China Development Bank has released a $254.76 million loan to Nigeria for a railway project linking the two northern states of Kano and Kaduna.
The stated this on Wednesday ahead of a visit to the West African country by China’s top diplomat this week.
As part of his annual New Year tour of Africa, China’s Foreign Minister Wang Yi will arrive in Nigeria on Wednesday and meet President Bola Tinubu and senior government officials on Thursday, Nigeria’s foreign affairs ministry said.
Construction of the Kaduna-to-Kano rail project, which is expected to gulp $973 million, has been slowed by funding delays.
Nigeria’s transportation minister, Saidu Alkali had earlier admitted that securing funds from banks has been challenging, saying financial institutions perceive significant risk associated with railway projects and are hesitant to proceed with the loan arrangements.
Consequently, China was approached to help fund some of the railway projects.
Meanwhile, the China Development Bank said in a statement on its website that the loan would provide financial support for the smooth progress of the 203-kilometre (126-mile) standard-gauge railway.
“Once completed, it will provide direct rail connectivity between Kano, an important northern city in Nigeria, and the country’s capital Abuja, offering local residents a safe, efficient, and convenient mode of transportation,” the bank said.
Nigeria’s parliament first approved China’s Exim Bank as financier for the rail project in 2020 but the bank later withdrew.
The Kano-Kaduna railway project is part of China’s Belt and Road Initiative and is being constructed by China Civil Engineering Construction Corporation (CCECC)
Upon successful completion, the project is also expected to ease movement of people and goods in a region, where road travellers face attacks from armed gangs who kidnap for ransom.
China is among Nigeria’s largest bilateral lenders, providing loans for roads, rail and power stations.
The Nigerian government earlier announced that China China has committed to funding the Ibadan-Abuja and Kaduna-Kano sections of the Lagos-Kano railway under the Belt and Road Initiative.
According to Alkali, most of the ongoing rail projects were awarded under an EPC+F (Engineering, Procurement, Construction, and Financing) model.
This model requires 15% counterpart funding from the federal government, with the remaining 85% expected to be sourced through loans.
