Nigeria House of Representatives Motions to Review Chinese Lending, May Apply Force Majeure on Some Loans
On May 12, Nigeria’s House of Representatives passed a motion to establish a committee to investigate all Chinese lending to the West African country since 2000, as well as to apply force majeure rules, which could allow for some loans to be cancelled. The motion arrives amid discontent among Nigerian lawmakers over the non-transparency of Chinese loans and growing calls for Chinese development lenders to provide debt relief as the COVID-19 pandemic raises repayment difficulties. Under the motion, a House of Representatives committee will liaise with Nigeria’s Ministry of Finance to review the possibility of declaring force majeure on some Chinese loans, as well as establishing a new committee to investigate all lending since 2000 and determining the possibility of renegotiating them.
Despite the motion to review Chinese lending, there are indications that certain segments of the Nigerian political spectrum are still interested in accepting additional financial support from Beijing. On February 5, 2020, Nigerian Ministry of Finance Zainab Ahmed said that the country needs $17 billion in lending from China to fund infrastructure projects. She added,
“…the loan will help us to improve our electricity supply, reduce poverty, create jobs, ensure access to finance, agricultural productivity, guarantee food security, achieve high school enrollment, provide clean potable water, rehabilitate major roads, and develop the mining industry.”
Nigeria is the largest Belt and Road recipient of Chinese lending among African countries, according to public reports, receiving approximately $28 billion since 2013 according to data collected by RWR Advisory Group. In particular, the Export-Import Bank of China is Nigeria’s largest bilateral creditor, according to Representative Ben Igbakpa, who initiated the motion. Recent estimates suggest that there at least 17 Chinese loans to fund various projects in the country.
A significant proportion of Chinese lending to Nigeria has gone to financing the renovation of the national railway network. More recently, in October 2019, China Development Bank provided a $629 million loan for the construction of Lekki Port, which, when completed, will expand ship handling capacity in Lagos State, and, in April 2020, the port received a $221 million equity investment from China Harbor Engineering Corporation.