THE Nigerian government is set to receive around $2.2 billion single-digit interest loan from the World Bank and another budget support facility from the African Development Bank.
Minister of Finance Wale Edun disclosed this at a press briefing on Saturday, April 19, at the end of Nigeria’s activities at the World Bank/International Monetary Fund Spring meeting in Washington, D.C.
The Minister, however, failed to give specific project targets for the loan, as Nigeria’s debt stood at N97.34 trillion at the end of 2023.
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Economy watchers said it would be difficult to monitor its effective usage if the loan is not tied to specific projects.
“The Minister of Finance calls this almost free money. The loan is priced at one per cent for about 10-20 years moratorium. The question is, what will it be used for?” an economist Kalu Aja asked.
Expressing similar concern, a development economist, Celestine Okeke, told The ICIR that the National Assembly needed to give clearance on the propriety of the loan to avoid plunging Nigeria into further debts.
“The National Assembly needs thorough oversight before we access this loan facility. The country is deeper in debt, and we must not put ourselves into a deeper debt trap,” he said.
Okeke recalled that the National Assembly’s poor oversight had led to Nigeria’s rising debt. The recent N23 trillion loan by the Central Bank of Nigeria (CBN) to the Federal Government is currently under scrutiny at the National Assembly.
Commenting on other international funding sources for the Nigerian economy, the minister listed diaspora remittances, foreign portfolio investments, facilities from the World Bank, and other international development partners.
He stated, “We have qualified for the processing just this week to the Board of Directors of the World Bank of a total package of $2.25 billion of what you can call ‘the closest you can get to a free lunch’- virtually a grant. It’s for about 10- 20 years moratorium and about 1% interest.
“In addition, there is a similar budgetary support – low-interest funding from the African Development Bank (AfDB) and there are ongoing discussions with foreign direct investors across many sectors.”
Edun also tapped issuing dollar-denominated securities specifically targeted at Nigerians in the diaspora and those with foreign-denominated savings in Nigeria as another measure to attract forex inflows into the country.
He further highlighted the efforts of the fiscal side of the economy in complimenting the recent monetary policy reforms by the Central Bank of Nigeria.
According to the minister, the issuing of government securities at an interest rate closer to the CBN’s monetary policy rate is an indication of the collaboration between both sides of the economy in tackling inflation in the country and attracting forex inflows.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.