INVESTIGATION: How Nigeria borrowed over $300m from China for telecoms projects that never delivered

Between 2002 and 2006, Nigeria obtained $359.9 million in loans from China to support its telecommunications sector, shortly after reestablishing democracy. However, despite this significant external funding, the projects stalled, and the country ended up repaying debts with taxpayers’ money for services that were never delivered to the people. Kehinde Ogunyale reports

In 2001, just two years after Nigeria returned to democratic governance following a series of military coups that disrupted the executive administration since independence in 1960, President Olusegun Obasanjo visited China as part of an effort to expand economic and trade cooperation between the two countries.

That same year, his administration introduced the National Rural Telephony Project (NRTP), an initiative aimed at extending telephone and telecommunications services to people living in rural and underserved communities within 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 the other two supported the development of the country’s telecommunications services, under the NRTP initiative.

At the time, communications infrastructure was concentrated mainly in urban areas, with very limited access to telephone service in rural areas. In line with International Telecommunication Union (ITU) initiatives, the federal government entered into 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 carried a 3.5 per cent interest rate, with an 11-year maturity and a three-year grace period. Alcatel was to provide telecommunications services, including telephone, fax, and internet, with over 636,000 Code Division Multiple Access (CDMA) lines installed in 108 Local Government Areas across Nigeria’s 36 states.

Despite financing and procuring equipment, no 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, leading the federal government to suspend the initiative, with many materials under the project becoming moribund.

An initiative intended to expand telecommunications services across several local government areas in different parts of the country did not deliver. Similarly, the loans, which were expected to have pulled in revenue for the country, were paid back with no service offered to the public.

A failed project and debts to be paid

On July 5, 2002, the government and ABS signed a $77,579,034.40 supplier credit agreement to commence the first phase of the project. At the time, Nigeria’s external debt stood at $28.34 billion, according to the Debt Management Office.

A year after the agreement, ABS amended the contract, shifting from a sole contractor to a consortium that included China National Machinery and Equipment Import and Export Corporation (CMEC) and making Alcatel-Lucent Nigeria (ALU) a subcontractor on the project.

By February 2005, a report published that approximately $23 million worth of equipment ordered by ABS had arrived at the Lagos Port. The equipment included switching systems, transmission systems, and cables, which were cleared for onward transport to project sites across various LGAs where the consortium is responsible under an existing contract to deliver rural telephony services to the people.

However, this was the last reported trench of the project, with no further development, whether the equipment was delivered to the site or fully installed. A Phase II contract was proposed in December 2006, but the project was never undertaken because of a lack of financing.

The credit matured in 2013, and the DMO report, as of 2015, reported that the loan had been fully repaid, with most of the equipment becoming obsolete after the NRTP initiative was cancelled. To date, no reports or documentation show how the loan was used to improve the telecommunications infrastructure during its operation.

Like the Alcatel project, ZTE also failed to deliver

Shortly after securing the Alcatel loan from China, the federal government also contracted ZTE (Zhongxing Telecommunication Equipment Corporation) under the NRTP initiative to extend 150,226 CDMA connections to 110 LGAs, with its main switching centres 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 per cent interest over a 12-year tenure.

However, the project’s success became questionable. While ZTE confirmed it delivered 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) became a major concern, especially as private-sector players invested in communication systems.

“The integration of the network to the NITEL transmission network and the Public Switch Telephone Network (PSTN) to ensure seamless connectivity to other networks could not be achieved as the NITEL transmission network had become moribund as a result of pending privatisation and poor funding of NITEL to maintain and operate its network,” the telecoms ministry stated in an FOI response.

The government announced the privatisation of the NRTP project in 2012, with the concession assets under a lease, operate, and own model, giving implementation to the private sector.

After a lengthy bidding process, Suburban 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 $57 million bid; Key Communication Limited was awarded the Ibadan zone at $38 million, and Hezonic Limited received the Port Harcourt zone.

