Nigeria Returns To China For A Significant Partnership Lone China’s High-Interest Loan Resurfaces For Kaduna-Kano Railway Development

The 203km standard-gauge railway will link Kano, Nigeria’s second-largest city with a population of 4 million, located in the north near the Niger border, to Kaduna, a city of approximately 760,000 in central Nigeria.

This development marks a crucial addition to the ongoing north-south corridor project that has been in the works for over a decade.

The Kaduna-Kano line is estimated to cost $1.2 billion, with China covering 85% of the funding and the remaining coming from the Nigerian government, according to the South China Morning Post.

State-owned firm China Civil Engineering Construction Corporation (CCECC) has been awarded the contract to build the railway, making it Nigeria’s largest contractor, as reported by the Post.

The new railway is set to connect two previous Chinese-funded north-south rail lines. One, completed in 2016, links Abuja to Kaduna, while the other, operational since 2020, connects Lagos to Ibadan on the coast.

Initially intended to be funded by China Eximbank, the Kaduna-Kano project was put on hold in 2020 due to the Covid-19 pandemic and concerns about Nigeria’s repayment capacity. However, the Post suggests that the resumption of funding indicates China’s confidence in the project’s commercial viability.

Although China Development Bank loans come with a higher interest rate, the use of the euro with a lower benchmark interest rate has been employed to mitigate the difference, according to the source cited by the Post.