Building railways and bridges in Africa are a key focus for Beijing, after senior diplomat for African affairs Wu Peng announced that China will support infrastructure development in Nigeria, while on a trip to the West African nation last month.
It is a sign that China is still committed to enhancing ties and financially backing growth in African nations. But observers have also said that a change in banks financing a major rail project in Nigeria points to China’s desire to commercialise its overseas lending.
Wu, the Chinese foreign ministry’s director general of African affairs, previously announced the signing of a finance agreement for the Kaduna-Kano railway, a landmark project in the Belt and Road Initiative in Nigeria.
It came after a promise in October by Chinese President Xi Jinping to finance and complete the Abuja-Kano and Port Harcourt-Maiduguri railway projects during a meeting with Nigerian Vice-President Kashim Shettima on the sidelines of the third Belt and Road Forum in Beijing.
China had agreed to provide 85 per cent financing for the construction of the two railway projects, while Nigeria was to pay the remaining 15 per cent. This money has since been earmarked by Nigeria for the project, according to Shettima’s office.
The funding was originally meant to come from state-owned policy bank China Eximbank, but it pulled the plug back in 2020, citing the Covid-19 pandemic and concerns about Nigeria’s ability to repay the loan.
But now the money is being provided by another state-owned policy bank, the China Development Bank (CDB). According to observers, this illustrates China’s wish for the commercialisation of overseas loan financing.
Previous estimates had put the total cost of the 203km (126-mile) Kaduna-Kano section of the line at US$1.2 billion. The Nigerian government committed US$380 million, with the revised cost to be borrowed set at US$973 million.