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Tag: Loan

  • Nigeria debts soar to almost $80bn as World Bank approves fresh $2.2bn loan

    Nigeria debts soar to almost $80bn as World Bank approves fresh $2.2bn loan

    Nigeria’s debt has risen to $80bn as World bank on Tuesday approved nearly $2.2bn loan for the country 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.

    The money for the projects according to reports will come from the International Development Association, the French Development Agency, the European Investment Bank and the federal government of Nigeria.

    According to Shubham Chaudhuri, World Bank Country Director for Nigeria ” The projects focus squarely on delivering better services for Nigerians: ensuring that children are immunized and sleep under mosquito nets; building better roads especially in rural areas, and providing Nigeria’s poorest citizens with a unique identification that will make social safety nets and services more effective.”

    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-led government, the new loan pushes Nigeria’s domestic and foreign debt to over $80bn, and comes just a year after the global bank disbursed about $2.4bn to the country.

    Nigeria’s reported domestic debt was already put at $55.6bn and foreign loans at $25bn (a total of $80bn).

  • Tambuwal gets N65.7b loan to buy cars, fertilizer, fund hajj

    Tambuwal gets N65.7b loan to buy cars, fertilizer, fund hajj

    Governor Aminu Tambuwal’s Sokoto state government said it would secure N65.7 billion loan to finance agricultural programmes, housing, water supply and enhance judicial administration in the state.

    On the shopping list are cars for judiciary, fertiliser for farmers, water and housing projects.

    The Secretary to the state government, Alhaji Saidu Umar disclosed this while addressing newsmen at the end of the state Executive Council meeting on Friday.

    He said the decision to secure the loan was taken by the council members in line with the state government’s effort to seek better ways of improving the lot of the people of the state.

    The SSG said the decision to obtain the loan was aimed at improving the peoples lives and promote economic development across the state.

    He explained that N550 million would be spent on procurement of 200 generators to provide safe drinking water in rural areas.

    He added that N140 million would be spent on the procurement of water resources implements.

    According to him, N4 billion would be accessed from the Central Bank of Nigeria (CBN) for agricultural loan facility as a counterpart funding.

    ” The sum of N10 billion will be sourced to finance the payment of contractors that would execute contracts awarded under the State Universal Basic Education Board
    (SUBEB).

  • World Bank, AfDB, others no longer willing to approve loan requests from Nigeria – FG

    World Bank, AfDB, others no longer willing to approve loan requests from Nigeria – FG

    …Says only China responsive

    Multilateral lending institutions including the World Bank and the African Development Bank (AfDB) are no longer willing to grant credit facilities to Nigeria, the Federal Government said on Tuesday.

    It said that informed its decision to approach China for the bulk of the external loans.

    Minister of Finance Budget and Planning Mrs. Zainab Ahmed the Federal Government resolved to borrow $17 billion from the China-Exim Bank as part of its external borrowing plan.

    She appeared before the Senate Committee on Local and Foreign Debts to defend President Muhammadu Buhari’s administration decision to borrow $29.96 billion to execute critical infrastructure projects across the country.

    With her were: Ministers of Information and Culture (Lai Mohammed); Federal Capital Territory (Mohammed Bello); Works and Housing (Babatunde Fashola); Minister of State for Transportation (Senator Gbemisola Saraki).

    Mrs. Ahmed explained that the Eight National Assembly had approved about $6 billion out of the $29.96 billion loan, leaving a balance of $22.718 billion.

    The minister told the committee that the federal and some state governments are jointly requesting the loans from various international lending institutions.

    She said that a larger part of the loan (about $17 billion) would come from the China-Exim Bank while others would come from Islamic Development Bank and other lending institutions.

    The senator representing Niger South Zone, Birma Enagi, had expressed worry at the level of loans being sought from China alone, which he put at $17 billion, representing 70 per cent of the $22.718 billion of the Federal Government’s external loan request.

    But Mrs. Ahmed explained: “Of the $22.718 billion, $17 billion is indeed from the China-Exim Bank. I can tell you that in 2016 when we went into recession, we went out to borrow to be able to fund even the National Budget.

