Nigeria’s economic policymakers are back in the spotlight, this time over mounting debt obligations to China. The country is in talks with Beijing over restructuring billions of dollars in loans taken to finance infrastructure projects, from railways to airport expansions. As Africa’s largest economy struggles with a weak naira, galloping inflation, and dwindling foreign reserves, the timing of this negotiation could not be more critical.
China is Nigeria’s largest bilateral creditor, holding about one-third of its external debt. The terms of many of these loans have been the subject of intense debate domestically, with critics accusing Abuja of mortgaging future revenues and sovereignty. The Ministry of Finance insists the talks are aimed at securing better repayment schedules rather than outright debt forgiveness, arguing that Nigeria’s infrastructure needs cannot wait.
Rail projects like the Abuja–Kaduna and Lagos–Ibadan lines, both built with Chinese loans, are seen as success stories of the partnership. But revenues from ticket sales have not matched expectations, partly due to security challenges along key routes. This leaves the government with the dual headache of repaying Chinese creditors while subsidising operations to keep services running.
Beijing, for its part, is treading carefully. China has been under scrutiny globally for its lending practices, with critics warning of “debt-trap diplomacy.” In response, Chinese officials have signalled greater flexibility in dealing with African debtors, preferring to renegotiate rather than risk default. Nigeria, given its size and strategic importance, is unlikely to be treated harshly.
Still, negotiations are fraught. Nigeria must convince China that its fiscal reforms, including the recent removal of fuel subsidies and moves to unify the exchange rate, will stabilise the economy enough to honour future repayments. Failure to secure favourable terms could mean even harsher austerity measures at home, risking social unrest in a country where protests over the cost of living have become frequent.
The political stakes are high. President Bola Tinubu has staked much of his credibility on fixing Nigeria’s economy and attracting foreign investment. Showing progress on debt talks would reassure markets and perhaps unlock new financing for critical projects. But critics argue that borrowing more from China, or anyone else, without first boosting revenue collection and cutting wasteful spending, would merely postpone Nigeria’s fiscal reckoning.
For ordinary Nigerians, the debate may feel remote, but its impact is tangible: debt repayments consume resources that could otherwise go to schools, hospitals, and job creation. If talks with China succeed in reducing the short-term burden, the government will have breathing room to pursue its economic reforms. If not, the squeeze will tighten, and the public may feel it through more taxes or cuts in social spending.
Nigeria’s dance with China is a delicate one—partnership and dependency rolled into one. Whether Abuja can turn this moment into a win-win or whether it finds itself even more entangled in debt will shape the country’s economic trajectory for years to come.
