The Nigerian government has given the green light for a $3.45 billion loan that will be allocated to finance vital projects within the power sector and a resource mobilization and education initiative.
While the move is aimed at spurring development in the country, it has raised concerns about the growing national debt crisis.
The announcement was made by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, during a press briefing following a Federal Executive Council (FEC) meeting presided over by President Bola Tinubu at the Presidential Villa’s Council Chambers in Abuja on Monday.
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Edun disclosed that the loans would have a lengthy tenure of around 40 years, with a moratorium period of approximately 10 years and notably low-interest rates. He stated, “In the cases of either loans, zero interest will apply, although some fees will be incurred.”
On the education front, Professor Tahir Mamman, the Minister of Education, revealed that this financial initiative aimed to bolster efforts to reduce the number of out-of-school children, particularly targeting girls aged 10 to 20 from 18 participating states. This move underscores the government’s commitment to promoting education and empowerment for teenage females.
Furthermore, Mamman noted that the Federal Executive Council (FEC) had reevaluated its policy direction and authorized the Public Procurement Council to carry out contract award functions in alignment with the requirements of the Public Procurement Act. This decision allows the FEC to concentrate on issues of national importance.
Betta Edu, the Minister of Humanitarian Affairs and Poverty Alleviation, informed reporters that the council had also approved the establishment of the Humanitarian and Poverty Alleviation Trust Fund. This fund will be overseen by a board of directors and aims to raise $5 billion annually from a range of sources.
Edu emphasized that the implementation of this initiative would be thoroughly planned, with the committee consisting of key ministers, including the finance minister.
One notable development is the ratification of the protocol on the protection of the rights of elderly people in Nigeria, signaling the government’s commitment to the welfare of the elderly.
Despite these ambitious projects, concerns have arisen regarding the increasing volume of loans being sought by the Tinubu administration.
Critics have drawn comparisons to the previous administration led by Muhammadu Buhari, which significantly increased Nigeria’s public debt to N87 trillion in eight years.
Earlier this month, the FEC granted approval for a $1.58 billion loan request. This request, as clarified by Edun, comprises two parts: $1.5 billion from the World Bank and $80 million from the African Development Bank (AfDB).
The Tinubu administration’s plan to accumulate a combined fiscal deficit of N30.6 trillion between 2024, 2025, and 2026, as outlined in the government’s medium-term expenditure framework (MTEF), has raised eyebrows. The 2024 budget proposal, in particular, is expected to have a fiscal deficit of N9.04 trillion, representing a fiscal deficit to GDP ratio of 3.83%, which exceeds the 3% threshold stipulated in the Fiscal Responsibility Act (FRA) 2007.
The situation paints a gloomy economic future for Nigeria due to the significant reduction in the nation’s oil output, which has greatly curtailed its revenue generation.