Senate Reveals Buhari Got $28bn Loan Approved As Chinese Debt Threat Hangs Over Nigeria

Despite always claiming the lawmakers are not a rubber stamp, the Senate President, Ahmed Lawan revealed that about $28 billion foreign loan requests made by President Muhammadu Buhari had been approved by the Upper chamber in one year. Lawan made this known despite the Chinese debt threat hanging over Nigeria's infrastructure.

While revealing the amount approved by the upper legislature, Lawan said the loans are not just approved, but projects the loans are requested for are scrutinised by the lawmakers. He stated that the Senate will track, monitor and supervise the application of the loans.

“We have approved foreign loans of about $28 billion in the last one year,” Lawan said, adding that, “We had ensured proper scrutiny for the desired projects and programmes of government, the conditions of the facilities; before approving such borrowing requests.

“The task ahead of us is to ensure tracking, monitoring and supervision of how the loans are applied. We must ensure that the target projects remain, and that there is value for money also.” Lawan made this known to mark one year since the ninth senate was inaugurated.

Is Nigeria's Debt A Time Bomb?

AllNews had reported that China will not be forgiving or canceling Nigeria's debt - which is between $3 billion to $20 billion - as preferred by the Nigerian government. With Nigeria's economic situation and revenue problem, Nigeria's backlog of debts owed to China might just be a ticking time bomb waiting to explode as most loans offered by China to countries are tied to Infrastructure as collateral.

It was reported that China usually seizes infrastructures of indebted countries owing the Asian country. China accounts for 10% of the $27 billion bilateral debt of Nigeria. This put China as the largest bilateral creditor of Nigeria. And with Nigeria having revenue problems, financing debt is expected to be an issue, although, the Finance Minister, Zainab Ahmed has continued to claim that Nigeria doesn't have a debt problem.

But according to the Director of Centre for Infrastructure Policy Regulation and Advancement (CIPRA), Lagos Business School, Dr Bongo Adi, Nigeria's debt situation shows that for every N1 made by the country, 96kobo is used to repay loan. Now, about 17 loans have been obtained by Nigeria from China for different capital projects. The loans from China will continue to be serviced by Nigeria until 2038.

So with such a repayment burden on Nigeria, the country's infrastructure is at risk. Nigeria has to learn from countries that China have threatened to overtake their infrastructure or have already overtaken its infrastructure. Sri Lankan lost its Magampura Mahinda Rajapaksa Port which was funded with a loan from Exim Bank of China after it defaulted. It was leased to the Chinese state-owned China Merchants Port Holdings Company Limited on a 99-year lease in 2017.

Also, Zambia and Rwanda are on the verge of losing state electricity company ZESCO and Port of Mombasa respectively, due to their inability to repay their debt. The countries are reportedly in talks on the debt situation.