Nigeria banks on low-interest $2.25bn World Bank loan to boost economic recovery

Business a.m.

The Nigerian government has qualified for processing a loan from the World Bank, totalling $2.25 billion at a low interest rate of one per cent. 

Wale Edun, minister of finance and coordinating minister of the economy made the disclosure at a joint press conference conducted by the Ministry of Finance and the Central Bank of Nigeria (CBN), held against the backdrop of the just concluded spring meetings of the International Monetary Fund (IMF) and the World Bank in Washington D.C.

Edun  said the package, approved by the board of directors of the World Bank, offers a 40-year term with a 10-year moratorium and a nominal one-per cent interest rate.

In his word: “If you look at the fact that we have qualified for the processing, just this week to the Board of Directors of the World Bank, of the total package of $2.25 billion of what you can call, I mean, if there is no such thing as a free lunch, but it is the closest you can get to free money. 

It is virtually a grant. It is for about 40 years, 10 years moratorium and about 1% interest. So that also is part of the flow you can count.”

Edun also disclosed that Nigeria is also poised to secure budgetary support and low-interest funding from the African Development Bank. He stated further that the Nigerian government is in the throes of negotiations with foreign direct investors. 

The minister addressed concerns about debt sustainability by highlighting the pivotal role of revenue generation in Nigeria’s economic strategy and its foundation role in the country’s economic game plan. He identified  oil revenue as a primary source of revenue, while expressing confidence in  President Bola Tinubu’s ambitious goal to increase oil production from 1.6 million barrels per day to 2 million barrels per day.

“These measures are crucial for enhancing our fiscal resilience and ensuring long-term economic stability,” he said.

The minister also disclosed that in a bid to strengthen its foreign exchange reserves and attract investment, Nigeria is exploring innovative avenues with particular emphasis on leveraging remittances from its diaspora community. He underscored the immense potential of Nigerians living abroad, acknowledging their substantial financial resources that could significantly benefit the Nigerian economy.

Emphasising the wellspring of potential that lies dormant within Nigeria’s diaspora, Edun, expressed optimism over their capacity to make substantial contributions to Nigeria’s economic growth and development.

Speaking further on how the government aims to effectively harness the potential of diaspora funds  he said: “The government is looking at attracting those funds and capturing those funds through a diaspora type of instrument, a diaspora bond. We think that would be a very attractive instrument for Nigerians abroad and for foreign holdings of foreign currency and we look to having a substantive, substantial and successful issue later in the year.”