On Tuesday, the Nigerian Foreign Minister, Geoffrey Onyema, announced that China has offered Nigeria a loan of about $6 billion Naira to fund infrastructure projects. To many Nigerians, this is good news considering the fact that the government stated that there is no money to fund its budget deficit.
Nigeria is one of the worst hit countries due to the fall in global oil prices. The country’s foreign reserves have been depleted severely and import revenue has fallen drastically as the country is 75 percent dependent on oil as its source of revenue. Since the fall in oil prices, the country has been grappling with several economic issues; its currency, the Naira, has depreciated to an almost all-time low while the prices of goods in the country have also increased. Many fear that the country may be headed towards the same path as Zimbabwe since the government has been adamant on not devaluing the Naira.
Despite the current economic crisis, the president is travelling around the world to seek for ‘assistance’ from other countries and many analysts have stated that this could be risky for the country. Several Nigerians have complained about his frequent trips, which they believe, cost too much and the money could be used to take care of certain problems in the country instead.
Following the recent announcement on the loan from China, here is why Nigerians should not be excited, yet:
According to Geoffrey Onyema, this is credit that is available as soon as Nigeria identifies the projects it would like to embark on.
Does this mean the Nigerian president travelled to China to sign for a credit facility without identifying projects? Does this mean that since the ministers assumed office in November 2015, they have been unable to create plans for projects that need to be carried out? Is the budget for decoration until it is approved?
Another quote from Geoffrey Onyema reads:
“It won’t need an agreement to be signed; it is just to identify the projects and we access it.”
In other words, Nigeria would have access to this loan without knowing what is at stake. This means that Nigeria signed for a credit facility without knowing the terms and conditions of the loan. According to several experts, the country does not need to take a credit facility at this time of “perfect storm” except it is a concessionary loan.
Nigerians should be worried and not excited about this credit facility, especially at a time when details of both Buhari’s agenda and the Chinese remain unclear.
