this failure to disclose those details, Ossai said that there would be an addition of another agreement since the financier is being changed from China Exim Bank to China Development Bank. If the House agrees to pass the resolution, members of the House will not be aware of those new agreements. He said that it was important and incumbent for the Minister of Finance, Budget and National Planning, Zainab Ahmed, to come along with the agreements with China Development Bank when coming to the legislative house on the issues.

This will guide members right when approving such conditions for the loan. “Mr Speaker, I believe that this motion should be stepped down while we ask the relevant authorities to forward all the agreements as agreed with China Development Bank,” he said. Femi Gbajabiamila, Speaker of the House, who presided over the session, argued that the substantive committees, especially the Committee on Transport, had gone through the details. Ossai insisted that it was an external loan with an international commercial agreement, which should fall under the jurisdiction of his committee. The Speaker of the House has asked both chairmen to see him privately, and then he put the motion to voice note and it was unanimously adopted.

The House yet to discuss on the 2020 probe on external borrowings.

Meanwhile, the House of Representatives has not said anything about the alleged abandonment of an investigation of commercial agreements and external borrowings by the Federal Government. The Ossai-led committee carrying out the probe had said that the agreements contained “dangerous” clauses. Yet, the committee is yet to present its report on the probe that began in 2020. However, the immediate past Minister of Transportation, Rotimi Amaechi, thanked the Senate President (Ahmed Lawan) and the Speaker of the House (Femi Gbajabiamila) for stopping the investigation. According to him, the probe prevented China from granting more loans to Nigeria.

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