The Board of Directors of African Development Bank on Wednesday approved a $600m loan for Nigeria months after the Federal Government had approached the lender for a budget-support facility.
The loan is meant to help Nigeria plug its budget deficit as the nation grapples with its first recession in more than 20 years.
The $600m loan is the first tranche of a total $1bn budget support package, according to a Reuters report quoting a senior bank official.
The second disbursement of $400m would be dependent upon the implementation of reforms and expected early next year, the bank’s Nigeria country director Ousmane Dore, said
The President, AfDB, Dr. Akinwunmi Adesina, had on September 26 said the bank was working on giving Nigeria loan facilities of $4.1bn between now and next year for critical sectors of the economy.
The loans include $1bn at a concessionary interest rate of 1.2 per cent for Nigeria to address the 2016 budget deficit and aid her economic recovery.
Adesina said this after a meeting with Vice-President Yemi Osinbajo and other members of the Economic Management Team at the Presidential Villa, Abuja.
According to the AfDB president, the package includes $1bn in budget support; $300m to create jobs for 185,000 youths; $250m towards infrastructure development in the North-East; $1m grant to deal with challenges of Internally Displaced Persons; $300m for infrastructure development around Abuja, and $200m for the Transmission Company of Nigeria to improve its facilities, among others.
Stressing that Nigeria was the largest shareholder in the bank, Adesina said that the bank was in the country to offer its support in the face of the current tough times.
He said, “I think the times are difficult but I want to commend the government for being bold in taking the right decisions.”
I think that the fact that the price of crude oil has gone down is a big challenge, because you have 98 per cent external forex revenue coming from the sector.
“So, it has created calibrations; I’m not going to go into the details of all the problems, but what is important is what we are going to do about it.