In a statement, following his four-day state visit to the People’s Republic of China, Nigerian President, Muhammadu Buhari said that the trip yielded over US$6 billion in additional investments in Nigeria. The successful visit is expected to have a huge and positive impact on key sectors of the country’s economy, including power, solid minerals, agriculture, housing and rail transportation.
With low oil prices eating into its foreign reserves, a weakening of its currency the naira against other currencies and a projected 2016 budget deficit of over $11 billion, Nigeria is confronting its worst economic crisis in decades. In recent months, the oil-exporting nation has been looking for sources to plug its deficit and fund the government’s ambitious plans to triple capital spending in 2016 fiscal year. The Chinese investments are a welcome relief to the beleaguered economy.
Speaking at a reception in his honor by the Communist Party of China, President Buhari said that Nigeria welcomes the support of the Chinese government, foreign investors and local businesses for efforts to diversify the nation's economy. The president noted that the diversification of the Nigerian economy was long overdue as continued reliance on crude oil exports had always made the economy vulnerable to shocks.
In his remarks on the occasion, President Jinping applauded the war against corruption being waged by Buhari. He also agreed that Nigeria's chosen path of development through economic diversification was the best way to go and promised to fully support the diversification program through infrastructural development and capacity building.
The Chinese President also expressed the readiness of China to set up major projects in Nigeria, including in refineries, power plants, mining companies, textile manufacturing and food processing industries. China and Nigeria also agreed to strengthen military and civil service exchanges as part of a larger capacity-building engagement. In line with this, China offered to raise its scholarship awards to Nigerian students from about 100 to 700 annually. In addition, 1,000 other Nigerians are to be given vocational and technical training by China annually.
Among the major infrastructure investment agreements signed between Nigeria and China are a $2.5 billion agreement for the development of the Lagos Metro Rail Transit Red Line project; a $1 billion for the establishment of a high-tech industrial park in Ogun-Guangdong Free Trade Zone in Ogun State and a $1 billion for the development of a green-field expressway for Abuja-Ibadan-Lagos. In the power sector, an agreement worth nearly $480 million was signed to construct a 300 Megawatt solar power plant in Niger State and another project valued at $200million was signed for the construction of two 500MT/day float gas facilities.
During the visit, 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. This would allow the renminbi (yuan) to be included in the foreign exchange reserves of Nigeria and permit its free flow among different banks in Nigeria. Nigeria's central bank also said it plans to diversify its foreign exchange reserves away from the dollar by switching a stockpile into yuan. It has already converted up to a tenth of its reserves into yuan five years ago. The framework to a currency-swap deal signed between the two countries would also make it easier to settle trade deals in yuan, which would be cheaper than Eurobonds.