AFRICAN DEVELOPMENT BANK TO PUMP IN $10BN INTO NIGERIAN ECONOMY

The African Development Bank (AfDB) has announced a $10bn package as intervention for Nigeria in the next three years to help her out of the current economic recession.
The sum of $4.1bn will be provided between 2016 and 2017 beginning with the provision of $1 billion this year, AfDB President, Akinwumi Adesina, told reporters at the Aso Rock Presidential Villa in Abuja yesterday.

Nigeria’s economy went into recession last month severely crippling an ambitious N6 trillion budget. The Federal Government is now turning to various sources to raise money to fund the budget.

The money will be spent on power, agriculture and infrastructure as well as for the private sector and SMEs financing.

“We’ve asked for the need for better synergies between the macro policy side and monetary policy side and also the fiscal policy side of the economy.

“And of course, we also recognize that power is perhaps the most important challenge that is driving inflation in the country. So we expect in our portfolio this year to invest a total of 1,400 megawatts of projects to focus on the energy sector and by 2017 we plan to invest in 1,387 megawatt of project for the sector,” Adesina said after a meeting with President Muhammadu Buhari.

Adesina, Nigeria’s former minister of Agriculture earlier led a delegation of the bank to a meeting with the National Economic Management Team headed by Vice President Yemi Osinbajo. Nigeria is the largest shareholder in AfDB.

He said: “The times are difficult, there is no doubt about that; but I want to commend the government for being bold in taking the right decisions.

“The fact that the price of crude oil has gone down is a big challenge because you’ve 98% external forex revenue coming from the sector, so it has created calibrations.

“We’ve said we’re going to support the Nigerian government with the budget support to be able to deal with some of fiscal imbalance they’ve.

“We’re looking to consider for an upward $1bn to help deal with that particular deficit.”
He stressed the need for Nigeria to diversify its economy, especially in agriculture, solid minerals, manufacturing as well as the industrial sectors.

The bank, he said, would also help to ensure macro-economic stability as well as fiscal stability in the country.

He said his delegation also discussed with the national economic management team on how to invest in area of women and youths employment in Nigeria “as well as to look for opportunities to support access to finance by supporting the Development Bank of Nigeria with $500m which will help to provide cheap financing for the real sector that the country wants to grow.”

Adesina said the AfDB would also provide $100 million to the Bank of Industry to be able to lend to small and medium size enterprises as well as finance the Bank of Agriculture to help reform itself for more financing. 

He affirmed that Nigeria was currently in tough times, but said the nation “is not falling apart. And when people talk about debt crisis, Nigeria is not in debt crisis. If you look at the fiscal deficit of this country with regard to the GDP, it’s about 3 or 3.5%. It’s still way below the 5% for the Fiscal Responsibility Act.”

The AfDB helmsman expressed optimism that “Nigeria will come out of this as a better more diversified economy than it went into the recession.”

Finance Minister Kemi Adeosun said what had been a great relief to the economic management team was the synergy between “what we’re trying to do and what the AfDB, repositioning under Adesina, is trying to focus on. And most of the sectors, the specific programmes that the bank has are the very areas we want to focus on the economy.”

Asked about the interest rate on the loans, the minister responded: “Its concession is way below two%. It’s about 1.2%. We’re not over borrowing, what we’re trying to do is to ensure that this money we’re borrowing, we use it on the key infrastructure that will drive the economy.”

Source:Daily Trust