Amid Nigerian President, Muhammadu Buhari’s visit to Beijing, Foreign Minister Geoffrey Onyeama announced that China has offered Nigeria a $6 billion loan to pay for infrastructure projects. President Buhari aims to increase spending on public works projects as a means of kickstarting economic growth. Nigeria is facing its worst economic crisis in decades as low global oil prices continue to hit public finances in the crude-exporting country.

Meanwhile, Finance Minister Kemi Adeosun said on April 9 that she is forecasting a budget deficit of 2.2 trillion naira ($11 billion) in 2016, and stressed the need for fiscal discipline. The forecast comes amid increasingly negative economic indicators. Inflation, as measured by the National Bureau of Statistics (NBS), rose to 12.8% in March – its highest level in almost four years – from 11.4% in February. This is mainly as a result of higher food and gasoline prices coupled with restrictions on foreign currency movements. The NBS reported on March 22 that unemployment rose to 10.4% in the final quarter of 2015, up from 9.9% in the previous quarter. Meanwhile, the IMF has lowered its 2016 growth forecast for Nigeria by almost one percentage point to 2.3%.

A short term fix

The loan deal will ease some pressure on Buhari in the short term by allowing him to announce the start of construction and other infrastructure projects. Loans from the Chinese government are likely to command lower interest rates than those available from commercial lenders. Moreover, China is unlikely to demand the reforms and oversight that the World Bank or IMF typically impose as conditions for lending. The Chinese loan is likely to take the form of a credit line that can be accessed on a project by project basis.

Nonetheless, a devaluation of the naira versus the US dollar remains likely in 2016. The Chinese loan does not address the disparity between the official exchange rate of 197-199 naira to the dollar and the actual market rate of approximately 320 naira to the dollar. Financial markets remain convinced that the government will devalue the naira, and until it does investors will remain reluctant to commit money to Nigeria. Difficulties sourcing foreign exchange, and in some cases shortages of industrial and other goods as a result of foreign exchange restrictions, will continue to adversely impact businesses with operations in Nigeria.

The loan amount is larger than expected, putting Nigeria at risk of struggling to repay if the oil price falls further. Buhari is aware of the need to diversify sources of government income, and wants to broaden Nigeria’s tax base and expand its portfolio of export goods. These measures are likely to take years to generate significant additional government revenue, and infrastructure projects are themselves unlikely to generate sufficient income to finance loan repayments in the near term.

What to watch

The IMF and World Bank will hold their spring meetings in Washington, DC April 15-17, at which a Nigerian delegation will be present. The lenders are likely to use the forum to once again exert pressure on Nigeria to loosen or scrap currency controls. Separately, equity and fixed income index provider MSCI will decide by April 29 whether or not to remove Nigeria from its Frontier Markets Index as a result of Nigeria’s currency restrictions. If MSCI expels Nigeria it would be the third such instance, following moves by J.P. Morgan and Barclays, and would add to mounting negative sentiment towards Nigeria among global investors.

The government is likely to come under intense scrutiny from civil society groups and political opponents to ensure that the money is spent on the projects for which it is intended. Nigeria has a poor record when it comes to efficiently deploying funds to build infrastructure. and money is often lost to recurrent spending, inflated salaries, over-invoicing, procurement scams and other methods of theft. Eliminating – or at least limiting – inefficiency and corruption from public works projects will be key if the government’s deal with China is to deliver on economic growth.

All of a sudden the west are interested in nothing but Nigeria - I smell a rat!

Forbes got it all mixed up.
-First of all it's not a loan, but it's an investment. Both parties are doing business together.

-Secondly, it's not $2 billion, but it's $6 billion investment package, and the various items and projects for which this cash would be spent on is properly highlighted.

So Nigerians, should we rather sit on the fence and do nothing waiting for manna to fall from above? No, half bread is better than not.


We must do something now.

This article is a mess!
It is a mumbo jumbo of contradictions & the scary sensationalist headline is an aberration!!

Moreover, China is unlikely to demand the reforms and oversight that the World Bank or IMF typically impose as conditions for lending. The Chinese loan is likely to take the form of a credit line that can be accessed on a project by project basis.

We are not skilled at management, a "need & access" basis works so much better than unfettered & unregulated access!

Make owo no wo igbo..

The IMF and World Bank will hold their spring meetings in Washington, DC April 15-17, at which a Nigerian delegation will be present. The lenders are likely to use the forum to once again exert pressure on Nigeria to loosen or scrap currency controls.