    “So, we went to the World Bank and made a request and the World Bank jointly with the AfDB, I think it was $2.6 billion.

    “After a while, the African Development Bank came through with $600 million within six months and I think about a year and a half later the World Bank came in with $400 million.

    “So, there is a question of response. It is not that we don’t ask from other institutions, but the question is which ones are able to offer us what we are trying to raise.

    “For China-Exim Bank, why it is so large is because most of our rail projects are funded by the China-Exim Bank and they are the largest component of this borrowing plan.

    “We would have wished to borrow from other multilateral institutions, but when we make a request and you are not getting response, you go to the ones that are more amenable and that respond positively and more timely.”

    Assuring that the funds would be channeled to the provision of infrastructure that will boost the economy, the minister.

    Project to fund

    She said: “Other projects are in the health care and education. It also included projects for the rehabilitation of the Northeast geopolitical zone.

    “Others are the Mambila Hydro Power project ($4.9 billion); Lagos-Kano modernisation project ($4.1 billion); Development Finance project loan being provided by a consortium of World Bank and African Development Bank agencies ($1.28 billion).

    “The facilities will support the setting up of the Development Bank of Nigeria through some development finance institutions in Nigeria to provide funds for small and medium size enterprises.

    “This will make access to finance to SMEs easier, help them to grow and help more Nigerians to come out of poverty line.

    “Above all, the loan would help us to improve our electricity supply, reduce poverty, create jobs, ensure access to finance, agricultural productivity, guarantee food security, achieve high school enrolment, provision of clean potable water, rehabilitation of major roads and development of the mining industry.”

    On why Nigeria is seeking 70 per cent of the foreign loan from China, the minister said: “It is meant to make funds available to our own development institutions so that they can give out loans because access to finance has been difficult for the SMEs.”

    On the debt profile, the minister said: “The 2016 – 2018 external borrowing plan is for the federal and the state governments. So, some states would be responsible for the repayment of some of the loans.”

    On the sustainability of the nation’s debt portfolio, Mrs. Ahmed noted the current debt portfolio ceiling as set by the Fiscal Responsibility Act is 25 per cent of total debt to GDP.

    “The ratio for December 2018 is 19.09 per cent, but it reduced to 18.9 per cent by the middle of 2019,” she explained, adding: “The debt service to revenue ratio is, however, high and it provides us strong justification for us to drive our revenue. For 2017, the ratio was 57 per cent and 51 per cent in 2018.

    “Our debt level is low compared to other countries. For instance, the USA, United Kingdom and Canada has debt rate to GDP ratio of 105 per cent while their debt to revenue service is 12.5 per cent.”

    Bello said that the $470 million being requested for would be used to fund water and rail projects in the capital city.

    Fashola, Senator Gbemisola Saraki and Mohammed also gave the breakdown of their ministries component of the loan.

    Kaduna defends loan

    Also on Tuesday, the Chief of Staff to the Kaduna State Governor, Mohammed Abdullahi, defended the state’s $305 million external loan request.

    Abdullahi said: “The loan is specifically designed to fund capital projects with socio-economic impact on Kaduna State and its residents in line with the state development plan. This is reflected from the budgetary provisions, where 22.13 per cent is allocated to the Ministry of Works, Housing and transport; 12.57 per cent is allocated to the Ministry of Education, Science and Technology; 8.71 per cent is allocated to the ministry of rural and community development; 8.36 per cent is allocated to the Kaduna Geographical Information Service (KADGIS); while the rest is distributed amongst other MDAs.”

    On the sustainability of the state’s debt and ability to repay, Abdullahi said: “Based on the economic indices, Kaduna state can comfortably repay the loan.

    “The state average monthly FAAC allocation for the preceding twelve months is N3.295 billion while our current monthly debt service is N467.12 million.

    “Also, the monthly debt service forecast on the FGN Budget support facility of N4.169 billion with a moratorium of 18 months and World Bank loan of $350 million with a moratorium of 10 years are N191.767 million and N98.843 million respectively.

    “If the state was to repay all loans today, the total monthly debts service would be N757.735 million representing 23 per cent of total deductions as a percentage of total allocations.

    “This is less than the threshold for sub-national borrowing which is capped at 40 per cent in view of this, Kaduna State is within the sustainable debt level.”

