Recently President Muhammadu Buhari flew back into the Nigeria after spending a week in China. His working visit to China aimed at securing greater support from Beijing for the development of Nigeria’s infrastructure, especially in the power, roads, railways, aviation, water supply and housing sectors.

Meanwhile, there are confusion and disagreement on whether the President was in China to seek for loans or was there to convince the Chinese government to make investments in Nigeria.

Some weeks before the President Buhari flew to china it was disclosed that the President would visit China to sign a loan infrastructure projects deal estimated to worth about $2 billion. The low interest loan is to be deployed to finance the N3 trillion deficits in the budget.

In a recent interview with the President’s Special Adviser on Media and Publicity, Mr Femi Adesina, He stated, “I can’t tell you how much until the day the loan will be signed. Both countries will also be signing some bilateral agreements to strengthen their relationship, that is all I can say for now.”

According to the Nigerian Minister of Finance, Kemi Adeosun, who had visited China in February to discuss the loan said that, “We are borrowing first of all at the cheapest rates, so multilateral loans are the cheapest,” she disclosed. All these reports were made before the President’s travel to China. But to our surprise it was later revealed to us that the President was there to yield investment exceeding six billion dollars.

As of last week Friday the Special Adviser to President Muhammadu Buhari on Media and Publicity, Femi Adesina said that the President never signed any loan agreement with the Peoples Republic of China during his one-week working visit to the Asian country. He said. “There was no loan deal during the President’s visit to China. All that is coming are investments into Nigeria.”

A statement by the Senior Special Assistant on Media and Publicity, Garba Shehu said the several agreements concluded with the Chinese during the visit will have a “huge and positive impact on key sectors of the Nigerian economy including power, solid minerals, agriculture, housing and rail transportation.”

He concluded that “about 100 Nigerian businesses and 300 Chinese firms participated in the Nigeria-China business forum” which took place as part activities marking the President’s trip.

It seems there is a confusion in understanding the differences between loans and investments.

According to investopaedia, a loan is the act of giving money, property or other material goods to another party in exchange for future repayment of the principal amount along with interest or other finance charges. A loan may be for a specific, one-time amount or can be available as open-ended credit up to a specified ceiling amount.

On the other hand, foreign investment consists of flows of capital from one nation to another in exchange for significant ownership stakes in domestic companies or other domestic assets. Typically, foreign investment denotes that foreigners take a somewhat active role in management as a part of their investment. Foreign investment typically works both ways, especially between countries of relatively equal economic stature.

In view of above therefore, whether President Buhari’s visit to China was to secure foreign loans or foreign investment, what is more important is the economic benefits to Nigerians and the country on the foreign trips.

Saad Yushau Shuaib
Department of Account
Baze University, Abuja
This email address is being protected from spambots. You need JavaScript enabled to view it.