The Nigerian Minister of Finance Zainab Ahmed borrowed nearly $2.2 billion or about a trillion naira from the World Bank in Washington DC on behalf of the Buhari administration to “improve immunization” and a few other things.
Last Tuesday, the World Bank approved nearly $2.2 billion loan for Nigeria to invest in six projects, including improving immunization, enabling a stronger business environment for the private sector, expanding the digital economy to promote job creation, and increasing public and private sector capacity on governance and social and environmental safeguards.
Those were the reasons the Nigerian finance minister Zainab Ahmed and President Muhammadu Buhari gave in Washington DC to secure the multi-billion dollar loan.
The World Bank said the money for the six projects will come from the International Development Association (IDA), the French Development Agency, the European Investment Bank and the federal government of Nigeria.
A breakdown of the multi-billion dollar loan says
- 1 – Immunization & Malaria – $650 million loan (238 billion naira)
- 2 – Nigeria Rural Access and Agricultural Marketing Project – $575 million loan
- 3 – Nigeria Digital Identification for Development Project – $430 million loan
- 4 – Ogun State Economic Transformation Project – $250 million loan
- 5 – Innovation and Acquisition of Skills Project – $250 million loan
- 6 – Sustainable Procurement, Environmental and Social Standards Enhancement Project – $80 million loan
Although the World Bank chiefs tried to focus on the projects rather than the debt and repayment conditions as well as the time it would take to pay back the billions of dollars being borrowed by the Buhari administration, the new loan pushes Nigeria’s domestic and foreign debt to over $80 billion, and comes barely a year after the global bank disbursed about $2.4 billion to Nigeria.
Nigeria’s reported domestic debt was already put at $55.6 billion and foreign loans at $25.6 billion or a total of over $80 billion.
The Buhari administration believes to ease the debt burden, Nigeria has to borrow more with low interest and long repayment periods from many institutions including the World Bank and the African Development Bank.
Even as Buhari and Zainab Ahmed continue their borrowing spree, snatching billions of dollars from anywhere they can at the time Transparency International recently rendered a damning verdict on the fight against corruption in Nigeria, the economy is on a downward trend.
Just last Monday, The International Monetary Fund (IMF) downgraded its forecast of Nigeria’s economic growth from 3 percent to 2 percent, saying that fiscal deficit was deteriorating, inflation rising and vulnerabilities increasing.
The fresh assessment of the Nigerian economy came after an IMF staff team led by Amine Mati, Senior Resident Representative and Mission Chief for Nigeria, visited Lagos and Abuja from January 29-February 12, 2020 to conduct its annual Article IV Consultation discussions on Nigeria’s economy.
“The pace of economic recovery remains slow, as declining real incomes and weak investment continue to weigh on economic activity. Inflation—driven by higher food prices—has risen, marking the end of the disinflationary trend seen in 2019. External vulnerabilities are increasing, reflecting a higher current account deficit and declining reserves that remain highly vulnerable to capital flow reversals. The exchange rate has remained stable, helped by steady sales of foreign exchange in various windows,” said Mr. Mati.
He said “high fiscal deficits are complicating monetary policy. Weak non-oil revenue mobilization led to further deterioration of the fiscal deficit, which was mostly financed by Central Bank of Nigeria (CBN) overdrafts. The interest payments to revenue ratio remains high at about 60 percent”.
“Under current policies, the outlook is challenging. The mission’s growth forecast for 2020 was revised down to 2 percent to reflect the impact of lower international oil prices. Inflation is expected to pick up, while deteriorating terms of trade and capital outflows will weaken the country’s external position”.
According to him, recognizing these vulnerabilities, the Nigerian authorities have taken a number of welcome steps.
“These include measures to boost revenue through the adoption of the Finance Bill and Deep Offshore Basin Act and; and improve budget execution by adopting the 2020 budget by end-December 2019. The tightening of monetary policy in January 2020 through higher cash reserve requirements to respond to looming inflationary pressures is welcome. Progress on structural reforms—particularly in Doing Business, finalizing power sector reforms, and strengthening governance—is commendable”.
According to the World Bank, the approved program for the fiscal year 2020 comprises the following projects:
- Immunization Plus & Malaria Progress by Accelerating Coverage and Transforming Services will strengthen health systems to deliver effective primary health care and improve immunization, malaria control, and child and maternal health in selected states. Among key results, the project aims to broaden vaccination coverage, increase the percentage of children under five who sleep under insecticide-treated nets from 28 to 41%, and improve the percentage of women who receive post-natal check-ups from 47 to 55%. The project is financed under concessional terms through an International Development Association (IDA) credit of $650 million.
- Nigeria Rural Access and Agricultural Marketing Project will upgrade rural roads and improve connectivity and access to local markets and agrobusiness services in 13 states. Specifically, the project will upgrade about 1,600 kilometers of rural roads and improve 65 agro-logistics centers. These interventions are expected to boost the proportion of population who live within two kilometers of an all-season road by up to 10%. The project is co-financed through an IDA credit of $280 million, $230 million from the French Development Agency, and $65m from the Government of Nigeria.
- Nigeria Digital Identification for Development Project will support the National Identity Management Commission to increase the number of persons who have a national identification number (NIN) reaching about 150 million in the next three years. This will enable people in Nigeria, especially marginalized groups, to access welfare-enhancing services. The project will also enhance the ID system’s legal and technical safeguards to protect personal data and privacy. This is co-financed through an IDA credit of $115 million, $100 million from the French Development Agency, and $215 million from the European Investment Bank.
- Ogun State Economic Transformation Project will catalyze private investment in Ogun State by improving the business environment, strengthening the linkages between agricultural producers, suppliers and service providers, and providing training and apprenticeships for women and farmers. Among some of the key results, the project will facilitate collaboration between farmers and agribusinesses improve STEM teaching in up to 70% of public secondary schools. This is financed through an IDA credit of $250 million.
- Innovation Development and Effectiveness in the Acquisition of Skills Project will strengthen the skills of 50,000 Nigerian students and enhance the capacity of technical teachers to better equip them for jobs in the formal and informal sectors. The project aims to increase the female enrollment rate from 13% to 23% in technical colleges and provide recognized skills and certification to 3,000 youth after they complete an informal apprenticeship. This is financed through an IDA credit of $200 million.
- Sustainable Procurement, Environmental and Social Standards Enhancement Project will strengthen capacity in managing procurement, environmental and social standards in the public and private sectors. The project will enhance the skills of over 21,000 people and help 4,000 professionals become certified in procurement, environment and social standards. It will also ensure that accredited degree programs meet International best practice and Good International Industry Practice in these areas. The project will help tackle corruption and the risk of environmental or social harm as investments are implemented. This is financed through an IDA credit of $80 million.