Nigeria’s Federal Government on Tuesday said it approached China-Exim Bank for a $17bn loan request because other lending institutions like the World Bank and the African Development Bank were not showing interest when Nigeria approached them during recession.
The Minister of Finance and National Planning, Zainab Ahmed, who stated this in the Senate while defending the decision of President Muhammadu Buhari’s to borrow $29.96bn loan to fund critical infrastructure across the country, noted that the 8th National Assembly had approved about $6bn for the Federal Government out of the $29.96bn loan, leaving a balance of $22.8bn.
She explained to the Senate Committee on Local and Foreign loans that the Federal Government and some state governments were jointly requesting the loans from various lending institutions.
Ahmed noted that 70 per cent of the loan, which is about $17bn, would come from the China-Exim Bank while others would be sourced from other lending institutions such as the Islamic Development Bank. She reiterated her position that the country had no issue with its current debt profile but noted that its dwindling revenue could not fund the various projects that were expected to have meaningful impact on the lives of Nigerians.
The funds ($22.8bn) will be channelled to the funding of infrastructure, which will enhance the productivity of our economy,” Punch quoted her as saying.
“Other projects are in healthcare and education. It also includes projects for the rehabilitation of the North- East geopolitical zone, which has been ravaged by insurgency.
“Others are the Mambila Hydro Power project ($4.9bn), Lagos-Kano modernisation rail project ($4.1bn), the Development Finance project loan being provided by a consortium of World Bank and African Development Bank agencies ($1.28bn).
“Above all, the loan will help us to improve our electricity supply, reduce poverty, create jobs, ensure access to finance, agricultural productivity, guarantee food security, achieve high school enrolment, provide clean potable water, rehabilitate major roads and develop the mining industry.”
On why the country is seeking 70 per cent of the foreign loan from China, the minister said, “it is meant to make funds available to our own development institutions so that they can give out loans because access to finance has been difficult for the SMEs.”
The minister said the current debt profile was not a problem.
“The 2016 – 2018 external borrowing plan is both for the Federal Government and the states. So, some states would be responsible for the payment of some of the loans.
“The ratio for December 2018 was 19.09 per cent but it reduced to 18.9 per cent by the middle of 2019. The debt service to revenue ratio is however high and it provides us strong justification for us to drive our revenue.
“For 2017, the ratio was 57 per cent and 51 per cent in 2018.”
She argued that the nation’s debt level was low compared to other countries like the USA, the United Kingdom and Canada.
Source: Business Hallmark