Your Nigerian Economist

Your Nigerian Economist

Inclusive growth lies at the heart of Nigeria's development. From macroeconomic policies to energy resources; trade to development topics, Your Nigerian Economist engages the citizenry in discussing relevant economic issues and proffers solutions towards a fairer, more developed economy.

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China and Nigeria: Loans or Economic Colonialism?

Mma Amara Ekeruche

Mma Amara Ekeruche

Amara works as a Research Associate at the Centre for the Study of the Economies of Africa (CSEA). She holds a BA (first class) in Economics from Kwame Nkrumah University of Science and Technology, Ghana and an MSc in Economic Policy from University College London.

President John Adams, an American Founding Father, made a strong assertion in 1826, “There are two ways to conquer and enslave a nation- One is by the sword and the other is by debt''. Nearly two centuries later, there are rumours that China may take over ZESCO, Zambia’s electricity utility company, after taking ownership of Sri Lanka’s Hambantota port earlier in the year as both countries face a debt crisis. This “China takeover” has raised scepticism on China-Nigeria economic relations, particularly our rising indebtedness to the Chinese. 

Since 2000, Nigeria has borrowed about $4.83 billion from China, promoting them to the status of Nigeria’s largest bilateral financing partner - at present, 8.5% of the country’s external loans are from China. Although most of this borrowing is done through China’s Export-Import (Exim) Bank, which offers concessionary loans at low-interest rates and with long maturity periods, Nigeria’s debt servicing capacity is already significantly compromised. Currently, 60 of every 100 naira generated by the Government goes towards servicing debt, with interest payments exceeding capital spending since 2014. However, Your Nigerian Economist reckons that the unsustainability of servicing Chinese debt (and debt in general) is not the only serious concern- their strict terms, style of borrowing, and lack of transparency should be pondered on. 

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