    A representative of the Katsina State Government said the state also plans to borrow $100 million from the Islamic Development Bank.

    He said the state would enjoy between 20 to 50 per cent grants and that projects to be executed would cover the entire local government areas of the state.

    Besides, he said that the loan was interest free.

    The Kogi State Government, represented by the Commissioner for Finance, Budget and Planning, Ashiru Idris, said the $100 million being requested by state was would be used to develop agricultural in the Staple Crop Processing Zone of the State.

  • Banks took N950b loan from CBN in three months

    Commercial and merchant banks took cumulative loans worth N949.91 billion from the Central Bank of Nigeria (CBN) within three months, the apex bank’s quarterly economic report has shown.

    The report released at the weekend showed that the loans came through CBN’s Standing Facilities meant for the lenders to square up their liquidity positions and meet customers’ needs.

    The funds were sourced, largely, from increased unclassified and foreign liabilities, and mobilisation of time, savings and foreign currency deposits. They were used, mainly, for acquisition of unclassified and foreign assets and to boost foreign reserves.

    According to the report, the total Standing Deposit Facility (SDF) granted during the period under review was N1.93 trillion, with a daily average of N32.20 billion, compared to N2,081.14 billion in the third quarter of last year. The cost incurred on SDF in the reviewed quarter amounted to N0.66 billion, compared to N0.63 billion in the preceding quarter.

    The SLF is an overnight CBN credit available on banking days between 2 pm and 3.30 pm, with settlement done on same day value. The rates for SDF and SLF remained at nine and 16 per cent, respectively.

    According to the CBN, the funds covered three months ended December and came as SLFs.

    The report said: “The banks continued to access the CBN’s Standing Facilities to square up their positions either by borrowing from the standing lending facility (SLF) or depositing their excess liquidity at the standing deposit facility (SDF) of the CBN at the end of each business day.”

    “Total request for the Standing Lending Facility (SLF), inclusive of direct SLF (N949.91 billion) and Intra-day lending facilities -ILF (N352.64 billion) that were converted to overnight repo during the review quarter, stood at N1.3 trillion, compared with N6.2 trillion in the preceding quarter.

    “The daily average transaction value amounted to N23.26 billion in 56 transaction days, with total interest earned at N767.13 billion, compared with the daily average of N100.05 billion in 62 transaction days, with a total of N4.21 billion, as interest earned at the end of the preceding quarter.

    “The total assets and liabilities of commercial banks stood at N40.8 trillion at end-November 2019, representing 3.2 per cent increase above the level at end-September 2019. The rise in bank’s assets could be linked to CBN’s directive that banks lend at least 65 per cent of their deposits to customers through the Loan to Deposit (LDR) policy.

    “The loans-to-deposit ratio, at 62.9 per cent, was 0.7 percentage point higher than the level at end-September 2019, but 17.1 percentage points lower than the prescribed maximum of 80.0 per cent.”

    At N22.96 trillion, banks’ credit to the domestic economy, at end-November 2019, showed an increase of 3.8 per cent, compared with the level at end-September 2019. The development reflected, largely, the 4.7 per cent and 3.6 per cent rise in claims on the Federal Government and the private sector, respectively, in the review period.

    The total specified liquid assets of the commercial banks was N14.6 trillion at end-November 2019, representing 60.6 per cent of the total current liabilities.

    At that level, the liquidity ratio was 2.9 percentage points and 43.3 percentage points above the level at end-September 2019 and the stipulated minimum ratio of 30 per cent, respectively.

  • Chelsea defender completes loan move to Swansea

    Chelsea defender Marc Guehi has joined Swansea on loan until the end of the 2019-20 campaign.

    The 19-year-old has already taken in a training session with his new team-mates, and will be available for selection when the Swans face local rivals Cardiff City on Sunday.

    Guehi was only able to appear in two Carabao Cup matches for Chelsea in the first half of the season, with the wait for his full Premier League debut still ongoing.

    The talented England U21 international is likely to play far more regularly at the Liberty Stadium, and Swansea will have the option to extend his loan for an extra year in the summer.

