Infrastructure needs renovating across much of Africa

Under the deal, Nigeria will have to provide matching funds to buy new rolling stock and equipment, as well as lay new track.

The deal is the latest example of China looking to tighten relations with oil-producer countries, analysts said.

China wants to secure steady energy supplies as its economy booms.

Critical decisions

Chinese firms also are keen to tap into what they hope will be the quick development of the Nigerian economy.

After many years of waste and corruption, Nigeria has paid off most of its foreign debts and set itself ambitious goals for economic growth.

"Provision of infrastructure is critical for economic development," said Nigeria's Finance Minister Ngozi Okonjo-Iweala.