These loans will all be made at a concessionary zero percent interest rate and most of the money is targeted for state level infrastructure projects, including health, education and job creation programmes. Economists say Nigeria's external debt is at comfortable levels. The government says that even with these additional loans, external borrowing will remain below 25 percent of GDP.
Exim Bank of China is lending Nigeria $3 billion at 2.5 percent over 20 years for projects including a railway in the capital Abuja, a power plant, aviation works and roads. Portions of these loans have already been distributed. There was no timeframe given on the Eurobond launch.
Africa's second-largest economy and top oil producer is growing in popularity as an investment destination, offering the promise of high economic growth and a consumer market of 160 million people. Its sovereign debt has soared since J.P. Morgan added it to its emerging market bond index this year. But decades of corruption and mismanagement mean that despite a $200 million-a-day oil export business, much of the country's infrastructure is dilapidated and the majority of Nigerians live in poverty and have little access to good state services.
China has made a string of cheap loans in the past few years to countries in Africa, which supplies oil and raw materials like copper and uranium to the world's most populous country and second-largest economy. Lending at below market rates to fund infrastructure projects using Chinese firms has been a common Beijing tactic for cementing its relationship with resource-rich Africa, whilst also subsidising its construction industry.