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World News | China’s Debt Trap Diplomacy Crashes Nigeria’s Economy

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Beijing [China]July 9 (ANI): China’s debt-trap diplomacy in Nigeria poses a serious threat to the country’s economy, as Beijing highlights its notorious loan facility to African nations for investments in projects ranging from infrastructure to agriculture.

According to the US media portal “Financial Post”, the reliance on Chinese loans will cause huge problems for the Nigerian economy, which has struggled to recover after falling into recession in 2019 and 2020.

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The Export-Import Bank of China provides huge debt service for the African country. It is estimated that in 2021, the Nepalese government has paid about US$210 million to the Export-Import Bank of China to repay loans for various projects including airport terminals, communication systems, water and electricity distribution, railways, etc.

Even after clearing the huge sum, Nigeria still owes China about $3.67 billion. It is evident from some research reports that Nigeria appears to be stuck with Chinese debt.

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Nigeria still needs three years to repay billions of dollars in loans owed to China, according to a research report. According to the media portal, only Abuja does not seek further loans from Beijing.

Nigeria has difficulty getting funding from the World Bank or the African Development Bank, which is one of the reasons Nigeria has turned to China for loans. However, these Chinese loans have many disadvantages.

Most of these loans have terms ranging from 5 to 20 years, with interest rates ranging from 2.5% to 3%. This duration is considered very high for funding another country. This is also a long gestation period for the development project.

China has taken advantage of Nigeria’s need for funding for infrastructure development by proposing hard commercial terms. Due to the country’s sluggish economy, Nigeria has obtained loans from China to invest in infrastructure projects, transportation sector, energy, agriculture, ICT, water projects, etc.

Nigeria already faces depleting foreign reserves and falling incomes. The country still faces a huge funding shortfall to bridge the infrastructure gap, so Abuja recently sought parliamentary approval for a $16 billion loan, of which about 78 percent ($12 billion) will come from China.

Economists have warned Nigeria that excessive borrowing from China and its increased reliance on external loans could adversely affect the country’s political and economic sovereignty.

In 2020, Congress also warned against sovereign clauses in Chinese loan agreements. There are also troubling allegations that China knowingly surreptitiously sponsors Nigerian presidential candidates. (ANI)

(This is an unedited and auto-generated story from the Syndicated News feed, the body of the content may not have been modified or edited by LatestLY staff)



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