China is said to have offered Nigeria a loan worth $6 billion to help fund infrastructure projects. President Buhari is currently on a visit to China in part to help solicit funding for its N6 trillion budget which it needs to finance with foreign debts of about N900b ($4.5b using exchange rate of N200/$1).
According to Media Reports, the deal does not necessarily mean that China will credit Nigerian banks with the money, rather it will be tied to specific projects and will only released when it’s time to cash back the projects.
“It is a credit that is on the table as soon as we identify the projects,” “It won’t need an agreement to be signed. It is just to identify the projects and we access it”….Nigerian Foreign Affairs Minister Geoffrey Onyeama .
It was also reported that Nigeria and China signed a currency swap deal which means rather than pay for imports from China in Yuan, Nigeria can swap that for its equivalent in Naira when the Chinese import things from Nigeria.
“It means that the renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,” Lin Songtian, director general of the Chinese foreign ministry’s African affairs department
China is about the 22nd country President Buhari has visited as a junkets the whole world every month since he came into power. Despite his travels, the economy has been in shambles since he took over with inflation hitting a near 4 year high and GDP growth rate falling. The government is also yet to pass its 2016 Budget.