Inside the World Bank's $800m loan to Nigeria for palliative care
Minister of Finance, Budget and National Planning, Zainab Ahmed, revealed last Wednesday that Nigeria had secured a World Bank facility worth $800 million.
According to her, the $800 million is the first tranche of palliatives to be disbursed through cash transfers to about 50 million Nigerians, who belong to the most vulnerable segment of society.
Details of a document seen by PREMIUM TIMES showed that the funding agreement is between Nigeria and the International Development Association (IDA), a part of the World Bank that helps poorer countries of the world.
The amount is part of a sum considered “concessional financing,” the document says.
According to the US Agency for International Development, concessional loans, or soft loans, come with more generous terms than market loans. They include below-market interest rates, grace periods during which the loan recipient is not required to repay their debt for several years, or a combination of low interest rates and grace periods. .
Installation detailsThe document also reveals that the settlement agreement was signed by the two parties, the Nigerian government and IDA, on August 16, 2022.
According to the agreement, the project aims to provide cash transfers to poor and vulnerable people in rural and urban areas of Nigeria, in response to economic shocks, for at least two years.
The project also aims to strengthen the safety net program delivery system, through the use of digital technologies, expanding coverage and improving efficiency.
Minister of Finance Zainab AhmedThe loan has a commitment fee rate of 0.5% per annum and a service fee of 0.75% per annum on the credit balance withdrawn, as well as interest of 1.25% per annum on the credit balance withdrawn.
Reimbursement will be made in installments, with payments due on January 15 and July 15 of each year. The first payment is due January 15, 2027 and the last payment is due July 15, 2051.
The loan must be repaid in US dollars, according to the agreement.
Meanwhile, the amount of each payment is expressed as a percentage of the principal amount of the loan, and it will increase over time. While the first payment will be 1.65% of the principal amount, the last payment will be 3.40% of the principal amount.
These percentages represent the portion of the loan that must be repaid with each payment, unless the lender specifies a different percentage under the terms and conditions of the loan agreement.
Nigeria has declared its commitment to carry out the project in accordance with the terms of the agreement.
Similarly, the agreement indicates that the loan will enter into force 120 days after the date of signature (August 16, 2022) and that it will end 20 years after the date of signature.
Since the minister's announcement, many Nigerians have raised concerns about the sustainability of the loan and how it could add to the country's debt burden.
Debt problems...
Minister of Finance, Budget and National Planning, Zainab Ahmed, revealed last Wednesday that Nigeria had secured a World Bank facility worth $800 million.
According to her, the $800 million is the first tranche of palliatives to be disbursed through cash transfers to about 50 million Nigerians, who belong to the most vulnerable segment of society.
Details of a document seen by PREMIUM TIMES showed that the funding agreement is between Nigeria and the International Development Association (IDA), a part of the World Bank that helps poorer countries of the world.
The amount is part of a sum considered “concessional financing,” the document says.
According to the US Agency for International Development, concessional loans, or soft loans, come with more generous terms than market loans. They include below-market interest rates, grace periods during which the loan recipient is not required to repay their debt for several years, or a combination of low interest rates and grace periods. .
Installation detailsThe document also reveals that the settlement agreement was signed by the two parties, the Nigerian government and IDA, on August 16, 2022.
According to the agreement, the project aims to provide cash transfers to poor and vulnerable people in rural and urban areas of Nigeria, in response to economic shocks, for at least two years.
The project also aims to strengthen the safety net program delivery system, through the use of digital technologies, expanding coverage and improving efficiency.
Minister of Finance Zainab AhmedThe loan has a commitment fee rate of 0.5% per annum and a service fee of 0.75% per annum on the credit balance withdrawn, as well as interest of 1.25% per annum on the credit balance withdrawn.
Reimbursement will be made in installments, with payments due on January 15 and July 15 of each year. The first payment is due January 15, 2027 and the last payment is due July 15, 2051.
The loan must be repaid in US dollars, according to the agreement.
Meanwhile, the amount of each payment is expressed as a percentage of the principal amount of the loan, and it will increase over time. While the first payment will be 1.65% of the principal amount, the last payment will be 3.40% of the principal amount.
These percentages represent the portion of the loan that must be repaid with each payment, unless the lender specifies a different percentage under the terms and conditions of the loan agreement.
Nigeria has declared its commitment to carry out the project in accordance with the terms of the agreement.
Similarly, the agreement indicates that the loan will enter into force 120 days after the date of signature (August 16, 2022) and that it will end 20 years after the date of signature.
Since the minister's announcement, many Nigerians have raised concerns about the sustainability of the loan and how it could add to the country's debt burden.
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