FG approves $400m loan for Lagos, Rivers, Osun, Ogun

The Federal Government on Wednesday approved foreign loans totalling over $400 million for Lagos, Rivers, Osun and Ogun states towards implementing infrastructural projects in the states.

Bashir Yuguda, minister of state for finance, who disclosed this while briefing journalists after the Federal Executive Council (FEC) meeting chaired by Vice President Namadi Sambo, said the council gave anticipatory approvals for eight loans.

The Ministry of Finance approached the council with eight memos for the president’s anticipatory approval, all of which were approved.

FEC ratified the president’s anticipatory approval to obtain $100 million credit from the French Development Agency in support of the Lagos Integrated Urban Development Project.

The facility is meant to improve the living conditions of the most vulnerable urban population of metropolitan Lagos, improve management and treatment of solid waste, strengthen the capacity of Lagos State and implement urban development projects in the state.

The payment period for the loan is 20 years, including 7 years moratorium, a commitment fee of 0.25 per cent per annum and an appraisal fee of 0.25 per cent.
Council also ratified the president’s anticipatory approval of the African Development Bank (AfDB) credit facility for $200 million for the proposed Port Harcourt water supply and sanitation project and an African Development Fund (ADF) credit of $5 million to support urban water sector reform project.

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The objective of the loan is to provide sustainable access to safe driving water and sanitation to the residents of Port Harcourt; strengthen the Federal Government’s capacity to reform the urban water and sanitation sector and improve service delivery across the country.

The project has five major components including water supply and sanitation infrastructure in Port Harcourt, institutional support to Port Harcourt Water Corporation, hygiene, sanitation and environment in Port Harcourt, urban water reform at the federal Level and project management.

The credit facility will be secured from AfDB with a repayment period of 15 years, 5 years moratorium, the interest is enhanced variable spread loan with the lending spread of 0.60 per cent per annum which translates to 1.56 per cent.

Council also approved obtaining $33.174 million credit from the French Development Agency in support of the Ogun State water supply project.

The facility will be secured from the FDA on blended terms with an interest rate of six months LIBOR plus margin, a repayment period of 20 years, including seven years moratorium, a commitment fee of 0.25 per cent per annum and an appraisal fee of 0.25 per cent.

The credit would be on-lend to Ogun State on the same terms and conditions offered by the FDA to the Federal Government.
Council further approved the anticipatory approval of an Islamic Development Bank loan of $65 million for financing the water supply and sanitation project in Osun State.

The loan is to be financed under manufacturing financing (IStisna’a). The terms and conditions of the loan as negotiated and agreed between the IDB and the Nigerian officials comprising the Ministry of  Finance and Osun State government in October 2014 and consequently approved by the IDB board of directors states a repayment period of 15 years, the gestation period of 4 of years and markup LIBOR + 155bps which currently translates to 1.5% per annum.

The project was approved in the 2012-2014 external borrowing plan of the Federal Government.

Council also approved the president’s anticipatory approval to obtain additional financing of $140 million credit from the International Development Association in support of the community and social development project being implemented in the 36 states of the federation and the FCT.

The Federal Government had in 2009 requested an initial credit facility of $200 million for the community and social development project (CSDP) from the World Bank. As of October 2013, 98% of the loan amount was disbursed, however, the closing date was extended from December 2013 to December 2014 to allow for utilisation of the loan.

Council also ratified the president’s anticipatory approval to obtain a $70 million credit facility, associated grants of $15 million and $0.48 million in support of the climate change adaptation and agribusiness support programme from the International Fund for Agricultural Development.

Nigeria has over 32 million hectares of arable land with only 46% under cultivation. About 80% of the populace derive their livelihood from agriculture and other related activities. As of 2011, agriculture was contributing about 40% of GDP, yet the sector is still characterised by low productivity and profitability. Presently, Nigeria is one of the world’s largest food importers, spending over USD 8 billion on the importation of food items annually.

Yuguda, who briefed journalists alongside the minister of aviation, Osita Chidoka; minister of water resources, Sarah Ochekpe, and education minister, Ibrahim Shakarau, dismissed reporters’ questions on the curiosity over guaranteeing loans to states all of which are controlled by the opposition All Progressives Congress (APC) so close to the general elections, saying that the gesture should not at all be seen as Greek gifts.