Buhari Seek Fresh $800m World Bank Loan 18 Days To Tenure Expiration
By Stephanie Odiase
President Muhammadu Buhari on Thursday requested the Senate to approve a fresh $800 million loan from the World Bank to be used specifically to continue the conditional cash transfer programme of N5,000 monthly to 10.2 million poor and low-income households for the next six months.
This comes 18 days to the end of his tenure, and just as the Budget Office has warned that Nigeria’s debt profile was becoming unsustainable, given the country’s low debt-to-revenue ratio.
In the letter read at plenary by the Senate President, Ahmad Lawan, Buhari explained that the loan would specifically be used to continue the National Social Safety Net Programme (NASSP). The NASSP involves the conditional cash transfer of N5,000 monthly to 10.2 million poor and low-income households with a multiplier effect on about 60 million individuals.
The letter reads in part: “It is with pleasure that I forward the above subject to you. Please note that the Federal Executive Council (FEC) approved an additional loan facility to the tune of $800 million to be secured from the World Bank, for the National Social Safety Net Programme (NASSP).
“There is the need to request for your consideration and approval to ensure early implementation. The Senate, may wish to note that the programme is intended to expand coverage of shock responsive safety net support among the poor and vulnerable Nigerians. This will assist them in coping with the costs of meeting basic needs.”
The president explained that the federal government of Nigeria under the conditional cash transfer window of the programme will transfer the sum of N5,000 per month to 10.2 million poor and low-income households for a period of six months with a multiplier effect on about 60 million individuals.
He stated that to guarantee the credibility of the process, digital transfers will be made directly to beneficiaries’ accounts and mobile wallets, adding that the intervention will stimulate activities in the informal sector, improve nutrition, health, education and human capital development of beneficiary households.
Meanwhile, the Director-General, Budget Office of the Federation, Ben Akabueze, who raised the alarm over the unsustainability of Nigeria’s debt profile while addressing members-elect of the 10th National Assembly in Abuja, on Thursday, noted that due to its poor debt-to-revenue ratio, Nigeria is fast exceeding its limited borrowing space.
He however, noted that while Nigeria’s debt-to-GDP ratio is within acceptable threshold, its debt-to-revenue is not. “You may have heard that we have one of the lowest GDP-to-debt ratios in the world. While the size of the FG budget for 2023 created some excitement, the aggregate budget of all the governments in the country amounts to about N30trillion. That is less than 15% in terms of ratio to GDP.
Comparing Nigeria’s 15% ratio to South Africa’s 30% and Morocco’s 40%, Akabueze stressed that the ration was too small for the country’s needs, resulting in fierce competition for limited resources.
“We now have very limited borrowing space; not because our debt-to-GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio. Once a country’s debt service ratio exceeds 30%, that country is in trouble and we are pushing towards 100%, and that tells you how much trouble we are in,” he warned.