By Kofoworola Fakeye, JKNewsMedia Reporter
REPAYMENT OF a Chinese loan tied to the Abuja CCTV project is expected to continue until about 2030, with Nigeria effectively paying an estimated $36.4 million yearly for infrastructure that was never fully delivered, according to the Foundation for Investigative Journalism (FJI).
FJI reports that the project, officially named the National Public Security Communication System (NPSC), was introduced in 2010 under former president Goodluck Jonathan as a security infrastructure programme for Abuja amid rising bomb attacks and insecurity in the Federal Capital Territory (FCT).
The federal government signed a contract valued at about $470 million with ZTE Corporation before securing a $399.5 million loan from China Eximbank to finance most of the project.
Data from AidData, a research lab at the College of William and Mary in the United States that tracks Chinese development finance globally, showed that the loan carries a 20 year maturity period, a seven-year grace period and a fixed interest rate of 2.5%.
Based on those terms, repayment is expected to continue until approximately 2030.
Also, FIJ stated that it cross referenced the details with the Debt Management Office documentation of the loan.
The DMO published a document in 2021 titled “Loans Obtained From China Exim As At September 30, 2021, Amounts In Millions”, stating that the federal government had repaid $122 million and interest of $96 million.
FIJ said it estimated the yearly repayment using a standard loan repayment formula often used for long term loans such as sovereign debt and mortgages.
The method assumes the loan is repaid in equal yearly instalments over a fixed period, with each payment covering part of the original loan and interest charged on the remaining balance.
Using the model, FIJ treated the $399.5 million loan as repayable over 13 years at an annual interest rate of 2.5% after factoring in the seven-year grace period within the loan’s 20-year lifespan.
Based on those assumptions, the estimated yearly repayment came to about $36.4 million.
FIJ also described the estimate as a simplified projection, noting that sovereign loans are often repaid under more flexible arrangements, including semiannual payments, interest added during grace periods or repayment plans with larger payments later.
The organisation also stated that the debt had become more expensive in naira terms because the loan was denominated in US dollars.
According to the Central Bank of Nigeria (CBN), the naira exchanged at roughly N150 to $1 in the official market when the loan agreement was signed in 2010, placing the $399.5 million facility at around N59.9 billion.
On Monday, however, the dollar traded above N1,370 at the official market. Using an exchange rate of N1,371 to $1, the same $399.5 million obligation is now equivalent to about N547.8 billion.
FIJ stated that the naira value of the debt had increased by roughly N487.9 billion since the loan was signed, with the debt burden growing by more than nine times in naira terms over the past 16 years due largely to the depreciation of the naira against the dollar.
At the current official exchange rate of roughly N1,371 to the dollar, the estimated yearly repayment of $36.4 million translates to about N49.9 billion annually.
When the loan was signed in 2010, the same yearly repayment would have cost about N5.5 billion at the prevailing exchange rate of around N150 to $1.
The CCTV project has remained controversial since implementation began. The federal government originally presented it as a modern surveillance and emergency response system designed to improve security monitoring across Abuja.
The infrastructure was expected to include city wide CCTV surveillance, emergency communication systems, command and control centres and integrated police communication facilities.
Members of the House of Representatives Committee on Police Affairs visited the control centre in 2016 and found that many installed cameras were either inactive or non-functional.
Lawmakers revisited the matter in 2019 and questioned why Nigeria was still repaying the Chinese loan despite concerns about the operational status of the surveillance infrastructure.
During legislative discussions at the time, Zainab Ahmed stated that the government was still servicing the loan but did not have full information regarding the project’s implementation status.
Lawmakers again raised the issue in April amid insecurity in the Federal Capital Territory.
The matter later became the subject of litigation after Socio-Economic Rights and Accountability Project sued the Federal Government under the Freedom of Information Act seeking details of the spending and implementation process.
In 2023, Emeka Nwite of the Federal High Court in Abuja ordered the government to disclose information relating to the project, including how the loan was spent and the identities of contractors involved.
On Sunday, the Federal Ministry of Finance told SERAP, which had urged Taiwo Oyedele to publish details surrounding the project, that “Records from the Ministry of Police Affairs indicate that while local subcontractors may have been engaged, there is an absence of detailed subcontracting records identifying specific local companies that received funds directly from the Chinese loan.”
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