Nigerian Minister of Finance, Kemi Adeosun, confirmed news about Panda bonds mentioned by Reuters last month. He said his country, Africa’s top GDP ranked economy, plans to issue Panda bonds (issued and subscribed in Yuan Renminbi, China’s currency) to plug its budget deficit.

“The opportunity now, with the renminbi being a reserve currency, we are looking obviously at the lowest cost of funds to fund our budget deficit. There is a possibility of issuing a panda bond. We are exploring this option nothing has been decided yet,” Kemi Adeosun told press on Saturday April 9, 2016, after meeting private sector’s actors.

The government of Nigeria said it would borrow the equivalent of up to $5 billion to plug its deficit and satisfy its urging needs in infrastructure, especially in the sectors of transport and energy. However, two months ago, the rates on African sovereign bonds soared significantly. This is the case of Cameroon who issued a benchmark bond with a 10-year maturity at a record rate of 9.75% in November 2015; this rate surged to 13.4% at February 12, 2016 before dropping to 10.25% at April 8.

The transaction is almost certain and could be brought up in talks, signed even during President Muhamadu Buhari’s state visit to China. The Nigerian head of state left the country on Sunday April 10, 2016, without signing the budget. Also, sources well-versed in Nigeria’s economic industry interviewed about the matter said Minister Adeosun was part of a delegation in charge of preparing this state visit.

Recently, Chinese loans have been much criticized in Nigeria. Truly, one of the states’ governors fears that conditions associated with the targeted loan could be unprofitable for Nigeria. A concern which not only Kenya where reimbursement of debt to China takes a significant share of budget, but Angola also, where parliamentarians question the efficiency of Chinese support share.

Idriss Linge