At Last, Buhari Seeks Senate’s Nod for Fresh $800m World Bank Loan for Poor, Vulnerable Nigerians

•Says its for 10.2m poor, vulnerable Nigerians 

•Nigeria’s debt profile becoming unsustainable, Budget Office declares

Sunday Aborisade and Udora Orizu in Abuja

President Muhammadu Buhari yesterday, asked the Senate to approve a fresh $800 million loan from the World Bank to enable his administration sustain its social investment programme for poor and vulnerable Nigerians.

This comes just as the Director General of the Budget Office of the Federation, Mr. Ben Akabueze, yesterday, raised the alarm that the nation’s debt profile was becoming unsustainable.

Buhari, in the letter, read at plenary by the President of the Senate, Ahmad Lawan, explained that the approval of the loan would specifically enable his government continue with the conditional cash transfer window of the programme.

He said the government would transfer the sum of N5,000 per month to 10.2 million poor and low-income households for a period of six months, with a multiplier effect on about 60 million individuals.

Buhari said in order to guarantee the credibility of the process, digital transfers would be made directly to beneficiaries’

account and mobile wallets.

Part of Buhari’s letter read: “It is with pleasure that I forward the above subject to you. Please note that the Federal Executive Council (FEC) approved an additional loan facility to the tune of $800 million to be secured from the World Bank, for the National Social Safety Net Programme (NASSP).

“There is the need to request for your consideration and approval to ensure early implementation.

“The Senate, may wish to note that the programme is intended to expand coverage of shock responsive safety net support among the poor and vulnerable Nigerians. This will assist them in coping with the costs of meeting basic needs.

“You may wish to note that the federal government of Nigeria under the conditional cash transfer window of the programme will transfer the sum of N5,000 per month to 10.2 million poor and low-income households for a period of six months with a multiplier effect on about 60 million individuals.

“In order to guarantee the credibility of the process, digital transfers will be made directly to beneficiaries’ account and mobile wallets.”

The letter further read: “The NASSP being a social intervention programme will stimulate activities in the informal sector, improve nutrition, health, education and human capital development of beneficiary households.

“Given the above, I wish to invite the Senate to kindly approve an additional loan facility to the tune of $800 million to be secured from the World Bank for the National Social Safety Net Programme (NASSP).

“While hoping that these submissions will receive expeditious consideration by the Senate, please accept, Distinguished Senate President, the assurance of my highest regards.”

Nigeria’s Debt Profile Becoming Unsustainable, DG Budget Office Laments

However, Akabueze has raised the alarm that the nation’s debt profile was becoming unsustainable.

Akabueze, stated this while delivering a lecture titled, “Budget Process and Money Bills,” at the ongoing induction programme organised by the National Assembly Management and the National Institute for Legislative and Democratic Studies for members elect for the 10th National Assembly.

He said, “We now have very limited borrowing space, not because our debt to Gross Domestic Product (GDP) is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio.

“Once a country’s debt service ratio exceeds 30 per cent, that country is in trouble and we are pushing towards 100 percent and that tells you how much trouble we are in.

“We have limited space to borrow. When you take how much you can generate in terms of revenue and what you can reasonably borrow, that establishes the size of the budget.

“The next thing would be to pay attention to government priority regarding what project gets what.

“You may have heard that we have one of the lowest GDP to debt ratio in the world. While the size of the federal government’s budget for 2023 created some excitement, the aggregate budget of all government in the country amounted to about N30 trillion.

“That is less than 15 per cent in terms of ratio to GDP. Even on the African continent, the ratio of spending is about 20 per cent.”

The former Lagos State Commissioner, pointed out that in South Africa, “it is about 30 percent, Morocco is about 40 percent and at 15 per cent, that is too small for our needs. That is why there is a fierce competition for the limited resources. That can determine how much we can relatively borrow.”

Akabueze noted that for Nigeria to be able to fix the infrastructural needs of the country, “we need to be spending about $100 billion annually as a country, including private spending on infrastructure.”

He noted that, “the aggregate budget of the federal government is only about $30 billion and the aggregate of the states and FCT budget don’t even add up to the federal budget.

“This means that even if we spend everything, we will still be left with a huge infrastructural deficit.”