China gets major Nigeria rail project back on track by granting key loan

Chinese state lenders had pulled the plug on the Kaduna-Kano project in 2020, but have greenlit new financing on commercial terms

Workers from a Chinese construction group called Chinese Construction and Civil Engineering Construction Company (CCECC) had attended a ground breaking ceremony for the Lagos-Ibadan railway in Nigeria in 2017.

The line is one of several rail projects China has funded in the country over recent years.
With the Chinese state lenders approving a loan for a key segment of a new cross-country rail project in Nigeria, it appears this is a deal that appears to reflect China’s increasingly pragmatic approach to development financing in Africa.

China Development Bank, a major policy bank, announced on Tuesday that it would grant an initial €245 million (US$253.7 million) tranche of funding for the Kaduna-Kano rail project, which is part of a larger rail corridor linking Nigeria from north to south.

The deal was announced during Chinese foreign minister Wang Yi’s visit to four African nations this week, which has seen China make renewed pledges to up its investment in the region.

“China has become an important driving force for global connectivity,” foreign ministry spokesman Guo Jiakun told a media briefing on Wednesday, citing a variety of cross-border rail projects China helped build.

But the financing agreement also signals China’s growing caution toward large-scale infrastructure construction in the developing world, as Beijing shifts its lending strategy toward “small yet smart” projects.

The Kaduna-Kano railway – a 203km (126-mile) line connecting Nigeria’s northern state of Kaduna with its second-largest city, Kano – has an estimated total cost of US$1.2 billion, with China providing 85 per cent of the financing and the Nigerian government committing the rest.

According to a local source with knowledge of the project, the new line is designed to connect two previous Chinese-backed rail projects in Nigeria: one linking the capital city, Abuja, with Kaduna, and another running between the country’s largest city, Lagos, and its third-largest city, Ibadan.

Culled from Southern China Morning Post