Buhari Approves Borrowing from World Bank, China

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•Nigeria-China trade volume drops to $15bn
Crusoe Osagie and Obinna Chima with agency report
President Muhammadu Buhari has approved plans for external borrowing from the World Bank, China and Japan.

Nigeria will take on debt from institutions including the World Bank, African Development Bank, Japan International Cooperation Agency and Export-Import Bank of China, Bloomberg quoted the presidency to have revealed on twitter.

This will include “low-cost, long-term” loans with interest rates of 1.25 percent and maturities of 20 years, according to the tweets. Details of a Eurobond will be announced “in due course.” The government is now waiting for lawmakers to approve the plans, the presidency said.

President Buhari announced a record N6.1 trillion ($19.4 billion) spending plan this year to try and stimulate the economy, which contracted in the first two quarters as oil revenue plunged. He said he expected the government to raise about $5 billion from the Eurobond market and multilateral and bilateral lenders.

The Debt Management Office last month asked banks to place bids by September 19 if they wished to manage a $1 billion Eurobond sale. Finance Minister, Kemi Adeosun told bond investors in London in June that Nigeria was close to securing around $3 billion of funding from the World Bank and African Development Bank.

Nigeria, which vies with South Africa as the continent’s biggest economy, has issued dollar bonds twice, the last time in 2013. Yields on its $500 million of securities due in July 2023 fell 11 basis points to 6.24 percent in Lagos, their lowest level since June 2015 and down more than 300 basis points since hitting a record 9.4 per cent on January 18.

Meanwhile, the volume of trade between Nigeria and China has been estimated to be about $15 billion in 2015, a figure the Chinese Consulate General, Chao Xiaoliang, said has dwindled over the last nine months.

According to Xiaoliang, the reason for the decline is the current harsh economic situation in Nigeria, adding that going forward, China is planning to use the just concluded G20 Hangzho summit to seek fresh investment opportunities in Nigeria and Africa at large.

He noted that the trade volume between both countries stood at $18.1billion in 2014, but dipped lower the following year which he said was due to the sluggish world economy.

The new Chinese Consulate during his first interactive session with journalists in Lagos, however stated that Nigeria and other African countries stand to benefit from the G20 summit, saying that China has launched a cooperation initiative to support industrialisation of Africa and the Least Developed Countries (LCDs).

He also added that China has promoted G20 member states to conduct cooperation to help LCDs accelerate their industrialisation through capacity building, increasing investment, improving infrastructure to achieve their poverty alleviation and sustainable development goals.

“China attaches great importance to develop sound relations with African countries based on mutually beneficial cooperation and common development. A prosperous and stable Africa also serves the interests of China as well as the whole world,” he said.

He said Africa and the LCDs are in urgent need of speeding up the process of industrilisation and improving self-development capability.

He said Nigeria being the biggest economy in Africa is faced with the current challenge of falling price of oil and commodity, maintaining that the G20 summit is of reference significance and would provide some opportunities for Nigeria to tackle its economic challenges.

In his words, “In G20 initiative on supporting industrilisation in Africa and LDCs, it recommends that the G20 group of leading economies promotes inclusive and sustainable structural transformation and industrialisation in Africa and LDCs through knowledge-sharing platforms for peer-to-peer learning; the sharing of best practices; policies; measures and guiding tools; multi-stakeholder discussions; calls for the G20 to support agriculture and agribusiness development.”

“We are also looking at deepening, broadening and updating the local knowledge base to encourage industrilisation through trade and deeper regional integration and also to promote the new industrial revolution,” he said.

He stated that China as a trustworthy partner of Africa, will keep its promise made in G20 summit and would always be ready to offer its assistance to and further strengthen China’s mutual beneficial cooperation with Nigeria and other African countries.

“The G20 summit has successfully concluded, and the legacy it has left will benefit the world for a long time. The summit will be a fresh starting point for the G20 to embark on a new journey. The Chinese government will take the summit as an opportunity to upgrade the cooperation and relations with African countries. I will work with my colleagues to help the Nigerian government and people enjoy the benefits of the G20 summit,” he assured.