Economy
Nigeria, other Africa debts to China not principal contributor to regions high debt—IMF
International Monetary Fund has said that five countries, Angola, Kenya, Zambia, Cameroon, and Nigeria mostly resource intensive, account for 55 percent of official bilateral debt to China. According to the IMF, “there is a correlation between the prevalence of bilateral trade and lending disbursements between China and the region’s countries, after controlling for GDP. But it is noteworthy that the debt owed to China has not been the principal contributor to the region’s public debt surge in the past 15 years. About half the region’s public debt is now domestic commercial borrowing with higher interest rates and shorter maturity. China’s FDI to sub-Saharan Africa has also increased significantly since 2006. The rise of China’s FDI flows was impressive, reaching about 23 per cent of annual FDI inflows or about $3 billion to the region in 2021.
“However, when compared with the size of investments from other parts of the world, the stock of Chinese investments as a share of the region’s total FDI is still relatively small, given its more recent accumulation—at about 4.4 percent in 2021 (Figure 3).4 Nonetheless, some resource-rich countries have seen relatively large inflows of Chinese FDI directed primarily toward construction and mining. Mounting evidence points to broadly positive effects of Chinese investments on the recipient country’s economic outcomes (Mandon and Woldemichael, 2022). …but recently, China’s economic engagements have cooled down… Following years of expansion, sub-Saharan Africa has seen a retrenchment of Chinese investment and lending since 2017. At the 2021 China-Africa Cooperation Forum, China announced its first cutback in financial support to Africa, from $60 billion to $40 billion over three years.
“Half of this reduction was due to a shift away from direct infrastructure financing toward more trade credit, possibly because of China’s political priorities and many African countries’ increased debt vulnerabilities. Chinese official total loan disbursements to sub- Saharan Africa have fallen precipitously, now representing about one-eighth of their peak value of 1.2 per cent of the region’s GDP in 2016. Similarly, total loan commitments (promised lending arrangements), which rose from 0.2 percent of the region’s GDP in 2005 to a peak of 1.7 percent in 2016, have also contracted dramatically to about 4 percent of their peak value. The decline is also evident in Chinese companies’ African construction gross revenues, which fell 30 percent from the peak of $53 billion in 2015, based on China-Africa Research Initiative data. Additionally, at the third Data on FDI are sourced from the United Nations Conference on Trade and Development.
“In contrast to the long-standing “go out” policy, the Chinese government announced plans to reduce overseas capital outflows in 2021. China-Africa Economic and Trade Expo in June 2023, about $10 billion of projects were signed (Africanews, 2023)—a 50 percent drop compared with 2019’s event, despite high-profile attendance.6 Chinese lending to sub-Saharan Africa has drawn considerable attention and criticism for imposing relatively harsh terms on debtors and using natural resources as collateral (Bräutigam, Huang, and Acker, 2020). Other concerns include the lack of standardization and transparency in public debt because Chinese lenders do not systematically document loans to individual overseas borrowers, leading to significant data gaps. In this context, China provides some official loans on concessional terms, accounting for less than 10 percent of total bilateral loans received by sub-Saharan Africa from China at the end of 2020, based on the World Bank’s International Debt Statistics data. The share of the region’s total external debt-service cost attributable to China’s official bilateral loans is 12 percent as of 2019, based on International Debt Statistics data.
“Moreover, sub-Saharan African countries that are either in debt distress or at high risk of debt distress account for about 40 percent of the total public debt stock to China at the end of 2020. China has been a key player in recent debt restructuring and negotiations (unlike in negotiations leading to the Heavily Indebted Poor Countries Initiative, during which Chinese lending to low-income countries was minimal). It also contributed to the Debt Service Suspension Initiative, providing 63 per cent of suspensions in 2020 and 2021, though owning just 30 per cent of the claims (Bräutigam and others, 2023). But so far, however, debt restructuring for some countries (including under the Group of Twenty Common Framework) has been slow and challenging because of several factors, such as many different debt instruments and a more diverse creditor base (including China), which requires adaptation and coordination. The recent preliminary agreement between Zambia and its official creditors (notably including China) to restructure its external debt is a promising sign for future resolutions in other countries”.
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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