The federal government has secured an $800 million loan from the World Bank in order to provide post-petroleum subsidy palliatives for over 50 million Nigerians ahead of June 2023.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, revealed to State House correspondents that the Federal Government had secured $800m from the World Bank.
The financing agreement document for the National Social Safety Net Programme – Scale Up between the Federal Republic of Nigeria and the International Development Association of the World Bank was obtained by reporters on Tuesday.
The objective of the project is to expand coverage of shock-responsive safety net support among the poor and vulnerable and strengthen Nigeria’s national safety net delivery system till June 30, 2024.
The document signed by the Nigerian finance minister and the World Bank Country Director for Nigeria, Shubham Chaudhuri, on August 16, 2022, revealed that the loan was concessional financing.
According to the World Bank, concessional finance is below-market-rate finance provided by major financial institutions, such as development banks and multilateral funds, to developing countries to accelerate development objectives. The $800m loan obtained by the Federal Government attracts a maximum commitment charge rate of one-half of one per cent per annum on the Unwithdrawn Financing Balance, and a service charge of three-fourths of one per cent per annum on the withdrawn credit balance, according to the document.
It also disclosed that the interest charge is one and a quarter percent per annum on the withdrawn credit balance.
Also, a percentage of the principal amount of the loan is expected alongside the other charges, and this will increase over time.
While the first payment will be 1.65% of the principal amount, the last payment will be 3.40% of the principal amount.
The payment dates are January 15 and July 15 in each year, starting from January 15, 2027, with payments in dollars.
The repayment will be made in installments, with the first payment due on January 15, 2027, and the last payment due on July 15, 2051.
Nigeria is expected to have a new president from May 29, 2023, who is expected to be at the helm of affairs of the country until May 29, 2027. The President-Elect, Bola Ahmed Tinubu, is expected to be sworn in on May 29, 2023. This means that the next administration is expected to begin the repayments for the $800m loan.