    Guehi was born in the Ivory Coast and signed for Chelsea at the tender age of eight, before making his way through the club’s youth ranks.

     

  • Governors’ Forum distances members from Buhari’s fresh $30bn loan request

    Governors of the 36 states have distanced themselves from the plan by the Federal Government to borrow $30billion in the next fiscal year.

    Speaking on the platform of the Nigeria Governors’ Forum (NGF) the state Chief Executives said the $30b borrowing plan submitted to the National Assembly by the FG has nothing to do with the states.

    NGF’s Chairman and Governor of Ekiti State, Kayode Fayemi made the clarification after a meeting of the group in Abuja on Wednesday night.

    He said: “You know the borrowing plan is a Federal Government borrowing plan. It is not the federation’s borrowing plan.

    “The Federal Government’s borrowing plan to the National Assembly is really a matter between the Federal Government and the National Assembly.

    “It is not something that we want to put ourselves in between. We don’t want to comment on that.”
    Fayemi declined to comment on the crisis in the Edo State House of Assembly, hinting that the NGF was not will to be involved because the matter was internal to the state.

    When asked if the NGF discussed the crisis in the Edo House of Assembly in meeting with Speakers of all the Houses of Assembly, Fayemi said “On the question around the meeting with the Speakers, the meeting with our speakers was not about individual states. It was on general constitutional matters and we had very fruitful deliberations on that.

    “So, we cannot comment on the issue you have raised about a specific state. I am sure that information will be available to you if you go to Edo State.”

    Fayemi assured that the governors were committed to the N30,000 minimum wage and were not going back on it.

    “Minimum was not on our agenda because minimum wage is a settled matter. And governors have all indicated, without any equivocation, that we subscribe to the Act of Parliament that has been passed on the national minimum wage of N30,000.

    “There is no debate, we have accepted that. The negotiation team that you are talking about (the negotiation team set up by each state with labour representatives) is not so much about the minimum wage.

    “It is about the consequential impact of the minimum wage on the higher level and each state has started that process. If the Nigerian Labour Congress (NLC) is not fully aware of the status of the negotiation. in the various states, we will be happy to share the information available to us with them.

    “But, as far as we are concerned, there is no opportunity of decision in the Governors’ Form to backtract. We are not backtracting from the minimum wage.

    “However, fingers are not equal. States have to negotiate in terms of the consequential implication.

    “There may be states that are in a position to pay N50,000. What we can tell you is that not state will pay less than N30,000 when we finally get to that point,” he said.

    Fayemi, who read the communique issued after the meeting, withheld details of the constitutional issues discussed by the governors and the Speakers.

    The communique reads: “We, members of the Nigeria Governors Forum (NGF), at our meeting held today at the NGF Secretariat Abuja, deliberated on several issues and resolved as follows:

    “The forum received an update from the Auditor General of the Federation (AuGF) and the World Bank team on the State Transparency, Accountability and Sustainability (SFTAS) Independent Verification Assessment (IVA) exercise conducted across states.

    “The Independent Verification Assessment (IVA) team highlighted among others, activities of the FY2018 Annual Appraisal Assessment to be concluded in January 2020 while the transfer of 2018 grants to States will take place in March 2020.

    “As a SFTAS implementing partner, the Nigeria Governors’ Forum Secretariat will carry out regional sensitization workshops in March 2020 and kickstart the provision of technical assistance to States through customized just-in-time advisory and training, exchange visits and peer learning events.

    “The forum received an update on the health priorities of the forum especially Universal Healthcare, Nutrition and on the Polio Eradication Initiative, including the Seattle Declaration.

    “Governors reiterated their commitment to an effective implementation and tracking of the Seattle commitment
    “The Forum received a briefing on the UK-Africa Investment Summit 2020 from the UK Foreign Office led by Harriet Thompson, the UK Deputy High Commissioner to Nigeria.

    “The summit will be hosted by the UK Prime Minister and will bring together businesses, governments and international institutions to showcase investment opportunities in Africa.

    “Members expressed optimism for deeper opportunities in various sectors of the economy including agriculture, infrastructure, manufacturing, health, education and financial services; and committed to strengthening the forum’s partnership with the UK’s CDC Group and the Private Infrastructure Development Group (PIDG) to help bridge relations between Nigerian and UK companies.

