China Eximbank provides $15.4 million buyer’s credit loan for unspecified project with NORINCO in May 2013

On May 31, 2013, China Eximbank and the Government of Djibouti signed a $15,400,000 buyer's credit loan (BCL) agreement [No. BLA 201305]. The BCL carried the following borrowing terms: an 8-year maturity, a 1-year grace period, an interest rate of LIBOR plus a 3.2% margin, a 0.75% management fee, and a 0.75% commitment fee. The proceeds of the loan were to be used by the borrower to finance 85% of the cost of a $19,279,290 commercial contract with NORINCO for an unspecified project. As of 2014, the loan had not yet disbursed.

Additional details

1. AidData has estimated the all-in interest rate by adding 3.2% to average 6-month LIBOR in May 2013 (0.421%). 2. The $15,400,000 buyer's credit loan that China Eximbank issued to the Government of Djibouti on May 31, 2013 is not included in the database of Chinese loan commitments that SAIS-CARI released in July 2020. Nor is it included it in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020. 3. The purpose of this loan merits further investigation. NORINCO supported the implementation of the Addis Ababa–Djibouti Railway Project as a contractor in Ethiopia. However, in 2018, NORINCO also provided technical assistance to support heavy equipment installation at the Chinese naval base in Djibouti. Another potentially relevant point is that the Armed Forces of Djibouti (FAD) are known to have acquired a WMA301 Assaulter Tank from NORINCO and a 66 meter landing ship with a 30 mm I/P17 remotely operated weapon station (ROWS) from NORINCO. 4. NORINCO is a Chinese state-owned defense corporation that manufactures a diverse range of commercial and military products.

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