President Goodluck Jonathan will travel to China next week to sign off on $3 billion in Chinese loans to build infrastructure in the country, Coordinating Minister of the economy and finance stated on Wednesday.
President Goodluck Jonathan (L) meeting with former President of China Hu Jintao (R) during family photograph of the 2012 Nuclear Security Summit in Seoul
The agreed loans will come from the Chinese government and will be based on interest rates of less than 3 percent over a 15-20 year period, Dr Ngozi Okonjo-Iweala said.
According to the Finance Minister, Nigeria needs $10 billion a year of investment to improve infrastructure like roads and electricity to keep up with a rapidly growing population of almost 170 million, and to sustain economic growth at around 6-7 percent.
“We know that China fuelled its growth by really keeping one step ahead in terms of infrastructure … we need roads, we need power, we need help on aviation, agriculture,” Okonjo-Iweala told Reuters news agency at the Presidential Villa in Abuja.
The loans are part of a $7.9 billion external borrowing plan approved by the National Assembly last year as government seeks to up cheaper external borrowing and limit domestic debt.
Okonjo-Iweala said the delegation travelling to China on July 7 would also be discussing China’s interest in oil from Nigeria, an OPEC member and Africa’s top producer.
“They want more oil and gas … we have something they want now and they have something we want, so you have grounds for negotiations,” Okonjo-Iweala said.
China has already made a string of loans to Nigeria in the past few years, some of which includes $500 million to build airport terminals in Lagos, Abuja, Port Harcourt and Kano; and over $700 million to build a hydroelectric power plant in Niger State.
It also includes $600 million to build a light railway in the capital Abuja, most of which has already been invested on a project due to be completed early next year.
Lending at below market rates to fund infrastructure projects using Chinese firms has enabled Beijing to cement relationships in Africa while subsidising its construction industry.
Governor of the Central Bank of Nigeria (CBN), Lamido Sanusi recently warned African governments that China’s pursuit of raw materials and markets for its manufactured goods on the continent carried “a whiff of colonialism” similar to that introduced by Europeans in centuries past.
But the Minister of Finance does not agree with such claim saying, “I’m not of the school that says ‘look this is colonialism’ … We should be open to whoever wants to invest and help us finance our needs,” she said.
With the discovery of shale oil and gas in the United States, Nigeria is losing its biggest customer and looking for new buyers. India has been increasing its imports from Nigeria.
U.S. President Barack Obama launched a $7 billion initiative on Sunday to help Africa with electricity shortages but this is dwarfed by the $20 million in loans China has promised the continent. Obama did not visit Nigeria.