IMF is too "concerned" about Nigeria! Omnious!

f MSCI expels Nigeria it would be the third such instance, following moves by J.P. Morgan and Barclays, and would add to mounting negative sentiment towards Nigeria among global investors.

Global investors? Rent seekers & portfolio investors are not the kinds we need...

The buy low, sell high speculators are the kinds IMF is planning to foist on us.

Investors in the real & tangible sector aren't so hot under the collar because they know they'll recoup their investments.

Infrastructures pay for themselves...Fares, fees ,tolls...

Nigeria has a poor record when it comes to efficiently deploying funds to build infrastructure. and money is often lost to recurrent spending, inflated salaries, over-invoicing, procurement scams and other methods of theft. Eliminating – or at least limiting – inefficiency and corruption from public works projects will be key if the government’s deal with China is to deliver on economic growth.

This is where we must follow government bumper to bumper...

No prodigal children kind of merrymaking.

The last paragraph is the Coco of the whole story. Eliminate waste and stealing in capital expenditure and the economy would kick start itself.

Also a point to note is that the money from China would be accessed on a project to project basis which means if PMB is serious, he can deliver the 2nd Niger bridge, improve our railways and power.
The ball is in your court Mr President.

hackactigist:
.
The government is likely to come under intense scrutiny from civil society groups and political opponents to ensure that the money is spent on the projects for which it is intended. Nigeria has a poor record when it comes to efficiently deploying funds to build infrastructure. and money is often lost to recurrent spending, inflated salaries, over-invoicing, procurement scams and other methods of theft. Eliminating – or at least limiting – inefficiency and corruption from public works projects will be key if the government’s deal with China is to deliver on economic growth.

If this GEJ had Taken Such a Loan, all Hell Would have Broken Loose, but these Broom Weaving Demonic people feel they can Do and Undo. This space will not be enough to list all the Pains that Nigerians are now going through since they assumed Office, Judgment Day is Coming.

nigeria is a failed state

divinehand2003:
Forbes got it all mixed up.
-First of all it's not a loan, but it's an investment. Both parties are doing business together.

-Secondly, it's not $2 billion, but it's $6 billion investment package, and the various items and projects for which this cash would be spent on is properly highlighted.

So Nigerians, should we rather sit on the fence and do nothing waiting for manna to fall from above? No, half bread is better than not.

We must do something now.

Dnt mind them.

That was a sponsored article from PDP.

They have no understanding of what the China deal is about.

Anything the Bubu does is wrong.

If the loan is well utilised, we will rejoice at the end.

Zombies won't believe this report. I am still shocked despite a critical analysis of the doom ahead some persons keep defending Buhari instead of seeing the message Forbes is trying to communicate.

On point!

divinehand2003:
Forbes got it all mixed up.
-First of all it's not a loan, but it's an investment. Both parties are doing business together.

-Secondly, it's not $2 billion, but it's $6 billion investment package, and the various items and projects for which this cash would be spent on is properly highlighted.

So Nigerians, should we rather sit on the fence and do nothing waiting for manna to fall from above? No, half bread is better than not.


We must do something now.

Forbes is a western memedia outlet. What do u expect

AntiWailer:


Dnt mind them.

That was a sponsored article from PDP.

They have no understanding of what the China deal is about.

Anyone wey like sponsor anything, the deal is done,

What's imperative now is that all goes well..

Lalasticlala, mynd44 , looks like this "hatchet" has a "credible link" problem...

Cc. Aresa , TheV0ice

Jirate:
If this GEJ had Taken Such a Loan, all Hell Would have Broken Loose, but these Broom Weaving Demonic people feel they can Do and Undo. This space will not be enough to list all the Pains that Nigerians are now going through since they assumed Office, Judgment Day is Coming.

Try and be reading news sometimes. Your GEJ already took $2.084Billion that he couldn't account for.

http://www.vanguardngr.com/2015/08/my-1bn-china-exim-bank-story-by-okonjo-iweala/

If he was here, he would have taken more.......and given to Dasuki to share as usual.

divinehand2003:
Forbes got it all mixed up.
-First of all it's not a loan, but it's an investment. Both parties are doing business together.

-Secondly, it's not $2 billion, but it's $6 billion investment package, and the various items and projects for which this cash would be spent on is properly highlighted.

