China has offered Nigeria a loan worth $6 billion to fund infrastructure projects, the Foreign Minister, Mr. Geoffrey Onyeama, told reporters yesterday after President Muhammadu Buhari met with Chinese President, Xi Jinping. “It is a credit that is on the table as soon as we identify the projects.
It won’t need an agreement to be signed. It is just to identify the projects and we access it,” he was quoted by Reuters. There was no immediate comment from China. The announcement came as both countries signed a currency swap deal to boost trade.
Nigeria has been in talks with China on an infrastructure loan for months. Director General of the Chinese Foreign Min-istry’s African Affairs Department, Lin Songtian, 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 the Central Bank of Nigeria (CBN) 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. The CBN has said it plans to diversify its foreign exchange reserves away from the dollar by switching some into yuan.
It converted up to one-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.
Lin further said that ICBC agreed to a $2 billion loan to Dangote, the company owned by Africa’s richest man, Aliko Dangote, to fund two cement plants. 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. At the Forum on China- Africa Cooperation (FOCAC) held in Johannesburg last December, the Chinese President announced that China would assist African states with loans to the tune of $60 billion.
The funding support will include $5 billion of grants in zero interest loans and $35 billion in preferential facility and export credit loans and concessional loans. Also, the Chinese government has promised to offer the Federal Government $15 million to revive the nation’s agricultural sector. President Jinping disclosed this yesterday in Beijing after talks between Nigerian delegation and high-ranking Chinese government officials.
He said the decision was in line with the desire to make Nigeria self-sufficient in food production. In this regard, the amount is for the establishment of 50 Agricultural Demonstration Farms across the country. Buhari, after the bilateral talks, directed that technical committees be immediately established to finalise discussions on new joint Nigeria/China rail, power, manufacturing, agricultural and solid mineral projects.
The technical committees are to conclude their assignments before the end of next month. Buhari had, at the talks, welcomed China’s readiness to assist Nigeria in her bid to rapidly industrialise 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. 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 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, Buhari and 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 Buhari has called on the Nigerian and Chinese business communities to work hard to reduce the trade imbalance between both countries, which is currently in China’s favour.
The president also challenged Chinese firms to see Nigeria beyond a consumer nation and begin to establish factories in the country to produce goods locally. Buhari spoke yesterday in Beijing, China during the opening of a Nigeria- China Business/Investment Forum. He is currently on a working visit to China.
He said the wide trade imbalance between the two countries, which was currently in favour of China, must be restructured to be mutually beneficial. His words: “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.” Business and trade relations between Nigeria and China have grown astronomically in the last decade with bilateral trade volumes rising from $2.8 billion in 2005 to $14.9 billion in 2015. Nigeria accounted for 8.3 per cent of the total trade volume between China and Africa and 42 per cent of the total trade volume between China and the Economic Community of West African States (ECOWAS) countries in 2015. Buhari said that trade and economic relations between both countries must be mutually beneficial and conducted with reciprocated respect and trust.
“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,” Buhari told the gathering.
The president noted that his administration was committed to supporting investors that were ready to establish manufacturing and processing facilities in Nigeria. “Already, our Federal Ministry of Industry, Trade and Investment is working on projects and programmes that will correct the wrongs of the past and enhance the ease of doing business in Nigeria. “The ministry’s efforts will be complemented by investment tax incentive programmes, public sector reform initiatives, as well as our zero tolerance stance on corruption.
“We also have an aggressive, but realistic infrastructure development programme that forms the backbone of our economic diversification policy. We are embarking on major power, road, rail, seaport and airport development programmes that will enhance the competitiveness of manufacturing businesses in Nigeria,” Buhari told the Chinese investors.
