CDB Approves $254.76 Million Loan for Kano-Kaduna Railway Project

The China Development Bank (CDB) has announced the approval of a $254.76 million (€245 million) loan for the Kano-Kaduna railway project in Nigeria. This significant funding aims to provide essential financial support to ensure the project progresses without delays.

The Kano-Kaduna railway, a standard-gauge line spanning 203 kilometers, is designed to connect Kano, a major commercial hub in northern Nigeria, to the nation’s capital, Abuja. Upon completion, the railway is expected to offer residents a safe, efficient, and convenient transportation alternative, significantly enhancing regional connectivity.

Beyond improving mobility, the project is poised to stimulate economic activity along its route. It is anticipated to promote the growth of related industries and generate numerous job opportunities for Nigerians during both the construction and operational phases.

Highlighted as a key initiative under the Third Belt and Road Forum for International Cooperation, the project is being executed by the China Civil Engineering Construction Corporation (CCECC), with financing provided by the CDB. According to the bank, construction is progressing smoothly. The CDB has emphasized its commitment to continued collaboration with the Nigerian government to ensure the timely disbursement of funds and effective management of subsequent project phases.

The bank stated that it would closely coordinate with Nigerian partners to ensure the smooth disbursement of subsequent loans and effective post-loan management.

Key Context

Last year, the Minister of Transportation, Saidu Alkali, disclosed that China has committed to funding the Ibadan-Abuja and Kaduna-Kano sections of the Lagos-Kano railway under the Belt and Road Initiative. The Minister noted that most ongoing rail projects were awarded under an EPC+F (Engineering, Procurement, Construction, and Financing) model. This model requires 15% counterpart funding from the federal government, with the remaining 85% expected to be sourced through loans.

Securing funds from banks has been challenging, as financial institutions perceive significant risk associated with railway projects and are hesitant to proceed with the loan arrangements. Consequently, China was approached to help fund some of these projects.

President Bola Tinubu has assured that the Ibadan-Abuja-Kaduna-Kano railway project will be completed to the satisfaction of Nigeria and West Africa at large. The Federal Government recently stated that the ongoing construction of the Kaduna to Kano rail line will be completed before the end of this year. Additionally, the government expressed its intention to construct a speed rail from Abuja to Lagos before year-end, with two organizations showing interest in constructing the speed rail through a Public Private Partnership (PPP) agreement.

The Permanent Secretary in the Federal Ministry of Transportation, Mr. Adeleye Adeoye, mentioned that the construction of the speed rail would commence as soon as the Infrastructure Concession Regulatory Commission (ICRC) completes its due process and gives the ministry the green light. The Federal Government has budgeted N44.4 billion for the completion of the Abuja-Kaduna Railway project, Lagos-Ibadan railway, and other railway projects across the country.