Tony Ailemen, Abuja
The African Development Bank (AfDB) has rolled out plans to help Nigeria’s ailing economy with $10B in financial aid to support various sectors of the economy.
President of the ADB, Dr. Akinwunmi Adesina, disclosed this at an interactive session with State House Correspondents after meeting with President Muhammadu Buhari at the State House, Abuja, on Monday.
Dr. Adesina, first Nigerian to occupy the ADB Presidency had earlier lead a strong delegation of the bank to meet Vice President Yemi Osibanjo and the economic management team to fashion out modalities for the Bank’s intervention in Nigeria’s ailing economy.
Nigeria, ADB’s largest shareholder, had in recent times witnessed fall in revenue occasioned by the crash in oil price at the crude oil market.
The ADB boss who described recent economic decisions taken in the country as “bold, tough, uncomfortable, but right,” however expressed hopes that Nigeria would reap the dividends in the short and long run.
“You can count on the ADB as a true friend of Nigeria. You should support massive investment in infrastructure, and we are here to also support. Closing the infrastructure deficit will enable growth, and create employment. Nigeria is too big to fail,” Adesina said.
The ADB President unfolded the packages his institution has for Nigeria, which include; $1 billion of budget support, $300 million to create jobs for 185,000 youths, $250 million towards North East infrastructure development, $1 million grant to deal with challenges of Internally Displaced Persons (IDPs), $300 million for infrastructure development around Abuja, $200 million for Transmission Company of Nigeria (TCN) to deepen facilities, among others.
Dr Adesina expressed delight with what he called “President Buhari’s push on anti-corruption, and stance on governance,” adding that building institutions was critical. To that end, he said ADB would give a total of $4.8 million as grant for institutional support, with the Economic and Financial Crimes Commission (EFCC) getting $2 million, and $1million to Independent Corrupt Practices and Other Related Offences Commission (ICPC). “You can always count on my support, and that of the ADB,”
“It is very important for me to be here and to talk to the Nigerian government about the challenges and opportunities that are in Nigeria. I think the times are difficult there is nodoubt about that, but I want to commend the government for being bold in taking the right decisions. I think that the fact that the price of crude oil has gone down, is a big challenge because you have 98 per cent external forex revenue coming from the sector, so it has created calibrations, I’m not going to go into the details of all the problems but what is important is that what are we going to do about it,” he said.
He disclosed that the bank is considering an award $1 billion to help to deal with budget deficit.
“In addition to that, there are other challenges that the economy has which is in terms diversifying and deepening the level of diversification in critical sectors, so agriculture, solid minerals, manufacturing as well as industrial sector is very important.
“So the bank is going to provide in total between 2016/2017 $4.1 billion to Nigeria in various sectors like power, infrastructure to agriculture and for the private sector, the SMEs financing and lending.
“I expect that our portfolio in Nigeria will not decrease; it will actually grow. We expect to invest in Nigeria, by 2019 a total of $10 billion”, Adesina said.
Also speaking on the power sector, he declared 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”
“We discussed with Vice President and Minister of Finance about how to invest in areas of women and youths employment in the country as well as to look for opportunities to support access to finance by supporting the Development Bank of Nigeria (DBN) with $500 million which will help to provide cheap financing for the real sector that the country wants to grow”
“We are also providing $100 million to the Bank of Industry (BoI) to be able to lend to small and medium size enterprises. We also want to finance the Bank of Agriculture to be to reform itself to be able to get more financing”
“Let me just say that Nigeria has tough times but Nigeria 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, is about 3 or 3.5 per cent is still way below the five per cent for the Fiscal Responsibility Act.
“If you look terms of the debt to the GDP ratio for Nigeria is 15 per cent. So there is no debt crisis in Nigeria, what you have is liquidity problem and we are trying about to be able to the country to be able to drive down inflation and to be able to make sure we are working with the government to be able to provide incentives to the private sector. Because to come out of recession you need more than government, you need the private sector. So incentives are very important. The finance minister talked about whole lot of incentives that they are going to give and think that is the right way to go”
“Nigeria will come out of this as a better more diversified economy than it went into the recession”, he said.
Minister of Finance, Kemi Adeosun, described the gesture as “a great relief” adding that what the bank is proposing was in line with the current areas of focus by the Nigerian government
“What has been great relief to us in the economic management team is the synergy between what we are 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 that we want to focus on the economy”
“And as Dr. Adesina said, we are looking unto them with $1 billion budget support but beyond that there are lot of loans and initiatives around agriculture, job creation or the youths, solid minerals, women empowerment and women’s access to finance, access to finance to the SMEs”
Speaking further on the interest rate on the loan, she noted that the nation was not over borrowing but working within limits to fund infrastructure development
“The concession is way below two per cent; it is about 1.2 per cent. We are not over borrowing what we are trying to do is to ensure that this money we are borrowing we use it on the key infrastructure that will drive the economy.”