Despite this, the federal government failed to hand over the asset to the concessionaires. The asset later became moribund and withered in several parts of the country. By December 2014, the government had repaid the loan to the Chinese government, including interest.

NigComSat-1: another satellite project failed after a year

Five years after being established, Nigeria’s National Space Research and Development Agency signed a commercial contract of $311 million with China Great Wall Industry Corporation (CGWIC) to deliver the country’s first communications satellite to orbit. The contract signed in 2004 included a 15-year operational service, training programs and insurance services.

NigComSat-1 was one of the major projects for the agency, and it officially kicked off on February 21, 2025. A year after, the China Eximbank and the Nigerian government signed another agreement for a $200 million preferential buyer’s credit (PBC) agreement. The PBC carried the following terms: a 12-year maturity, a 5-year grace period, a 3 per cent interest rate and a maturity date of March 21, 2018.

The NigcomSat-1 communications satellite featured 28 transponders across four frequency bands: 8 Ka-band, 14 Ku-band, 4 C-band, and 2 L-band. To meet coverage needs, it was equipped with seven shaped communication antennas. Weighing 5,086 kg at launch, the satellite was positioned at 42° east longitude over the equator, with a planned end-of-life power output exceeding 8KW and a design lifespan of 15 years.

This project was China’s first commercial in-orbit delivery telecommunications satellite. Similarly, Nigeria established NIGCOMSAT Limited in 2006 to sell fixed satellite services to Africa and Italy.

By May 2007, China successfully launched NigComSat-1 from its Xichang Satellite Launch Centre (XSLC) using an upgraded LM-3B (LM-3B/E) rocket. By June, CGWIC handed the satellite over to NIGCOMSAT Limited in orbit, along with a tracking station in Kashi, Xinjiang Uygur Autonomous Region, and a fully operational ground station in Abuja.

However, in November 2008, NigComSat-1 failed in orbit after running out of power due to a solar array anomaly. Meanwhile, according to DMO, the government fully repaid the loan by the end of 2013.

The government obtained another loan from China to replace the satellite with NigcomSat-1R. In 2010, China Eximbank and the Government of Nigeria signed a $20.1 million loan agreement to replace it, and the satellite was launched into space in December 2011 and is still operational.

Borrowing crippling Nigeria’s ICT sector

Data show that over the last two decades, Nigeria has borrowed $1.4 billion from China, mostly through the Exim Bank, to develop eight projects in the country’s information and communication technology sector.

China’s investment in Nigeria’s ICT sector represents about 16 per cent of the total $8.9 billion loans it has given to the country since 2002. This report already found that three of the eight projects failed to meet expectations despite receiving loans, adding to debt and raising concerns that much of the infrastructure is falling into disrepair.

Other investigations also found that other ICT projects, like the NigcomSat-1R project and a Public Security Communication System Project worth $399.5 million, are also facing challenges years after the loans were taken and the infrastructure was set up, raising further concerns about why the country is taking on more loans for telecommunications projects when the sector is not functioning properly.

The Head of Enterprise and Policy desk at TechCabal, Frank Eleanya, said in an interview that this might be tied to how easy it is for a government to secure loans from China, which most African countries find more adaptable than those in other countries.

Eleanya also raised concerns that Chinese loans usually centre on developmental ambitions, with conditions such as requiring the project to focus on infrastructure development, be implemented by a Chinese company, and lack a rigid form of accountability.

He said, “One reason is that the terms and conditions they offer aren’t as stringent as those of Western lenders. For instance, Nigeria borrowed $460 million in 2015 for CCTV cameras that were supposed to be deployed in Abuja. That money was borrowed without publicising the conditions. If the lender had been the World Bank, we probably would have seen the details on its website, how the money was being spent and so on.”

This reporter also made further efforts to reach out to the Nigerian Communications Commission (NCC) on the status of the government’s investigation into the NRTP projects and the assets, which later became moribund, but received no response after messages were sent.

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