The African Development Bank (AfDB) has offered Nigeria a $4.1 billion financial support package to help the country address the economic challenges confronting it at the time.
AfDB President, Dr Akinwumi Adesina, led a delegation of the bank to the Presidential Villa in Abuja on Monday for a meeting with the National Economic Management Team headed by Vice President Yemi Osinbajo.
Speaking to State House correspondents after the meeting, Adesina said the $4.1 billion support would be provided between 2016 and 2017 to support critical sectors of the Nigerian economy, including power, agriculture and infrastructure, as well as private-sector businesses and financing for small and medium-sized enterprises (SMEs).
He said the bank’s portfolio in Nigeria was expected to increase rather than decline, noting that the AfDB planned to invest a total of $10 billion in the country by 2019.
Adesina, who was Nigeria’s immediate past Minister of Agriculture before assuming leadership of the continental development bank, also disclosed that the AfDB would provide $1 billion in budget support to Nigeria within the year.
He said the bank was particularly concerned about supporting efforts to diversify the Nigerian economy, strengthen macroeconomic stability and improve fiscal management.
“The bank’s largest shareholder is Nigeria. It’s very important for me to be here and to talk to the Nigerian government about the challenges and opportunities that are in Nigeria.
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,” Adesina said.
According to him, discussions with the Nigerian economic team also focused on creating employment opportunities for women and youths, while expanding access to finance for businesses and the real sector.
Adesina said the bank was considering a $500 million facility to support the Development Bank of Nigeria, which would enable it to provide more affordable financing for businesses in the real sector.
He also announced plans to provide $100 million to the Bank of Industry to strengthen its capacity to lend to small and medium-sized enterprises, while the Bank of Agriculture would receive support to undertake reforms aimed at improving its ability to provide financing.
While acknowledging the difficult economic situation facing Nigeria, the AfDB president said the country remained capable of overcoming the challenges.
“…Nigeria is not falling apart. And when people talk about debt crisis, Nigeria is not in debt crisis,” he said, adding that the country’s fiscal deficit relative to its Gross Domestic Product was about 3 to 3.5 per cent, below the five per cent threshold provided under the Fiscal Responsibility Act.
Finance Minister, Mrs Kemi Adeosun, said the government was encouraged by the alignment between its economic priorities and the areas being emphasised by the AfDB under Adesina’s leadership.
She said the government was looking to the bank for the $1 billion budget support, while also expecting assistance in areas including agriculture, job creation, youth development, solid minerals, women empowerment and access to finance for women and SMEs.
Responding to questions on the interest rate attached to the proposed loans, Adeosun said the financing would be concessional, with an interest rate of about 1.2 per cent.
“It’s concessionary, way below two per cent. It’s about 1.2 per cent. 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,” she said.
The support was announced against the backdrop of Nigeria’s economic difficulties in 2016, when the government was seeking measures to stimulate growth, strengthen infrastructure and support businesses affected by the downturn.
Credit: Daily Trust
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