Despite a $2.4 billion loan obtained by Nigeria in 2018, the Federal Government is currently in talks with the World Bank for a fresh $2.5 billion loan.
World Bank Vice President for Africa, Hafez Ghanem, disclosed this during an interview with Bloomberg on Wednesday, September 18, 2019. He said:
“We’re talking about a new set of programs of about the same amount, it should be around $2.5bn
“It’s important to resolve the problems of the power sector in Nigeria to bring in more investments because you need to bring down the cost of power to make the economy more competitive for the development of industries.
“Nigeria has a comparative advantage in that area because of the youth, a majority of the population is young. So if we want to create jobs, we need to invest much more in the digital economy.”
President Muhammadu Buhari’s government has increased its borrowing to finance government spending, with domestic debt at $55.6bn and foreign loans at $25.6bn.
The country is also faced with revenue shortfalls as the output and price of oil, Nigeria’s main export, fell in the past five years.
Nigeria has been seeking credit with low interest, long repayment periods from institutions to ease its burden, including the World Bank and the African Development Bank.
Minister of Finance, Budget and National Planning, Zainab Ahmed, recently said Nigeria did not have a debt problem, despite misgivings amongst economists over the country’s rising debt profile.
Rather than debt, the minister said the country’s problem was revenue, and accused those criticizing the foreign loans taken by the President Buhari administration of ‘insensitivity’. Ahmed had said:
“There is a lot of insensitivity around the level of our debt. I want to restate that our debt is not too high; what we have is a revenue problem.
“Our debt is still very much within a reasonable fiscal limit. In fact, amongst our comparative countries, we are the least in terms of borrowing.”
But she also warned that Nigeria would suffer if the current revenue performance was not improved.
The minister noted that the Federal Government hoped to raise its revenue performance from the 55 per cent that was attained in 2018 to 85 per cent in the next four years.