Kunle Aderinokun
25 November 2008
Abuja — The World Bank's total loan portfolio to aid projects in Nigeria from 1999 to date has hit $3.5 billion.
The revelation came to light yesterday as the Federal Government sealed a deal to borrow $780 million for the Third National Fadama Development Project (NFDP- III), Federal Road Development Project (FRDP) as well as Community and Social Development Project (CSDP).
The agreement on the $780 million International Development Association (IDA) credit was signed yesterday in Abuja by the Finance Minister, Dr. Shamsuddeen Usman, for the Federal Government and the Country Director of the World Bank, Mr. Onno Ruhl, on behalf of the Bretton Woods institution.
Out of the total credit, $250 million was secured for NFDP-III (otherwise called Fadama III), while $330 million and $200 million were meant for FRDP and CSDP.
IDA credit is a highly concessional interest-free loan, which is payable in 40 years with a 10-year moratorium.
It only attracts a commitment charge of not more than 0.5 per cent per annum on the un-disbursed amount with a service charge of 0.75 per cent per annum and payable on the amounts withdrawn.
Usman said there was nothing wrong in obtaining the loan, adding that it was the utilisation of the loan that mattered.
"We should be less emotional about these projects. There is nothing wrong with borrowing. If you use it well, you benefit. It is the kind of loan and the way you utilise it that matters. Let's base our assessment on actual observation. By next year, we will organise a tour for you to see the effects of the projects," said the minister.
Expressing displeasure over recent reports on Nigeria's debt portfolio, which he said was misleading, Usman wondered how the country could have obtained a $3.3billion loan as reported when in actual fact, the World Bank had allocated her a total loan portfolio of $750 million.
He said in 2009 fiscal year, the World Bank's allocation for the country would increase to $1.1 billion.
Usman said the $780 million IDA credit would contribute to the Federal Government's efforts in tackling food scarcity, poverty reduction in the rural areas and transport, which, according to him, were key areas of the current administration's Seven-Point Agenda.
The minister said the objective of the CSDP was to reduce poverty as well as improve social and physical infrastructure and services.
The $200 million is expected to be utilised by 22 states and the Federal Capital Territory, Abuja.
The states included Adamawa, Edo, Ekiti, Enugu , Gombe, Imo, Katsina, Kogi, Kwara, Nasarawa, Niger, Ogun, Oyo, Plateau, Taraba, Yobe and Zamfara.
The objective of the NFDP-III, he said, was to increase the income of users of rural water resources on a sustainable basis, adding that the project would be implemented in the 36 states of the federation and the FCT.
According to him, the Federal Ministry of Agriculture and Water Resources would coordinate the project, which spans over a period of five years, with effect from next year to 2013.
From the $450 million for the Fadama III project, $250 million is a contribution from International Development Association (IDA) credit and the balance would be made up by federal, states, local government and communities.
Under the arrangement, Usman said, the Federal Government would contribute $23 million; state governments, $77 million; local governments $40 million and the relevant communities contribution would be in kind, while the Global Environmental Facility (GEF) would provide a grant of $7 million.
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Those unborn children will be using the facilities built by the loan.
development without borrowing is impossible and those that knock this move most likely have limited knowledge on what it takes to develope and nation.
im for it.
And you are right but the facilities would not be built with this loan but it would wind up in a foreign bank. May be you have an inside scoop that most of us are not privy to?. If past loans were used for the common good may be no one would talking about this but past experince has shown otherwise. Well I will call you at 3:00AM know what happened to the loan before long.
Nigerians especially those in reponsible positions have a smooth way of creating targeted goals for the justifications of securing the $780m loan from the World Bank.
On a hind side what has happened to oil money? If the Fed. Government is not able to put to use the derivates from free oil what in haven's sake suggests that taking a loan would be justified.
The one reason that comes to mind why the Fed. is adamant in obtaining this loan is to circumvent direct accountability after all the loan would be paid back from the oil money. The truth of the matter is that at the end of the day this loan amount would end up in the pocket of those who asked for it. The condition of the road would remain the same; poverty will persist and so on.
This would be a test for the International Transparency Group to determine how Nigeria is doing. I cannot depend on fellow Nigerians to watch the utilization of this loan because a thief cannot watch another thief. This is not an indictment of all Nigerians because the good ones would not be allowed to come to the corridor of the loan.
Bottom-line Mr. Musa the loan is a bad idea because it is no more than the US Congress asking the Big 3 to develop an action plan to justify the bailout. Yes, the Nigerian Government has an action plan but past experience has shown that it is a ploy to steal and stash away the money. Nigeria has made enough money to make Dubai look like a child's play. Dubai’s success is centered on commitment and vision of her leaders after all Dubai has not started to tap her oil reserves.
Also the price of oil had decreased 40 some %, that's what happened to oil money.
Explaining a noble objective that works else where as reason to take this loan by the Yaradua government is treacherous because we very well know that this loan will not be well utilised. It will be stolen as other loans were and we shall become more indebted at the end of the day. Some of us know that taking laons for developmental purposes in principle is not a bad thing, but what is bad is that this money will certainly be stolen. So there is no justification for taking it in the first place. If there is one single undeniable achievement Obasanjo made in his administration, it was paying off our debts which previous administrations took and which was strangling the economy and put us to our knees. Why would Yaradua hasten to start piling up our debt column again now inspite of the fact that he has not made a single achievement in his lazy administration so far? For Nine years we have wrecked profit after profit due to high oil prices, what have we achieved with the money(s)? Why is it that just a few days the oil price has fallen and the Lazy, do-nothing, retrogressive, reclusive, visionless Yaradua is already going for Loans? Bottom line is that we vehemently oppose taking of such loans because we know that it shall be stolen, swallowed through over inflated contracts awarded to non-existent companies. And we know that Madam Waziri of EFCC can not realy fight the looters because if she dares the fate of Ribadu today will befall her. So anyone trying to convince us about taking of such loans is among those that will share in the spoil.
The FGN has started again to take loans,payable in 30 years, putting unborn children into boundage.It is becoming obvious that we can not continue like this.We really need a change.