10 July 2013 – Nigeria is to source some of the estimated US$10 billion a year it requires to improve infrastructure such as electricity and roads from China. China has agreed to provide US$3 billion in loans at a low interest rate to be paid back over 15 to 20 years.
Between 2005 and 2012 Nigeria has been the top destination in Africa for investments that are individually worth over US$100 million apiece by Chinese companies, totalling 15 deals worth almost US$26 billion. Chinese investment in Nigeria includes the US$7.8 acquisition of Addax Petroleum, a further US$2.3 billion investment in the country’s oil and gas sector and about US$5.4 billion in roads, rail, coal power and hydro power in the country.
While the US is offering US$7 billion to help Africa with electricity shortages, China has promised US$20 million the continent in loans, though not all focused on electricity. China has made numerous cheap loans in the past few years to countries in Africa, a continent which supplies it with oil and raw materials like copper and uranium.
The Chinese loans to Nigeria include over US$700 million to build a hydroelectric power plant in Niger state. Lending at below market rates to fund infrastructure projects using Chinese firms has enabled Beijing to cement relationships in Africa while subsidising its construction industry.
A Nigerian delegation that travelled to China on the 7th of July among other things went to discuss China’s interest in oil from Nigeria, an OPEC member and Africa’s top producer. With the discovery of shale oil and gas in the United States, Nigeria is losing its biggest customer and looking for new buyers.