    “The forum received a delegation of the Conference of Speakers of the State House of Assembly and had fruitful discussions on some constitutional matters.

    “The forum received a presentation from the Ministry of Finance, Budget and National Planning, on the Geo-Referenced Infrastructure and Demographic Data for Development (GRID3) programme in Nigeria – a programme designed to strengthen the application of geospatial data for evidence-based decision making in the country.

    “The National Coordinator of GRID3, Inuwa Yau, also highlighted several applications of the programme in priority areas of government including food security, health coverage, financial inclusion, survey and demographics and education.

    “Finally, state governors commended the Ministry of Finance, Budget and National Planning for coordinating the GRID3 programme which will be central to development-planning going forward.

    “Members pledged to work with the ministry by providing the institutional arrangements in all states to ensure that each state supports the generation and management of geospatial data.

    “This will ensure that state governments have the right information in identifying where people live and how critical services can be most equitably and effectively allocated.”

  • Senate begins consideration of Buhari’s loan request

    Senate begins consideration of Buhari’s loan request

    The Senate on Tuesday referred President Muhammadu Buhari’s 2016 – 2018 External Borrowing Plan request to its Committee on Local and Foreign Debts.

    The President’s request was forwarded to the Committee for further legislative work following its presentation by the Senate Leader, Yahaya Abdullahi, during plenary.

    The Committee has Senator Clifford Ordia (PDP, Edo Central) as Chairman and Senator Bima Mohammed Enagi (APC, Niger South) as Vice Chairman.

    President Buhari had in a letter dated November 26, 2019, said the Eighth National Assembly approved only a part of the External Borrowing request forwarded to it in September 2016.

    This, according to him, stalled the Federal Government’s implementation of critical projects spanning across the mining, power, health, agricultural, water and educational sectors.

    The letter read: “Pursuant to Section 21 and 27 of the Debt Management Office (Establishment) Act, I hereby request for Resolutions of the Senate to approve the Federal Government’s 2016 – 2018 External Borrowing plan, as well as relevant projects under this plan.

    “Specifically, the Senate is invited to note that: While I had transmitted the 2016-2018 External Borrowing Plan to the Eighth National Assembly in September, 2016, this plan was not approved in its entirety by the Legislature, only the Federal Government’s Emergency projects for the North East, (Four (4) States’ projects and one (1) China Exim Bank Assisted Railway Modernisation Projects for Lagos – Ibadan Segment) we’re approved, out of a total of thirty-nine (39) projects.

    “The Outstanding projects in the plan that were not approved by the Legislature are, nevertheless, critical to the delivery of the Government’s policies and programmes relating to power, mining, roads, agriculture, health, water and educational sectors.

    “These outstanding projects are well advanced in terms of their preparation, consistent with the 2016 Debt Sustainability Analysis undertaken by the Debt Management Office and were approved by the Federal Executive Council in August 2016 under the 2016 – 2018 External Borrowing Plan.

    “Accordingly, I have attached for your kind consideration relevant information from the Honourable Minister of Finance, Budget and National Planning, the specific outstanding projects under the 2016 – 2018 External Borrowing plan for which legislative approval is currently sought.

    “I have also directed the Minister to make herself available to provide any additional information or clarification which you may require to facilitate prompt approval of the outstanding projects under this plan”, the letter read.

  • Buhari not responsible for Nigeria’s growing debt profile – DMO

    Buhari not responsible for Nigeria’s growing debt profile – DMO

    …Says President seeking approval for $22.7bn loan not approved by Saraki’s eight assembly

    …clears air on nation’s external debt

    The Debt Management Office (DMO) says the public debt stock of the country is a cumulative figure of borrowings by successive governments over many years.

    The DMO said this in a statement released in Abuja on Tuesday.

    It said that it was not appropriate to attribute the Public Debt Stock to any particular administration.

    It, however, explained that President Muhammadu Buhari submitted a request to the National Assembly for approval of the 2016 – 2018 Medium Term External Borrowing Plan for the sum of 22.718 billion dollars.