So Nigerians, should we rather sit on the fence and do nothing waiting for manna to fall from above? No, half bread is better than not.


We must do something now.

A. It is not entirely an investment. Some like the prepaid meters and ultra-high storey building deals are investments that the Chinese will make profits from the sale of meters and spaces respectively. Others like the Abuja-Kano-Lagos expressway are credit lines that Nigeria would have to pay back in due course because China cannot just dash us $1b (cost of the project) like that, especially when there is no tolling.

B. The article said $6b. You did not read the article and you jumped to comment.

C. The point is not if half bread is better than none, it is that we are getting palm kernel when we need bread. Nigeria has a deficit of $11b (N2.2t) in our 2016 budget. The projects and the salaries there need cash. If China is not giving us cash loan and IMF is not giving us cash loan, then we are very screwed. Our only option is treasury bills/bonds, but Nigeria cannot raise any significant amount from issuing bills/bonds because we have lost our J.P Morgan and Stanley ratings and will soon lose MCPI rating.

Investments are not substitutes of cash loans. They are meant to be additions.

Dangote went to China and got $2b cash loan. Buhari went there and got $0 cash loan and $6b worth of verbal investments. The same China made investment commitments under GEJ to build three refineries to the tune of $23b. Where are the refineries today? And we know that GEJ was closer to China than Buhari.

We should realize that some of those investments will not materialize. One thing I am sure about is that had GEJ gone to China for cash loan, he would have gotten it. Buhari went to negotiate loan without his finance minister, this is the result.

Buhari and Nigeria is bleeped. Let him pray Oil rises to $60, if not Nigeria will fall into recession.

-Lord

There's no doom that's stated here as far as I'm concerned, the article never pointed out any danger that may arise from taking the loans.
As regards mismanagement of the funds, there's nothing to fear due to two reasons, firstly the fund will be accessed on project to project basis so it's not like there's one money that someone can take from or divert, secondly is that buhari is not likely going to allow people mess around with such money if at all it's available.
Lastly, I want to ask, what do we stand to gain from devaluation of the naira, I really need a lecture on this cos most people I've asked seem not to understand the details too

PRYCE:
On point!

TPAND:
Zombies won't believe this report. I am still shocked despite a critical analysis of the doom ahead some persons keep defending Buhari instead of seeing the message Forbes is trying to communicate.

Madam NOI claimed she got $2.084B loan from the same China. Were you in Zombie land that you were too dumb to speak out?

http://www.vanguardngr.com/2015/08/my-1bn-china-exim-bank-story-by-okonjo-iweala/

Do you prefer we take the IMF loan instead with attendant cuts in social services, civil service jobs, wage reduction, devaluation or wait for your heroes to return what they've stolen as falana advised?

divinehand2003:
Forbes got it all mixed up.
[s]-First of all it's not a loan, but it's an investment. Both parties are doing business together.

-Secondly, it's not $2 billion, but it's $6 billion investment package, and the various items and projects for which this cash would be spent on is properly highlighted.

So Nigerians, should we rather sit on the fence and do nothing waiting for manna to fall from above? No, half bread is better than not.


We must do something now[/s].

China has offered Nigeria a $6 billion loan to fund infrastructure projects, the Minister of Foreign Affairs, Mr. Geoffrey Onyema, said yesterday in Beijing the Chinese capital.
Nigeria is facing its worst economic crisis in decades as sinking oil prices eat into its foreign reserves and the naira weakens against other currencies.

Nigeria has been for months looking for sources to help plug a projected 2016 deficit of N2.2 trillion ($11.1 billion) as Buhari plans to triple capital spending in the 2016 fiscal year.

According to Reuters, during Buhari’s visit to Beijing, the Industrial and Commercial Bank of China Ltd (ICBC), the world’s biggest lender, and Nigeria’s central bank signed a deal on yuan transactions.
“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 African Affairs Department of China’s foreign ministry, told reporters.

The agreement was reached following a meeting between Buhari and Chinese President Xi Jinping.

What do u tink

LoL... Ipob forbes branch according to Yoruba's

I think Lordadam has analysis it.

Go through it wit a fair mind and u'll see china want to benefit through it.

Imagine them increasing the invisible to $6b; why? They Will over-benefit thru it nd their loan will still be paid.

