The African Development Bank (AfDB) has pledged to offer a $1 billion loan to Nigeria, to support the country with the funding of the $2.2 trillion shortfall in the 2016 budget.
The facility attracts a 1.2 per cent interest rate.
AfDB President, Akinwunmi Adesina, made the announcement when he led a delegation of the regional bank to a meeting with Vice President Yemi Osinbajo and members of the economic management team.
Adesina’s visit to Nigeria, yesterday, was his first since he assumed office as president of the bank.
Speaking to State House correspondents after the meeting, he stated that the bank will support the federal government with the budget to be able to deal with some of fiscal imbalance that they have.
The former minister of agriculture said the bank was also planning a $4.1 billion concessional credit to Nigeria in the areas of power, infrastructure, agriculture and for the private sector, SMEs financing and lending between 2016 and 2017, adding that the bank’s investment in Nigeria by 2019 would be a total of $10 billion.
“I’m not here to lecture the Nigerian government; I’m here to support very strongly. We have said that we are going to support the Nigerian government with the budget support to be able to deal with some of the fiscal imbalance that they have. We are looking to consider for an award of $1 billion to help to deal with that particular deficit. In addition to that, there are other challenges that the economy has in terms of diversifying and deepening the level of diversification in critical sectors; so agriculture, solid minerals, manufacturing as well as industrial sector are very important. So the bank is going to provide in total between 2016 and 2017 $4.1 billion to Nigeria in various sectors such as power, infrastructure and agriculture and for the private sector, the SMEs’ financing and lending.
“I expect that our portfolio in Nigeria will not decrease; it will actually grow. We expect to invest in Nigeria by 2019 a total of $10 billion. So let me just say that the issues that we think are important are the need to further deepen the diversification of the rest of the economy, and the macro-economic stability as well as fiscal stability in the country. We have asked for the need for better synergies between the macro policy side and monetary policy side and also the fiscal policy side of the economy. And, of course, we also recognize that power is perhaps the most important challenge that is driving inflation in the country. So we expect in our portfolio this year to invest in a total of 1.400 megawatts of projects to focus on the energy sector and by 2017 we plan to invest in 1,387 megawatts of project for the sector,” Adesina stated.
While admitting that the times are difficult, the AfDB president commended the government for being bold in taking the right decisions.
Adesina explained that he discussed with the vice president and minister of finance about how to invest in areas of women and youths employment in the country as well as to look for opportunities to support access to finance by supporting the Development Bank of Nigeria (DBN) with $500 million which will help to provide cheap financing for the real sector that the country wants to grow.
According to him, the AfDB is also providing $100 million to the Bank of Industry (BoI) to be able to lend to small and medium size enterprises adding that the bank also want to finance the Bank of Agriculture to be to reform itself to be able to get more financing.
“So all in all, I want to say that we are not fair weather friends of Nigeria, we are here to provide strong support to the Nigerian government.
“Let me just say that Nigeria has tough times but Nigeria is not falling apart and when people talk about debt crisis, Nigeria is not in debt crisis. If you look at the fiscal deficit of this country with regard to the GDP, it is about 3 or 3.5 per cent, which is still way below the five per cent for the Fiscal Responsibility Act,” he stated.
He contended that to come out of recession, the private sector is needed as much as the government.
On her part, the Minister of Finance, Kemi Adeosun, said what has been of great relief to the economic management team is the synergy between what the government is trying to do and what the AfDB repositioning under Adesina is trying to focus on.
According to her, most of the sector specific programmes the bank has are in the very areas the government wants to focus on.
Credit: All Africa