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Between 2002 and 2006, Nigeria secured a $359.9 million loan from China to support its telecommunications sector, shortly after reestablishing democracy. However, despite substantial external funding, the projects stalled, and the country ultimately had to pay its debts with taxpayers’ money for services that were never provided to the people. Kehinde Ogunyale report
In 2001, just two years after Nigeria returned to democratic rule following a series of military coups that had disrupted executive rule since independence in 1960, President Olusegun Obasanjo visited China as part of efforts to expand economic and trade cooperation between the two countries.
That same year, his government introduced the National Rural Telephone Project (NRTP), an initiative aimed at expanding telephone and telecommunications services to people living in rural and underserved communities in the country.
Following the visit, Nigeria secured at least four loans from China in 2002. Two loans funded gas plants in Ondo and Ogun states, while two others supported the development of the country’s telecommunications services, under the NRTP initiative.
At that time, communications infrastructure was concentrated primarily in urban areas, with very limited access to telephone service in rural areas. In line with the International Telecommunication Union (ITU) initiativethe federal government signed a contract with Alcatel-Lucent Shanghai Bell (ASB) in 2002, after obtaining a $77.58 million supplier credit agreement from China Exim Bank, a year after Obasanjo’s visit.
The financing has an interest rate of 3.5 percent, with a term of 11 years and a grace period of three years. Alcatel will provide telecommunications services, including telephone, fax and internet, with more than 636,000 Code Division Multiple Access (CDMA) lines installed in 108 Local Government Areas across Nigeria’s 36 states.
Despite financing and equipment procurement, not a single CDMA line was installed. A full investigation about a decade later into the NRTP initiative revealed several instances of financial mismanagement and disputes over implementation and execution, which led the federal government to make the wrong decisions. suspend this initiative, with much of the material in the project dying.
Initiatives intended to expand telecommunication services in several local government areas in various regions of the country have not yielded results. Likewise with loans, which are expected to increase state income, but are repaid without any services being offered to the community.
The project failed and the debt had to be paid
On July 5, 2002, the government and ABS signed a $77,579,034.40 supplier credit agreement to begin the first phase of the project. At that time, Nigeria’s foreign debt stand of $28.34 billion, according to the Office of Debt Management.
A year after the agreement, ABS changed the agreement contractmoving from a sole contractor to a consortium that includes the China National Machinery and Equipment Import and Export Company (CMEC) and making Alcatel-Lucent Nigeria (ALU) a subcontractor on the project.
In February 2005, a report published that approximately $23 million worth of equipment ordered by ABS had arrived at the Lagos Port. The equipment includes switching systems, transmission systems and cables, which have been cleared for subsequent transportation to project sites in various LGAs where the consortium is responsible under existing contracts for providing rural telephone services to communities.
However, this is the final reported project trench, with no further developments as to whether the equipment has been delivered to site or fully installed. The Phase II contract is submitted in December 2006, but the project was never implemented due to lack of funding.
The credit matures in 2013, and the DMO reports in 2015, reported that the loan was repaid in full, and most of the equipment became obsolete after the NRTP initiative was cancelled. To date, there are no reports or documentation showing how the loan was used to upgrade telecommunications infrastructure during its operations.
Like the Alcatel project, ZTE also failed to make it happen
Shortly after securing Alcatel’s loan from China, the federal government also contracted ZTE (Zhongxing Telecommunication Equipment Corporation) under the NRTP initiative to expand 150,226 CDMA connections to 110 LGAs, with its main switching centers in Bauchi, Kano, Kaduna, Enugu and Oyo states.
The federal government financed the ZTE contract through an $82.25 million loan from China at 3.5 percent interest over a 12-year term.
However, the success of the project is questionable. Although ZTE confirmed that it had completed the project in 2010, including the Technical Provisional Acceptance Test (PAT) and Final Acceptance Certificates (FACS), integrating the government’s NRTP initiative into Nigeria’s Telecommunication Limited (NITEL) was a major project. worriesespecially as private sector players invest in communications systems.
“Network integration into NITEL’s transmission network and Public Switch Telephone Network (PSTN) to ensure seamless connectivity to other networks cannot be achieved as NITEL’s transmission network is nearly defunct due to pending privatization and poor funding of NITEL to maintain and operate its network,” telecommunications ministry state in FOI responses.
Government announced privatization of the NRTP project in 2012, with concession assets based on a lease, operation and ownership model, so that implementation is carried out by the private sector.