    According to the statement, this request is not a new one as being perceived but rather it represents those borrowings which have been submitted to the National Assembly but are yet to be approved before the expiration of the 8th Assembly.

    “The requests in the Plan are proposed borrowings from multilateral and bilateral lenders.

    “The proposed loans are concessional, semi-concessional, long-tenured and are for the purpose of financing infrastructure and other developmental social projects.

    “All of which have multiplier effects in terms of job creation, business opportunities and an overall increase in Nigeria’s Gross Domestic Product (GDP).

    “Also, the benefits are long term and will serve generations of Nigerians.

    “The proposed New Borrowing is consistent with the subsisting Debt Management Strategy which seeks to replace short term high –interest cost domestic debt.

    “With low-interest long term external debt and is one of the measures that is being implemented to moderate the level of Debt Service.

    “The achievements in this regard are evidenced in the declining share of Domestic Debt in the Total Public Debt from over 83 per cent in December 2015 to about 68 per cent in June 2019,” it explained.

    The statement noted that Nigeria had a ceiling of 25 per cent on the total public debt stock to GDP which is Debt to GDP and it had operated within.

    It said that the ratios for Dec. 31, 2018, and June 30, 2019, were 19.09 and 18.99 per cent respectively.

    “The Debt Service to Revenue Ratio (Debt Service/Revenue) has, however, been higher than desirable and provides strong justification for the current drive to increase Oil and Non-Oil Revenues significantly.

    “The debt service to revenue for the years 2017 and 2018 were 57 per cent and 51 per cent respectively.

    “The debt service figures have grown as a result of the increase in the Debt Stock and relatively high domestic Interest Rates.

    “Still on the issue of debt sustainability, when compared to a number of countries, Nigeria’s Debt to GDP is relatively low but the Debt Service to Revenue is relatively high.

    “The United States of America, United Kingdom and Canada had Debt/ GDP ratios of 105, 85 and 90 per cent in 2017 which were much higher than that of Nigeria.

    “But because they generate adequate revenues, their debt service to revenue for the same year were 12.5, 7.5 and 7.5 per cent respectively.

    “The case was also similar for Brazil, South Africa, Kenya and Mexico who had higher Debt to GDP than Nigeria (74, 53, 57 and 46 per cent respectively but had lower debt service to revenue of 32.20, 11.4, 13.2 and 13.6 per cent respectively.

    “This is clear evidence that Nigeria’s revenues are low. This is further demonstrated by Nigeria’s tax to GDP ratio of only six per cent in 2018 compared to Kenya’s 15.7, Morroco 21.8, Cameroon 12.2 and South Africa 27.5 per cent in 2017”

    The statement pointed out that the above figures attested to the fact that Nigeria had a revenue challenge rather than a debt problem.

    According to the statement, it is in this regard that all efforts are in top gear to increase revenues through measures such as the Finance Bill and Strategic Revenue Growth Initiative.

    “Overall, the justification for the borrowing is that many of the projects in the plan are for the development of infrastructure in the areas of roads, railways, waterways and power which will help to unleash the potential of the Nigerian economy.

    “Other loans such as those for the educational sector will contribute to the development of Nigeria’s human capital, while loans for Agriculture will be used to diversify the economy.

    “There will also be funding for Development Finance Institutions to enhance access to finance for Micro, Small and Medium Scale Enterprises.”

  • Zainab, Fashola, Saraki defend Buhari’s 22.7bn loan request

    Zainab, Fashola, Saraki defend Buhari’s 22.7bn loan request

    The Federal Government on Tuesday deployed three ministers to the House of Representatives to defend President Buhari’s request from National Assembly for approval of 22.7 billion dollars fresh borrowings for his government.

    At the green chamber to defend the loan captured under the Federal Government’s External Borrowing Plan (2016 to 2018) were Minister of Works and Housing, Mr Babatunde Fashola, Minister of Finance, Mrs Zaynab Ahmed and Minister of State, Transport, Ms Gbemisola Saraki, according to report by News Agency of Nigeria.

    The ministers, who appeared at a public hearing conducted by the House committees on Aids, Loans and Debt Management, and Rules and Business put up strong arguments as they tried to convince the lawmakers that the loan would be invested in Infrastructure development and not consumption if approved.

