The Nigerian Senate, on Wednesday, approved $2.6 billion out of the $5.5 billion external borrowing request sent to the National Assembly by President Muhammadu Buhari in May last year.
The approval came after the Senate considered a report of its committee on local and foreign debts during plenary. Of the total sum approved, $1.5 billion is to be sourced from the World Bank; €671 million from the Export-Import Bank of Brazil; and another €324 million from the Deutsche Bank of Germany.
The approved sum, according to the chairman of the local and foreign debt committee, Clifford Ordia, would see €995 million going to finance priority projects of the Federal Government, while $1.5 billion would be disbursed to the 36 state governments to finance critical projects.
Ordia, while giving a breakdown on the application of the sum approved by the National Assembly, disclosed that €995 million would be deployed to finance priority projects to address the impact of the COVID-19 pandemic and to improve Nigeria’s food security through the mechanization of agriculture and agro-processing in Nigeria.
According to a statement signed by special assistant to the Senate president, Ezrel Tabiowo, Ordia explained that a total of six indigenous assembly plants, one in each geo-political zone have been identified and would be rehabilitated to assemble completely knocked down (CKD) mechanisation farm machinery and equipment to be imported from Brazil.
According to the lawmaker, the CKD mechanisation to be imported would, specifically, be adapted for local conditions with job creation opportunities for citizens.
The loan, he noted, would be used to deliver technological package to smallholder farmers for a fee through the establishment of service centres in each of the 774 local governments of the federation to be owned and run by private business entities.
On providing fiscal support to states across the federation, Ordia disclosed that the sum of $750 million from the World Bank would be used to finance States Fiscal Transparency, Accountability and Sustainability (SFTAS) programme in the 36 states and the Federal Capital Territory (FCT).
He noted that the said financing was approved by the National Assembly in June 2020 as part of the $1.5 billion Development Policy Financing to partly finance the Federal Government’s 2020 revised budget deficit.
According to him, the local and foreign debt committee found that in October 2020, following the continuous economic disruptions occasioned by the pandemic and in view of the need to consolidate on and sustain the gains of the program and to increase states fiscal capacity to respond to the COVID-19 crises.
He added: “The committee found that the Federal objective of the restructuring is to support states to introduce measures to further mitigate fiscal shocks by introducing COVID-19 responsive disbursement linked indicators at the state level, to match the fiscal measures at the federal level.”
“The committee notes that it is based on the above restructuring, that additional financing in the sum of $750 million is now required for the COVID-19 response of Nigeria”, Ordia said.
The lawmaker explained that another $750 million (USD) would be used to finance the COVID-19 action recovery and economic stimulus programme to support efforts by state governments to protect livelihoods, ensure food security and stimulate economic activities.
According to the statement, the tenor/moratorium of the loan to be sought from the World Bank is 25-year at an interest rate of 2.45 percent per annum; while that from the Export-Import Bank of Brazil is for 15 years at an interest rate of 2.935 percent; and the loan request from the Deutsche Bank of Germany for seven years at 2.87 percent interest rate.