After a long offer processSuburban Broadband was awarded the Abuja and Kaduna NRTP projects with bids of $47.7 million and $47.5 million respectively. Gicell Wireless Limited secured the Bauchi zone with a $30 million bid. Additionally, Voicewave Limited won the Enugu zone with a bid of $57 million; Key Communication Limited was awarded the Ibadan zone of $38 million, and Hezonic Limited received the Port Harcourt zone.
Despite this, the federal government failed to hand over the assets to the concessionaires. That asset then became almost dead and withered in several regions of the country. In December 2014, the government repaid the loan to the Chinese government, including interest.
NigComSat-1: another satellite project failed after one year
Five years after its founding, the Nigerian National Space Research and Development Agency signed a $311 million commercial contract with China Great Wall Industry Corporation (CGWIC) to send the country’s first communications satellite into orbit. The contract signed in 2004 includes 15 years of operational services, training programs and insurance services.
NigComSat-1 is one of the major projects for the agency, and it officially started on February 21, 2025. A year later, China Eximbank and the Nigerian government signed another agreement for a preferential purchaser credit agreement (PBC) worth $200 million. PBC has the following terms: maturity of 12 years, grace period of 5 years, interest rate of 3 percent, and maturity date on March 21, 2018.
The NigcomSat-1 communications satellite features 28 transponders in four frequency bands: 8 Ka-band, 14 Ku-band, 4 C-band, and 2 L-band. To meet coverage requirements, it is equipped with seven shaped communication antennas. Weighing 5,086 kg at launch, the satellite is positioned at 42° east longitude above the equator, with a planned end-of-life power output exceeding 8KW and a design life of 15 years.
This project is China’s first commercial in-orbit delivery telecommunications satellite. Likewise Nigeria founded NIGCOMSAT Limited in 2006 sold fixed satellite services to Africa and Italy.
In May 2007, China succeeded launched NigComSat-1 from the Xichang Satellite Launch Center (XSLC) uses an upgraded LM-3B (LM-3B/E) rocket. In June, CGWIC handed over the satellite to NIGCOMSAT Limited in orbit, along with a tracking station in Kashi, Xinjiang Uighur Autonomous Region, and a fully operational ground station in Abuja.
However, in November 2008, NigComSat-1 fail in orbit after running out of power due to a solar array anomaly. Meanwhile, according to DMO, the government paid off the loan at the end of 2013.
The government obtained another loan from China to replace the satellite with NigcomSat-1R. In 2010, China Eximbank and the Nigerian Government signed a $20.1 million loan agreement to replace it, and the satellite launched into space in December 2011 and is still operational.
Borrowing is crippling Nigeria’s ICT sector
Data shows that over the past two decades, Nigeria has borrowed $1.4 billion from China, mostly through Exim Bank, to develop eight projects in the country’s information and communications technology sector.
Chinese investment in the ICT sector in Nigeria represents about 16 percent of the total $8.9 billion in loans that have been provided to the country since 2002. The report has found that three out of eight projects failed to meet expectations despite receiving loans, increasing debt and increasing revenues. worries that a lot of infrastructure is damaged.
Other investigations also found that other ICT projects, such as NigcomSat-1R project and Public Safety Communications Systems Project worth $399.5 million, also faces challenges years after loans were taken out and infrastructure was built, raising further concerns about why the country is taking out more loans for telecom projects when the sector is not functioning well.
Head of Enterprise and Policy at TechCabal, Frank Eleanya, said in an interview that this may be related to how easy it is for governments to get loans from China, which most African countries say is more adaptable than others.
Eleanya also raised concerns that Chinese loans are typically centered on development ambitions, with terms such as requiring projects to focus on infrastructure development, be implemented by Chinese companies, and lack rigid forms of accountability.
He said, “One reason is that the terms and conditions they offer are not as stringent as those given by lenders in the West. For example, Nigeria borrowed $460 million in 2015 for CCTV cameras that were supposed to be placed in Abuja. The money was borrowed without publishing the terms. If the lender was the World Bank, we would probably see the details on its website, how the money was spent, and so on.”
This reporter also made further attempts to contact the Nigerian Communications Commission (NCC) regarding the status of government investigations into NRTP projects and its assets, which were then moribund, but received no response after messages were sent.
[This report was published with funding support from the Media Foundation for West Africa (MFWA) under the Critical Coverage of Africa-China Relations in West Africa project]