    The 8th National Assembly had received the proposed projects for 2016 to 2018 Medium Term (Rolling) External Borrowing Plan put at 30 billion dollars.

    The ministers, however, presented the same proposal at 22.7 dollars and gave reasons why the country should have funds as soon as possible.

    They emphasised that the loans would promote infrastructure development and job creation.

    The Minister of Finance said Nigeria that the country had a revenue generating challenge and stressed the need to invest in sustainable projects that would generate revenue.

    Ahmed said the loan would be “strictly for infrastructure development.

    “So that we can address the deficit that we have. We know we must comply with some criteria; every Kobo borrowed will be judiciously used,” she said.

    Also, Minister of Works and Housing said Nigeria’s debt portfolio and debt service were being considered.

    Fashola emphasised that investing in capital projects were needed to help the country achieve a self-sustaining economy.

    “As we cannot ignore the concerns about debts, so we cannot ignore the concerns and demands for the provision of life sustaining infrastructure.

    “We have passed budget of several hundreds of billions, but the reality is that over four years, we have never received full funding for any budget. And the reason is simple, there is a deficit, and we cannot finance it.

    “Some of the roads we are investing in will last for upwards of 20 to 30 years if well maintained and not abused. For rail assets, usually the tracks will last for at least 100 years. Power plants like the Mambilla will be there for many decades.

    “So, we will be spending today’s money to secure tomorrow’s assets that will sustain our growing population and growing economy.”

    The Minister of State for Transport also said there was the need to complete Kano-Lagos and Niger Delta coast rails.

  • Why Nigeria is borrowing fresh $3bn from World Bank – Ahmed

    Why Nigeria is borrowing fresh $3bn from World Bank – Ahmed

    The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed has said the $3bn loan being sought by the Federal Government from the World Bank would be deployed for reforms in the power sector.

    She said this during an interview with journalists on the sidelines of the World Bank/International Monetary Fund meetings holding in Washington DC, United States.

    Ahmed, who is leading the Federal Government’s delegation to the meeting said she would be holding further discussions with the management of the Bank to present how the fund would be disbursed for the project.

    She said based on the plan of the Federal Government for the power sector, the loan would be used for the development of transmission and distribution networks to enhance the delivery of electricity.

    Ahmed also said the loan would be used in addressing some of the challenges that the country is currently facing in the power sector.

    She said, “There is a proposed $2.5bn to $3bn facility for the power sector development programme in Nigeria and this will include development of the transmission networks and the distribution networks as well as removing the challenges that we currently have now in the electricity sector.

    “We are going to have a full meeting to discuss the power sector recovery programme and back home we have been working a great deal with the World Bank to design how this programme will be implemented.

    “So we have an opportunity now to have a direct meeting with the leadership of the bank and to tell them the plan we have and how much we need from one to five years.”

    The finance minister explained that the government would be pushing for the disbursement of the $3bn facility in two tranches of $1.5bn each.

    When asked to comment on concerns being raised by the IMF about Nigeria’s debt which stands at N25.7tn the finance minister insists that Nigeria does not have a debt problem.

    She said what the government needed to do is to increase its revenue-generating capacity in order to boost the revenue to about 50 per cent of Gross Domestic Product.

    She said with Nigeria’s current revenue to GDP ratio standing at just 19 per cent, it’s underperformance is significantly straining the government’s ability to service its debt obligation.

    The minister said, “Nigeria does not have a debt problem. What we have is a revenue problem.

    “Our revenue to GDP is still one of the lowest among countries that are comparable to us. It’s about 19 per cent of GDP and what the World Bank and IMF recommended is about 50 per cent of GDP for countries that are our size. We are not there yet. What we have is a revenue problem.

    “The underperformance of our revenue is causing a significant strain in our ability to service debt and to service government day-to-day recurrent expenditure and that is why all the work we are doing at the ministry of finance is concentrating on driving the increase in revenue.”

    When asked why the Federal Government decided to increase the revenue projection in the 2020 budget to N8.9tn at a time when government revenue performance is less than 60 per cent, she said a lot of measures are being put in place to correct the anomaly.