Despite being the highest producer of oil in Africa, and 13th in the World, Nigeria still takes loans to finance budget, projects among other things.
The International Monetary Fund (IMF) has warned Nigeria and other low income Countries, that greater reliance on foreign borrowing may at some point expose their economies to vulnerability, if the funds are not put to good use.
Although, the World Bank believes that Nigeria’s borrowing plan is in line with the Country’s economic realities, it has however warned that the cost implications of paying interest on such debts might not be sustainable, considering the dwindling revenue accruing to Government coffers.
Mrs. Kemi Adeosun, recently affirmed the Government’s intention to continue borrowing to drive the economy, adding that borrowing was a temporary measure aimed at developing infrastructure in the Country.
While justifying external borrowing, the Finance Minister maintained that “Nigeria’s debt-to-GDP ratio is one of the lowest, at 19%, but most Countries have over 100%”.
The Senate prevented President Muhammadu Buhari from taking $29.96bn loan in November 2016.
Here is a breakdown of loans taken under the Buhari-led Government:
World Bank
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In July 2015, Nigeria received $2.1bn for the purpose of rebuilding the North-East of Nigeria ravaged by the Boko Haram insurgency.
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$575m was also approved in June 2016, for the same purpose.
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The Federal Executive Council approved the sum of $500m loan request from World Bank in April 2017, for the kick-off operation of Development Bank of Nigeria, with repayment plan set for 21 years.
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In February 2017, the World Bank agreed to give Nigeria $2.5bn to support the 2016 budget.
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In March, the World Bank approved $200m credit to support the Federal Government, in its effort to enhance agricultural productivity of Small and Medium scale Farmers.
African Development Bank
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In September 2016, it was reported that African Development Bank was working on giving Nigeria loan facilities of $4.1bn. The package contained; $1bn for budget support, $300m to create jobs for 185,000 youths, $250m towards infrastructural development in the North-East, $1m grant to deal with challenges of Internally Displaced Persons, $300m for infrastructure development around Abuja, and $200m for the Transmission Company of Nigeria to improve its facilities.
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In January 2016, $1bn was approved to support the 2016 budget.
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In April of the same year, the AfDB offered $300m loan to Nigeria for the development of Youth in Agriculture Project.
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In November 2016, AfDB also approved $600m loan as the first tranche, of a $1bn meant to help Nigeria plug its budget deficit.
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In April 2017, $450m was approved by AfDB to Nigeria, for the purpose of promoting export trade.
KfW Development Bank
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The German Government-owned KfW Development Bank based in Frankfurt, gave $200m to Nigeria for the kick start of the Development Bank of Nigeria.
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€9m was also requested in May 2017, for the purpose of Agricultural Finance.
French Development Agency
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The sum of $130m was approved for the Development Bank of Nigeria to kick start operation in April 2017.
China Eximbank
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In April 2016, Nigeria secured $6bn loan from the Chinese Government to finance infrastructure, in the 2016 budget.
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In August 2016, Nigeria went into talks with China, to get a loan of $21bn to finance the 2016 budget and embark on massive infrastructure development.
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N408bn ($1.32bn) was approved for Lagos-Ibadan rail project in January 2017, while $7.5bn was released for the construction of Lagos-Kano rail project.
Sukuk Loan
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$100bn debut sovereign Sukuk was taken in June 2017 and sold in September 2017, for the purpose of construction of 25 major roads in the six geopolitical zones of the country.
Central Bank of Nigeria
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The Central Bank of Nigeria disbursed N75bn loan to farmers across the 36 States in December 2016 and the FCT.
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In June 2017, the CBN gave out a loan of N100m to National Youths Service Corps members to establish businesses.
According to NBS, Federal Government presently accounts for 74% of the Nation’s total foreign debt, while all States, including the FCT account for the remaining 26%.
Similarly, the Federal Government accounts for 78.66% of the country’s total domestic debt, while the balance is held by the 36 States and FCT.
In the 2017 appropriation act, debt service had 1.66trn representing 32.73% of the Federal Government’s total expenditure, which makes it important to take steps in reducing debt service cost.
Also, in June 2017, the Nigerian Government’s domestic debt was N11.97trn, while external debt incurred by both the Federal and State Governments is $13.81. According to data released by Debt Management Office, Nigeria’s total debt profile, both foreign and local, is N19.16trn.
