The Nigerian government has announced its qualification for a World Bank loan from put at $2.25 billion at one per cent interest rate.
Minister of Finance and Coordinating Minister of the Economy Wale Edun stated this weekend at a joint media parley held by the Ministry of Finance and the Central Bank of Nigeria (CBN) at the spring meetings of the International Monetary Fund (IMF) and the World Bank in Washington D.C.
The minister said the package, as approved by the Board of Directors of the World Bank, offers a 40-year term with a 10-year moratorium and a nominal 1 percent interest rate.
“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 said.
He also said Nigeria was set to benefit from budgetary support and low-interest funding from the African Development Bank (AfDB), pointing out that negotiations with foreign direct investors are also underway.
He minister allayed the rising fear over the country’s debt sustainability and emphasised the pivotal role of revenue generation in Nigeria’s economic strategy.
Specifically, the minister noted oil revenue as a primary source, hinting on President Bola Ahmed Tinubu’s plan 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,” the finance minister said.
…Plans Diaspora bond later in the year
The minister also said Nigeria was exploring innovative avenues to bolster its foreign exchange supply and attract investment, with a keen focus on remittances from its Diaspora community.
While underscoring the immense potential of Nigerians living abroad, the minister acknowledged their substantial financial resources that could significantly benefit the Nigerian economy.
Edun said: “There are Nigerians abroad who are thriving financially,” and noted their capacity to make substantial contributions to Nigeria’s economic growth and development.
“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.”
“To harness these resources effectively, the Nigerian government is considering the issuance of diaspora bonds, aiming to attract funds from Nigerians living abroad and foreign currency holdings. The proposed diaspora bonds are anticipated to serve as an attractive investment instrument, catering to the financial interests of both Nigerians abroad and foreign investors.
“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,” the minister said.
He further said: “The government is optimistic about the prospects of a successful diaspora bond issuance, envisioning a substantive and substantial response from investors. Plans are underway to launch the bond later this year, with hopes of securing significant inflows of investment capital to fuel economic growth and development.”
…Targets W/Bank’s electricity for Africa
The minister also said Nigeria was targeting the largest share of the World Bank’s planned provision of electricity to 300 million more people on the African continent between now and 2030.
He said: “An exciting development from this week’s meetings is the commitment to provide electricity to an additional 300 million people across Africa by 2030. This initiative is the result of collaborative efforts between the World Bank and other development partners. Overall, the Nigerian delegation has received positive feedback from their participation at the 2024 World Bank and IMF Spring Meetings.”
…CBN boss
Also at the parley, CBN Governor Olayemi Cardoso spoke on further benefits of the meeting and how the Tinubu administration hoped to strategise the naira against the dollars, pound sterling and other foreign currencies.
“Besides our meetings with multilateral financial institutions, and foreign investor groups with a keen interest on developments in Nigeria, including a critical gathering at the US Chamber of Commerce, we had very productive discussions with leading International Money Transfer Operators (IMTOs), where we collectively committed to doubling remittance flows through formal channels into Nigeria in the immediate short to medium term.
“This target is both ambitious and achievable, and we’re wasting no time in setting up a collaborative task force, reporting to myself, to drive progress and address any bottlenecks that hinder flows through formal channels,” Cardoso said.
He also said there had been positive response from foreign portfolio investors (FPI).
“They’re part of a process of continuous engagement. And it is so critical that we use any opportunity we can to dialogue with investors and to update them on the state of the reforms that have taken place.
“The response from the foreign portfolio investors has been very positive and it shows in the numbers and we expect from the reactions that we got during the course of the past few days, that positive sentiment will continue to improve,” Cardoso further said.
…On Naira stability
Cardoso also said the apex bank was working tirelessly towards achieving a stable foreign exchange (FX) rate, and ensure the rate finds its adequate price discovery level.
“Again, to be honest, I think we should expect that there will be increases here and there, ups and downs and even from what you’ve reported yesterday, from what I gather, the naira has begun strengthening overnight.
“So, I think the most important thing to say here is that we are doing everything possible to ensure that we have a stable exchange rate and an exchange rate that finds its adequate price discovery level,” the CBN boss said.
On inflation, he said: “We remain vigilant, recognising the challenges that persist, such as elevated inflation driven by rising food prices, transportation costs, and energy expenses. We note that inflation, though rising, is doing so at a decelerated rate and we are confident it will soon commence a fall.
“Security concerns in food-producing regions and infrastructure challenges also demand attention.
“The CBN has implemented a number of policy reforms to address some of these various pressures and, while I am confident enough today to talk about some of our early success, I am at the same time extremely mindful of our ongoing challenges.”
