It’s Raining Chinese Loans. Nigeria Secure $4.5B Agric loan. China is giving Nigeria, a loan to the tune of $4.5billion to buy appropriate farming tools to boost local agriculture. The tools include: tractors, bulldozers, graders, irrigation pumps and so on.
Chief Audu Ogbeh, the Minister of Agriculture and Governor Abdulaziz Yari of Zamfara state made the announcement on Tuesday, April 4. Ogbeh said: “We came to brief the President on developments following our visit to China in April last year and our negotiations on a number of issues to deal with machineries for agricultural development.
“We signed an agreement which engages all the states including FCT from the Federal Ministry of Agriculture for the procurement of strategic machinery for rural development and agriculture. Tractors, bulldozers, graders, irrigation pumps, tarsiers and so on from China.
The Chinese were willing to supply us these things for a long term basis, 20 years credit at an interest rate of 1 percent per annum. “A committee has been working on the matter and we are close to sorting out all the small details and that is why we came to see the President. “Of all the partners we have, the Chinese have shown the willingness to see us out of our problems, because about 30 years ago they were in the same situation.
“They see us as people in the same circumstances that they were then and they are willing to help us get out of it and we appreciate it, the president does.” Speaking on the response of the president, the minister said: “The President responded well. He asked us to get in touch with the Ministry of Budget and Planning, Finance and CBN to sort out all the technical details and move on with it.
” Yari said: “They are giving us a credit line of $4.5billion which will cover the machineries and infrastructure that is rural earth dams, irrigation and the loan has a 20 years repayment term with 5 years moratorium.
“Initially we started negotiations to drop a counterpart funding of 25%, but understanding the economy of Nigereria, we negotiated to give a counterpart funding of 10 percent which we believe Nigeria can do and we are targeting the natural resources fund fro the counterpart funding.
“We are now speaking with the Chinese group and the Nigerian governors and the technical committee that was set up by the minister and the ministry of agriculture and rural development. “So we have now come to a stage where the President needs to come in so that he can give us a leadership role and a kind of approval of a certain level so that we can forge ahead.
“This government has said they will diversify the economy to agriculture and the only way that this can succeed is through agric mechanisation.” In conclusion, the Zamfara governor said: “The president has given us his commitment and also asked us to engage the minister of finance, budget and national planning and the CBN to conclude and then the minister of agric will make presentation to council, then to the national assembly for final approval.
It’s raining Chinese loans not just in Nigeria, but in several other African countries. Chinese finance often goes to large-scale infrastructure projects, with a particular focus on hydropower generation and railways. More than 35 African countries are engaging with China on infrastructure finance deals, with the biggest recipients being Nigeria, Angola, Sudan, and Ethiopia.
The finance is channeled primarily through the China Export-Import (Ex-Im) Bank on terms that are marginally concessional. Given the export promotion rationale, the tying of financial support to the participation of Chinese contractors is a typical feature. A large share has gone to countries that are not beneficiaries of recent debt relief initiatives.
In some cases, infrastructure finance is packaged with natural resource development, making use of a mechanism known as the “Angola mode.” Chinese finance is on a scale large enough to make a material contribution toward meeting Africa’s vast infrastructure needs. As such, it offers an important development opportunity for the region.