China offers Nigeria $6b loan to fund projects

‘No agreement needed, we just identify the projects and access the fund’
CBN, ICBC sign deal on transactions; Yuan included in Nigeria’s forex reserves
Buhari orders establishment of committee on new China, Nigeria projects
Large trade imbalance between China, Nigeria must be reduced – President

China has offered Nigeria a loan worth $6 billion to fund infrastructure projects in the country, Foreign Affairs Minister, Geoffrey Onyeama said on Tuesday. According to a report by Reuters news agency, Onyeama told reporters travelling with the President after Buhari met Chinese President Xi Jinping that “It is a credit that is on the table as soon as we identify the project.” “It won’t need an agreement to be signed; it is just to identify the projects and we access it,” he said. There was no immediate comment from China. Lin Songtian, director general of the Chinese foreign ministry’s African affairs department, had earlier said Nigeria would be able to benefit from a $55 billion package for Africa, which mostly consists of concessional grants or export lines.

The Industrial and Commercial Bank of China Ltd (ICBC), the world’s biggest lender, and Nigeria’s central bank also signed a deal on yuan transactions. “It means that the renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,” Lin said. Nigeria had said it was looking at panda bonds – yuan-denominated bonds sold by overseas entities on the mainland – to fund the deficit, saying they that would be cheaper than Eurobonds. Nigeria’s central bank has said it plans to diversify its foreign exchange reserves away from the dollar by switching some into yuan. It converted up to a tenth of its reserves into yuan five years ago. Lin said a framework on currency swaps has been agreed with Nigeria, making it easier to settle trade deals in yuan.

China has signed similar swap agreements with countries ranging from Kazakhstan to Argentina to promote wider use of its yuan. Beijing also signed agreements to develop infrastructure in Nigeria, part of a drive to deepen its ties with Africa. ICBC agreed a $2 billion loan to Dangote, the company owned by Africa’s richest man, Aliko Dangote, to fund two cement plants it plans, he told Reuters. China’s Xi told Buhari there was huge potential for economic cooperation in areas like oil refining and mining, according to Xinhua, China’s official news agency. The Minister made known the $6b loan deal just as President Buhari directed that technical committees be immediately established to finalize discussions on new joint Nigeria/ China rail, power, manufacturing, agricultural and solid mineral projects.

The President gave the directive Tuesday in Beijing after talks between his delegation and high-ranking Chinese government officials led by President Xi Jinping. A statement signed by Garba Shehu, Senior Special Adviser to the President (Media & Publicity), said the technical committees are to conclude their assignments before the end of next month. President Buhari had at the talks welcomed China’s readiness to assist Nigeria in her bid to rapidly industrialize and join the world’s major economies. President Jinping agreed that Nigeria’s chosen path of development through economic diversification was the best way to go. To help Nigeria to achieve this, China promised to fully support the country through infrastructural development and capacity building.

China also expressed an interest in setting up major projects in Nigeria such as refineries, power plants, mining companies, textile manufacturing and food processing industries as soon as the enabling environment is provided by the Federal Government. In response to President Muuhammadu Buhari’s desire to make Nigeria selfsufficient in food production, President Jinping offered 15 million U.S. dollars agricultural assistance to Nigeria for the establishment of 50 Agricultural Demonstration Farms across the country. China and Nigeria also agreed to strengthen military and civil service exchanges as part of a larger capacity-building engagement.

In line with this, China offered to raise its scholarship awards to Nigerian students from about 100 to 700 annually. In addition, 1,000 other Nigerians are to be given vocational and technical training by China annually. President Jinping applauded the war against corruption being waged by President Buhari. The Chinese leader assured President Buhari that Nigeria will always have a special place in the affairs of the Peoples Republic of China. After the talks, President Buhari and President Jinping witnessed the signing of several agreements and memorandums of understanding by Nigeria and China.

The agreements include a “Framework Agreement Between the Federal Ministry of Trade and Investment of the Federal Republic of Nigeria and the National Development and Reform Commission of the Peoples Republic of China.” Others were a “Memorandum of Understanding on Aviation Cooperation between the Ministry of Transportation (Aviation) of the Federal Republic of Nigeria and the Ministry of Commerce of the Peoples Republic of China” and a “Memorandum of Understanding Between the Federal Republic of Nigeria and the Government of the Peoples Republic of China on Scientific and Technological Cooperation”.

A “Mandate Letter Between the Industrial and Commercial Bank of China and the Central Bank of Nigeria on Renminbi (RMB) Transactions was also signed. Meanwhile, President Muhammadu Buhari Tuesday in Beijing called on the Nigerian and Chinese business communities to work harder to reduce the trade imbalance between both countries which is currently in China’s favour. Speaking at the opening of a Nigeria-China Business/ Investment Forum, President Buhari said that trade and economic relations between both countries must be mutually-beneficial and conducted with reciprocated respect and trust.

A statement by Femi Adesina, Special Adviser to the President (Media & Publicity) quoted the President as saying “Although the Nigerian and Chinese business communities have recorded tremendous successes in bilateral trade, there is a large trade imbalance in favour of China as Chinese exports represent some 80 per cent of the total bilateral trade volumes. This gap needs to be reduced.

“Therefore, I would like to challenge the business communities in both countries to work together to reduce the trade imbalance. “You must also imbibe the spirit of having a mutually beneficial relationship in your business transactions. You must not see Nigeria as a consumer market alone, but as an investment destination where goods can be manufactured and consumed locally,” President Buhari told the gathering. The President said that his administration was committed to supporting investors that were ready to establish manufacturing and processing facilities in Nigeria.