LordAdam:

A. It is not entirely an investment. Some like the prepaid meters and ultra-high storey building deals are investments that the Chinese will make profits from the sale of meters and spaces respectively. Others like the Abuja-Kano-Lagos expressway are credit lines that Nigeria would have to pay back in due course because China cannot just dash us $1b (cost of the project) like that, especially when there is no tolling.
B. The article said $6b. You did not read the article and you jumped to comment.
C. The point is not if half bread is better than none, it is that we are getting palm kernel when we need bread. Nigeria has a deficit of $11b (N2.2t) in our 2016 budget. The projects and the salaries there need cash. If China is not giving us cash loan and IMF is not giving us cash loan, then we are very screwed. Our only option is treasury bills/bonds, but Nigeria cannot raise any significant amount from issuing bills/bonds because we have lost our J.P Morgan and Stanley ratings and will soon lose MCPI rating.
Investments are not substitutes of cash loans. They are meant to be additions.
Dangote went to China and got $2b cash loan. Buhari went there and got $0 cash loan and $6b worth of verbal investments. The same China made investment commitments under GEJ to build three refineries to the tune of $23b. Where are the refineries today? And we know that GEJ was closer to China than Buhari.
We should realize that some of those investments will not materialize. One thing I am sure about is that had GEJ gone to China for cash loan, he would have gotten it. Buhari went to negotiate loan without his finance minister, this is the result.
Buhari and Nigeria is bleeped. Let him pray Oil rises to $60, if not Nigeria will fall into recession.
-Lord

I think Lordadam has analysis it.

Go through it wit a fair mind and u'll see china want to benefit through it.

Imagine them increasing the invisible to $6b; why? They Will over-benefit thru it nd their loan will still be paid.

and so begins the attack on the integrity of the country by the west.

why are they all of a sudden so concerned and worried about who we are taking a loan from?

let's me guess, it because it's China right?

the agitation of the IMF is highly suspect. a lot of Wailers who weren't born during the Babangida era when he was deceived by these same Western agents to initiate SAP which sapped all our energy as a country will come here and start spewing rubbish.

How has American indebtedness to China put America at risk?

What has been the benefit of IMF to us that the deal with the Chinese will be worse than?

The useless western media and agents of IMF should tell us that first.

The whole world know that you can only ignore China at your peril. Even UK had to go and cut a deal with the Chinese 2years ago.

Did the deal also put UK at risk?

Buhari and his team could not even manage conflicting reports falling out from the Chinese visit, budget padding and fulani onslaught yet, they promise to deliver change? I'm even doubting that seun is human as a result of this administration.

AZeD1:
The last paragraph is the Coco of the whole story. Eliminate waste and stealing in capital expenditure and the economy would kick start itself.

Also a point to note is that the money from China would be accessed on a project to project basis which means if PMB is serious, he can deliver the 2nd Niger bridge, improve our railways and power.
The ball is in your court Mr President.

I'm sorry to highlight that the 2nd Niger bridfge is not listed in the immediate expenditure

Chubhie:
Buhari and his team could not even manage conflicting reports falling out from the Chinese visit, budget padding and fulani onslaught yet, they promise to deliver change? I'm even doubting that seun is human as a result of this administration.

I tell you the communication dept of the govt should score less than zero.

sweetgala:


I'm sorry to highlight that the 2nd Niger bridfge is not listed in the immediate expenditure

It is part of this year's expenditure. The chairman of the sovereign wealth fund talked about it a month ago.

http://allafrica.com/stories/201604040641.html

theV0ice:


I tell you the communication dept of the govt should score less than zero.

How they succeeded in organising and deploying the most diabolos propaganda during the elections baffles me if they can't even manage basic government information.

Chubhie:

How they succeeded in organising and deploying the most diabolos propaganda during the elections baffles me if they can't even manage basic government information.

Actually opposition propaganda is easier than govt. Its the same with PDP now. PDP is in opposition and doing a better job of the information war because the underdog will always enjoy the sympathy of most neutrals. APC enjoyed it then.

Its like a football match of equally matched opponents. The one that just conceded will be more aggressive about an equaliser.

divinehand2003:
Forbes got it all mixed up.
-First of all it's not a loan, but it's an investment. Both parties are doing business together.

-Secondly, it's not $2 billion, but it's $6 billion investment package, and the various items and projects for which this cash would be spent on is properly highlighted.

So Nigerians, should we rather sit on the fence and do nothing waiting for manna to fall from above? No, half bread is better than not.


We must do something now.

See this illiterate. You feel you know more than Forbes?