Transferring money: FG seeks new $400 million loan to support 15 million households

As one of the ways to mitigate the consequences of the termination of the petrol subsidy on Nigerians, the Federal Government has applied to the World Bank for a new loan of $400 million for the conditional cash transfer to 15 million households.

The Federal Government is borrowing $1.2 billion from the World Bank for the cash transfer, an increase of $400 million over the $800 million loan it previously obtained for the same purpose.

In a speech to the nation on October 1 to celebrate the nation’s independence, President Bola Tinubu announced the conditional cash transfer to 15 million households as one of the measures to mitigate the effects of the removal of the petrol subsidy, which has caused an astronomical increase in the cost of living.

Additionally, he stated that the Federal Government would start paying 15 million households N25,000 per month starting in October 2023 and continuing through December 2023.

In order to provide post-petroleum subsidy palliatives for more than 50 million Nigerians, President Muhammadu Buhari’s immediate prior administration obtained $800 million from the World Bank. The succeeding administration was supposed to be able to access the loan.

President Tinubu also announced the approval of a N25,000 temporary allowance for junior government employees for the ensuing six months in his broadcast on October 1.

According to him, the approval came after talks with labour unions and other business community partners to raise the federal minimum wage without causing excessive inflation.

The average low-grade worker will receive an extra N25,000 each month for the following six months, the President announced.

However, following further discussions with the leadership of the Nigeria Labour Congress and the Trade Union Congress and protests over the exclusion of other categories of workers and pensioners as well as the threat by organised labour to go on a nationwide strike, the government announced N35,000 as a provisional wage award for all treasury-paid Federal Government workers for six months.

“The government is funding the N35,000 wage increase for all federal civil servants and it is not taking a loan,” the source claimed. A loan of N25,000 multiplied by three months for 15 million people is the one the government is accepting. On this one, there is an existing loan of $800 million, to which the government will add $400 million, totaling $1.2 billion, which will be utilised for the conditional cash transfer.

“However, the government will pay for the other one (a financial prize to federal civil personnel). As a result, a supplementary appropriation will almost certainly be made for that as it is against the law to utilise government funds for personal expenses.

On the World Bank’s list of the top 10 International Development Association debtors, Nigeria has maintained its fourth place.

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After rising from fifth place in the fiscal year 2022, this occurred.

Despite being in fourth place, the nation racked up roughly $1.3 billion in debt in a single year.

Nigeria rose to the fourth spot on the list, according to the World Bank’s Fiscal Year 2022 audited financial statement, with $13 billion in IDA debt stock as of June 30, 2022.

Nigeria had IDA debt stock of around $14.3 billion as of June 30, 2023, according to the World Bank’s fiscal year 2023 audited financial statement, yet it still retained its fourth place on the list.

With a $16.9 billion debt, Pakistan retained its third-place ranking from the previous fiscal year.

Nigeria has the greatest IDA debt in Africa, whereas Bangladesh, India, and Pakistan are the top three Asian borrowers.

Additionally, Nigeria was listed as one of the top 10 nations that received new IDA loans this year in the World Bank 2023 Annual Report.

According to the study, Nigeria received $1.55 billion from the bank for the fiscal year of 2023, ranking as the ninth-highest beneficiary.

According to documents found on the Washington-based bank’s website, the loan is called “Nigeria Human Capital for Opportunities and Empowerment.”

The loan’s goal is “to strengthen systems for improved delivery of primary healthcare and basic education services in participating states.”

In the event that the board of the World Bank Group approves the loan, it will be put into effect in 2024.

Nigeria has received loans from the World Bank’s International Bank for Reconstruction and Development and International Development Association over the years.

While the IDA offers grants and concessionary loans to governments of the world’s poorest nations, the IBRD lends to governments of middle-income and creditworthy low-income nations.

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