Senate approves another Buhari’s loan request as Nigeria’s economy bleeds

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After some time, the Senate has approved another loan request by President Muhammadu Buhari.

This time, the country’s upper legislative arm endorsed the sum of $16,230,077,718 (USD) billion, €1,020,000,000 billion (Euros).

Also approved was a grant component of $125 million (USD), and the request to the Bank of Industries for the issuance of €500 million (Euros) but no more than €750 million Eurobond in the International Capital Market. 

The chamber’s approval to the loan requests was, however, accompanied by a resolution that the terms and conditions of the loan from the funding agencies, be forwarded to the National Assembly prior to its execution for approval and proper documentation. 

The approval followed the consideration of a report by the Committee on Local and Foreign Debts  on the proposed 2018-2020 External Borrowing (Rolling) Plan. 

Chairman of the Committee, Senator Clifford Ordia (PDP, Edo Central), in his presentation, said President Buhari’s request was in compliance with the provisions of the Debt Management Office (Establishment) Act 2003 and the Fiscal Responsibility Act 2007.

According to the lawmaker, the provisions of the statutes enjoins the President to seek and obtain the approval of the National Assembly in respect of the External Borrowing Programme of the Federation and States. 

He explained that out of the total amount approved by the National Assembly, the sum of $3,529,300,000 billion would be sourced from the World Bank; $5,078,441,252 billion from China EximBank; $3,902,267,260 billion from Industrial & Commercial Bank of China; $2,893,693,930 billion from China Development Bank; and $698,500,000 million  from the Africa Development Bank (AfDB). 

In addition, he stated that €345,000,000 million euros is expected to be sourced from the French Development Agency (AFD); €175,000,000 million euros from the European Investment Bank; $190,255,276 million USD from European ECA/KfW/IPEX/AFC; €500,000,000 euros from the International Capital Market; and $62,120,000 USD from Standard Chartered Bank/SINOCURE. 

Senator Ordia explained that the Committee in reaching its resolutions, noted the serious concerns of Nigerians about the level and sustainability of the country’s borrowing in the last decade. 

Ordia said Nigeria’s debt figures which continue to increase, reached an all-time high of around 95 percent of retained revenue and 35 percent of its annual expenditure.

He expressed concern that the development constitutes a drain on the nation’s economy and limits resources available for national development. 

Underscoring the need for a more proactive approach to revenue enhancement, the lawmaker observed that “there are noticeable improvements in our revenues but the growth is not sufficient or rapid enough to catch up with the pace of  development required for our nation.”

He disclosed that out of the sum of over $22.8 billion approved by the National Assembly under the 2016-2018 External Borrowing Plan, only $2.8 billion – an amount representing ten percent – has been disbursed to Nigeria. 

The lawmaker stressed that the projects, which require additional financing, would have great multiplier effect on stimulating economic growth through infrastructure development, job creation, poverty alleviation, healthcare and improve the nation’s security architecture.

He emphasised that tax revenues accruable to Government would increase as a result of the impact of commercial and engineering activities.