The African Development Bank is working
on giving Nigeria loan facilities of $4.1bn between now and next year
for critical sectors of the economy.
The loans include $1bn at a
concessionary interest rate of 1.2 per cent for Nigeria to address the
2016 budget deficit and aid her economic recovery.
The President, AfDB, Dr. Akinwunmi
Adesina, disclosed this to State House correspondents on Monday after a
meeting with Vice President Yemi Osinbajo and other members of the
Economic Management Team at the Presidential Villa, Abuja.
According to the AfDB president, the
package includes; $1bn in budget support, $300m to create jobs for
185,000 youths, $250m towards infrastructure development in the
North-East, $1m grant to deal with challenges of Internally Displaced
Persons, $300m for infrastructure development around Abuja, and $200m
for the Transmission Company of Nigeria to improve its facilities, among
others.
Stressing that Nigeria was the largest
shareholder in the bank, Adesina said that the bank was in the country
to offer its support in the face of the current tough times.
He said, “I think the times are
difficult but I want to commend the government for being bold in taking
the right decisions. I think that the fact that the price of crude oil
has gone down is a big challenge, because you have 98 per cent external
forex revenue coming from the sector.
“So, it has created calibrations; I’m
not going to go into the details of all the problems, but what is
important is what we are going to do about it.
“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 imbalances that they have. We are
looking to consider for an award of $1bn to help to deal with that
particular deficit.”
Adesina added that the bank would help
to revive Nigeria’s economy, especially by deepening the level of
diversification in critical sectors such as agriculture, solid minerals
and manufacturing.
According to him, the bank is going to
provide in total $4.1bn to Nigeria between 2016 and 2017 for power,
infrastructure, agriculture and for the private sector, including
financing and lending to the Small and Medium-scale Enterprises.
He also said that he expected the AfDB portfolio in the country to grow to $10bn by 2019.
Adesina, a former Nigerian Minister of
Agriculture, added, “We also recognise 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 power to focus on the energy sector; and by 2017, we plan
to add 1,387 megawatts to the sector.”
He said that the bank also discussed
with Osinbajo and the Minister of Finance, Kemi Adeosun, on how to
invest in areas of women and youth employment in the country as well as
to look for opportunities to support access to finance by supporting the
Development Bank of Nigeria with $500m, which will help to provide
cheap financing for the real sector that the country wants to grow.
According to him, the bank is also
providing $100m to the Bank of Industry to enable it to lend to small
and medium-sized enterprises.
Adesina said, “Let me just say that
Nigeria is experiencing tough times, but Nigeria is not falling apart;
and when people talk about debt crisis, Nigeria is not in a debt crisis.
If you look at the fiscal deficit of this country with regard to the
GDP, it is about three or 3.5 per cent. It is still way below the five
per cent recommended by the Fiscal Responsibility Act.
“If you look in terms of the debt to the
GDP ratio for Nigeria, it is 15 per cent. So, there is no debt crisis
in Nigeria; what you have is liquidity problem and we are trying for the
country to be able to drive down inflation and to be able to make sure
we are working with the government to be able to provide incentives for
the private sector.
“Because to come out of recession you
need more than the government, you need the private sector. So,
incentives are very important. The Finance minister talked about a whole
lot of incentives that they are going to give and I think that is the
right way to go.
“Nigeria will come out of this as a better and more diversified economy than before it went into the recession.”
Also speaking, Adeosun said there was no
need to fear over the new loan as it would be put into good use, adding
that the government was not over-borrowing.
She added, “And as Dr. Adesina said, we
are looking unto them with $1bn budget support; but beyond that, there
are lots of loans and initiatives around agriculture, job creation for
the youths, solid minerals, women empowerment and women’s access to
finance, and access to finance by the SMEs.
“We are not over-borrowing, what we
are trying to do is to ensure that this money we are borrowing we use it
on the key infrastructure that will drive the economy.”
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