Lawmakers Approve NGN7.2trn Foreign Loans Equivalent
Ahmad Lawan, Senate President

Lawmakers Approve NGN7.2trn Foreign Loans Equivalent

Nigerian lawmakers have approved foreign currencies borrowings from China and other foreign lenders value at more than N7 trillion, a sum derived from using a foreign exchange rate of N410 to a dollar for a sum of $17.2 billion approved to fund projects in different sectors of the economy.

The report for approval was presented by the Chairman of the Senate Committee on local and foreign debts, Senator Clifford Ordia, PDP, Edo Central during the plenary. The approval also included a borrowing request of 1.02 billion euros, an equivalent of $1.18 billion and also include a grant of $125 million.

Meanwhile, a detailed report shows that the bulk of the loans are from China, including from Chinese Exim Bank, Industrial and Commercial Bank of China and China Development Bank.

Others include World Bank, African Development Bank, French Development Agency, European Investment Bank and Standard Chartered Bank with Sinocure. Ordia said that a number of projects for which funding is being requested under the 2018-2020 borrowing plan were ongoing projects, carried over capital expenditure for the country.

Also, the Nigerian Senate approval also indicated that $22.8 billion was approved under the 2016-2018 borrowing plan but only $2.8 billion or just 10% of the contracted sum had been disbursed thus far.

Meanwhile, the Senate committee noted that Nigeria’s debt service has reached an all-time high of around 95% of retained revenue and 35.6% of annual expenditure. Total public debt has been projected to cross N50 trillion in 2021.

Speaking at the plenary session midweek, the committee added that the nation’s debt service amount continues to increase as the revenue-to-debt ratio and tax-to-revenue ratios remain beyond acceptable levels.

The Senate also approved Eurobonds request for the state-owned Bank of Industries (BOI). While speaking, Ordia said projects will result in a rebirth of commercial and engineering activities and the consequent tax revenues payable to the Government as a result of these productive activities will increase.

“Subsequently, on the 15th of September 2021, the President of the Senate of the federal republic of Nigeria read another Communication from the President and Commander in Chief of the Armed Forces, Containing an addendum to the 2018-2020 External Borrowing (Rolling) Plan in the sum of $4,054,476,863, €710,000,000 and Grant Component of $125,000,000 for various projects and same was also referred to the committee for further legislative action,” Ordia said.

“… a good number of the projects in respect of which financing is being requested under the 2018-2020 external borrowing (rolling) plan are mostly ongoing projects and programmes in respect of which externally borrowed funds have been spent in the past, including loans and grants.”

The Senator said the committee found as a fact that out of a sum of over $22.8 billion approved by the National Assembly under the 2016-2018 external borrowing rolling plan, only $2.8 billion (10%) has been disbursed to Nigeria.

Ordia said the projects require additional financing and “will have a great multiplier effect on stimulating economic growth through infrastructure development, job creation, poverty alleviation, health care and improve our security architecture.”

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