Nigeria has reportedly approached the World Bank for another loan to the tune of $2.5 or N767.3 billion in a new tranche of concessionary lending.
According to Bloomberg, the World Bank’s vice president for Africa, Hafez Ghanem disclosed this in Abuja on Wednesday night.
Ghanem stated in an interview that in the past year, Nigeria received $2.4 billion from the World Bank, while he stated that Nigeria and the world bank are in talks over a new $2.5 billion loan. “We’re talking about a new set of programs of about the same amount, it should be around $2.5 billion,” he said.
Further Details: According to Ghanem, it’s important to resolve the problems of the power sector in Nigeria to bring in more investments. He further disclosed that the World Bank is supporting digital transformation in Nigeria because of its potential ability to transform other areas of the economy including industry, agriculture and services,
“Nigeria has a comparative advantage in that area because of the youth, a majority of the population is young,” he said. “So if we want to create jobs, we need to invest much more in the digital economy.”
“Because you need to bring down the cost of power to make the economy more competitive for the development of industries.” Ghanem Stated.
To ease the mounting debt burden, Nigeria has sought more credit with low interest and long repayment periods from institutions including the World Bank and the African Development Bank.
Brief on Nigeria’s debt profile: Data obtained from Nigeria’s Debt Management Office (DMO) as at the end of March 2019 shows that the country’s public debt (domestic and external) stood at a whopping N24.9 trillion. This is about 19% of the country’s Gross Domestic Product.
- Nigeria’s rising debt has attracted wide criticisms both locally and internationally. For example, the International Monetary Fund (IMF) questioned Nigeria’s ability to repay its N24.9 trillion debt.
- Nigeria is largely faced with revenue shortfalls as the output and price of oil, fell in the past five years.
- The IMF had also expressed concern about the rollover risks, arguing Nigeria’s capacity to refinance debt might drop in the future.
- Meanwhile, the Federal Government has since rebuffed such claims, stating that the nation’s debt burden is sustainable.
- The Federal government also disclosed this week that Nigeria spent a whooping N1.11 trillion to cover debt service obligations in the first six months of the year 2019.
- More debt on the horizon as the Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, disclosed that the sum of N1.7 trillion will be borrowed to finance the 2020 budget.