China Development Bank approves $254.76m loan for Kano-Kaduna rail project

• Published On: 08 January 2025 at 18:07

The China Development Bank has approved a loan of $254.76 million (€245 million) for Nigeria's Kano-Kaduna railway project, which will significantly boost the country's ongoing infrastructure development.

The loan, announced by the bank on Tuesday, is expected to provide critical financial support for the completion of the 203-kilometer-long standard-gauge railway.

The railway will connect Kano, a major commercial center in northern Nigeria, with Abuja, the country's capital. Once completed, the project is expected to improve regional connectivity by offering residents a safer, more efficient, and convenient mode of transportation.

Beyond improving mobility, the Kano-Kaduna railway is expected to boost economic growth along its route. During the construction and operation phases, the project is expected to boost local industries and create job opportunities.

The railway project is part of the Belt and Road Initiative, China's global development strategy. The China Civil Engineering Construction Corporation is carrying out the construction, which has been funded by the CDB.

The bank has expressed confidence that the project is proceeding smoothly and has committed to continuing collaboration with the Nigerian government to ensure timely fund release and efficient management of the project's subsequent phases.

Looking ahead, the CDB intends to collaborate closely with Nigerian partners to ensure the smooth disbursement of future loans and effective project oversight after completion.

The Kano-Kaduna railway project is a critical component of Nigeria's overall efforts to improve its rail network. Last year, Nigeria's Minister of Transportation, Saidu Alkali, announced that China had agreed to finance the Ibadan-Abuja and Kaduna-Kano sections of the Lagos-Kano railway as part of the Belt and Road Initiative.

Many of these railway projects are being funded through an EPC+F (Engineering, Procurement, Construction, and Financing) model, with the Nigerian federal government providing 15% of the funding and the remaining 85% coming from loans. Alkali also mentioned the difficulty in obtaining funding from other banks due to perceived risks associated with railway projects, which has prompted Nigeria to seek assistance from China.

In a recent update, President Bola Tinubu stated that the Ibadan-Abuja-Kaduna-Kano railway project would be completed to the satisfaction of Nigeria and West Africa in general. The federal government has also committed to completing the Kaduna-Kano rail line by the end of the year.

The government is also planning to build a high-speed rail line from Abuja to Lagos, and two organizations have expressed interest in a Public-Private Partnership to fund the project. Construction is expected to begin once the Infrastructure Concession Regulatory Commission has completed its due process.

The Federal Government has allocated N44.4 billion to complete the Abuja-Kaduna, Lagos-Ibadan, and other railway projects throughout the country.