After a hiatus of several years, China has resumed lending for Nigerian rail development with an initial $253.7m loan approved by the China Development Bank for the Kaduna-Kano railway, the bank announced on 7 January.

The 203km standard-gauge line will connect Nigeria’s second-largest city – Kano, population 4 million, located near the Niger border in the north – to Kaduna, a city of some 760,000 in central Nigeria.

It’s one of the missing links in a longer north-south corridor in development for over a decade.

The Kaduna-Kano line’s total cost is estimated to be $1.2bn, with China providing 85% of the financing and the rest coming from the Nigerian government, South China Morning Post reports.

State-owned firm China Civil Engineering Construction Corporation (CCECC) will build the line. It’s now Nigeria’s biggest contractor, according to the Post.

Citing a local source, the Post said the new line would connect two previous Chinese funded north-south railways.

One, finished in 2016, links the capital Abuja to Kaduna. The other linking Lagos on the coast to Nigeria’s third-largest city, Ibadan, started running in 2020.

China Eximbank funded both of those, and it had intended to fund the Kaduna-Kano line, but pulled away from the project in 2020, citing the Covid-19 pandemic and concerns about Nigeria’s ability to repay the loan, the Post notes.

Its source told the Post that the shift suggests China thinks the new line will succeed commercially.

China Development Bank loans have a higher interest rate than Eximbank’s, but the source said the bank used the euro, which has a lower benchmark interest rate, to narrow the gap.