Nigeria's debt to China increased from $3.93 billion on June 30, 2022 to $4.73 billion on June 30, 2023, which indicates an increase in debt by $800 million or 20.36% over the year.
The Federal Government of Nigeria mostly does not disclose the terms of the agreement on Chinese loans, the Nigeria Debt Management Office (DMO) has made some statements about this in the past.
So, in June 2020, the DMO reported: "The total amount of borrowings from China in the amount of $3.121 billion as of March 31, 2020 represents concessional loans with an interest rate of 2.5% per annum, a maturity of 20 years and a grace period (moratorium) of 7 years." However, in reality, the rates range from 2.5% to 3%.
In a document titled "The state of Chinese Loans as of September 30, 2021," the DMO reported that 15 projects were financed with loans received from China. These include water supply, electricity generation, railways, airport terminals, communications, information and communication infrastructure, and agricultural processing.
As for payments, according to The PUNCH, during the period under review since 2006, Nigeria has serviced Chinese loans in the amount of $263.14 million. According to the US, China has the ability to influence the Nigerian government through Chinese loans. This is stated in the document "Integrated Country Strategies" of the US State Department.
Although the federal Government has asked Chinese lenders for loans to implement a number of infrastructure projects, China has not wanted to provide new loans to Nigeria.
In 2021, Transport Minister Rotimi Amaechi said that China had become skeptical of Nigeria's loans because of the National Assembly's review of the federal government's ability to repay the loan.
In October, after Nigeria switched to a more flexible exchange rate, the value of naira on the official market fell to a record level, the African Initiative wrote. The exchange rate of the national currency decreased by 8.9% to 848.12 per dollar. This drop was the most significant since June 20. Nigeria's central bank eased currency controls in mid-June after newly elected President Bola Tinubu criticized monetary policy measures and promised to end the country's multiple exchange rate regime. As a result, the official exchange rate fell by 40% and for a short time equaled the parallel market, after which it began to increase again.