Chinese Loans, Rail Projects and All That, by Waheed Ogunjobi - THE BUSINESS PACKAGE


Saturday, June 26, 2021

Chinese Loans, Rail Projects and All That, by Waheed Ogunjobi

By: Waheed Ogunjobi

There have been hues and cries in different quarters about the huge indebtedness of the Nigerian nation to the Chinese government which in the last count stood at $2 billion dollars for the rail projects particularly. Most times, those who are raising the dusts  have deliberately left out the fact that it is an Infrastructural loan financing agreement which is targeted particularly at rail projects

Part of the hues was the controversy over the ceding or otherwise of sovereignty in the case of default. Again, those who are latching on this part of the argument haven't told us what happens if Nigeria does not default eventually and is able to pay pack the loans. No one is talking about the benefits that will accrue to the nation if everything about the Infrastructural loan agreement go  as planned. 

Truth is that, Nigerians have the penchant to pick a side of an argument that best suits their sentiments without giving the people the benefits of seeing the  other sides  and some of our people themselves whose mentalities are biasedly wired readily jump on the bandwagon of that arguments without necessarily doing a little bit of background checks. Those are just by the way.

The President Muhammadu Buhari administration in June inaugurated the $1.5 billion dollars 157 - Kilometers  Lagos -Ibadan Standard Gauge Railway project. The rail line is expected to enhance the movement of commuters and good within the economic corridor of Lagos and Ibadan and through that to other parts of the country. It had since commenced commercial operations full throttle. 

Without necessarily holding the brief for anyone, and weather anyone says it or not, despite the numerous shortcomings of the current administration in view of the prevailing circumstances,  President Muhammadu Buhari will go down in history as the President who conceived and delivered major railway projects within the life cycle of his administration especially since the return of democracy on 1999. . 

This is cheery considering the fact that Nigeria has a history of abandoned rail project.  For instance, the  Itakpe -Warri project was abandoned for almost 25 years until this government completed it. The Current administration has also completed the Abuja - Kaduna Standard Guage Rail as well as the Abuja Urban Light Rail project. The administration also embarked upon  a rail project that is to link Nigeria Jibia border town with Maradi in Niger Republic , which had sparked lots of controversies. 
Lagos is the commercial capital of Nigeria and Ibadan is one of the biggest city in Africa. The Lagos –Ibadan  railway was started in June 2017 and it is a good omen that exactly 4 years after in June 2021, it became operational.

Part of the key take away from the inauguration was the statement credited to President Buhari when he said "  The vital line establishes an end -to- end logistics supply chain in railway transport within its short corridor Lagos - Ibadan as goods to the hinterland would now be transported by rail directly from the Apapa port (Quayside) straight to the inland container Depot located in Ibadan from where it can be distributed to other parts of the country" . This is one of the hidden facts that many people do not see beyond the ferrying of passengers from Lagos to Ibadan.

Amaechi had explained the economic benefits of the railway extension to  Niger which had sparked lots of controversies this way ‘’ It’s important to take it to Niger because of economic reasons. Most coastal territories in Africa are competing better than us in terms of cargoes coming from not the hinterland, the landlocked countries’’

“We decided to join the market and compete so that we can make our seaports very viable. We decided to introduce the Kano-Maradi rail so that we can convey their goods from Maradi (a boundary village) to our ports with ease. I don’t know why people are screaming about it. It’s about economics, not politics’’
Obviously, yhe administration is yet to fully explore its plans on the rail lines as the Transport Minister had  further said, ‘’The Port Harcourt to Maiduguri rail  starts from Bonny, with a deep seaport approved by the President already but handled by a private firm, and then a rail line from Bonny to Port Harcourt – Aba- Umuahia – Enugu – Makurdi – Lafia – Jos – Kafanchan – Bauchi – Gombe – Damaturu, and Maiduguri, with a spur from Port Harcourt to Owerri. So what is left on that line would be Abakaliki and Awka.
Accordingly , he said: “Where we have about two seaports or river ports in Port Harcourt, you’ll be able to transport a lot of Iron Ore deposits from the North East through the Port Harcourt – Maiduguri rail. The completion of this project which we hope that if it doesn’t start this year, will start the first quarter of next year, the completion, will move cargo, create employment, create industrial development and it will grow the economy’’

The  current administration and its Chinese counterpart helping to fast-track the project despite the laudable initiative have been under a scathing criticism on the propriety or otherwise of the loan obtained to execute the project. Apparently to prove critics wrong, the Minister of Transportation, Rotimi Amaechi recently said the Federal government has repaid up to $ 150m out of the $2billion Chinese Loans borrowed for the rail construction and the loan repayment has a moratorium of 20 years at 2.8 per cent interest.  He also clarified that the administration of President Muhammadu Buhari only borrowed for the Kaduna- Abuja ($500m and the Lagos -Ibadan railways ($1.5 billion).

Instead of castigating the Chinese government and the Nigerian government, Nigerians should rather be thankful and focus on things that will make the project work, since they will still bear the brunt of its success or otherwise. Nigerians should demand first of all the full agreement entered with the Chinese on the project and as well periodic update  on the repayment. 

Going forward, part of the problems that may confront the new railway system is that of speed which could make people abandon its usage. There is also the need for better sensitisation on what having the train actually mean for the nation and her people. If the issue of cost benefit analysis in terms of cost chargeable per trip would also be a problem,  it should be properly worked out.

One thing that is observed however is that the administration has continued to pursue its plan on the railway expansion doggedly without necessarily getting bogged down by the negative comments. This is the hallmark of leadership. But by and large,  the administration need to give its programmes and policies on the rail modernisation project a human face, by stopping to think. First, they should weigh the economic benefits of the ones already executed before going headlong to secure a huge loan for another one. They should equally weigh the economic benefits of citing rail projects in a particular locations in the country. For instance, a report in the Sunday Tribune of 30th June 2019 captioned ‘’Abuja N 296 billion naira light rail project wasting away: Train running without passengers. The report said the 390 capacity project inaugurated by President Buhari in July 2018, for instance conveyed seven passengers from the city centre to Idu station. Signals like this cannot be totally  ignored!
Therefore, there is the need for the Federal Government to make due diligence work in the award of further contracts. Equally necessary is the need for the current government to put machineries in place to ensure that the ideal of the project is not jettisoned by subsequent administration  either through legislation or other means,  giving the reality that the current administration has just two years to bow out  and giving  our antecedents especially in the lack of continuity in project executions. 
However, going by the testimonies from commuters who are already savouring the new train experience, by and large, the Lagos-Ibadan railway for instance has been most welcome and there may be no reason to harbour the doubts  that such projects  have what it takes not only to be robust and successful, but also self-finance itself if properly managed.

Waheed Ogunjobi, a  Oublic Affairs Analyst writes from Abeokuta and can be reached through or 08035004741.

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