The Federal Government of Nigeria has approached the World Bank for a new loan of $400 million to fund a conditional cash transfer program benefiting 15 million households. This initiative is designed to alleviate the economic impact of the recent removal of petrol subsidies on Nigerian citizens.
This additional $400 million request brings the total amount borrowed from the World Bank for the cash transfer program to $1.2 billion. The government had previously secured an $800 million loan for the same purpose.
President Bola Tinubu announced this conditional cash transfer program in a nationwide address on October 1, which marked Nigeria's Independence Day. The measure is aimed at mitigating the adverse effects of petrol subsidy removal, which has led to a significant increase in the cost of living.
As part of this program, the Federal Government will begin distributing N25,000 monthly payments to 15 million households for three months, starting from October and continuing through December 2023.
A high-ranking government official, speaking anonymously due to the sensitivity of the matter, confirmed that the Tinubu administration intends to fund the N35,000 cash award to civil servants without taking a loan. Instead, a supplementary appropriation bill will be presented to the National Assembly to secure the necessary funds.
The source clarified, "The government is funding the N35,000 wage increase for all federal civil servants and it is not taking a loan. The one the government is taking a loan for is the one of N25,000 multiplied by three months for 15 million households. There is a loan of $800 million on this one, and the government is adding $400 million, making it $1.2 billion, which will be used for the conditional cash transfer."
Simultaneously, Nigeria has retained its fourth position on the World Bank's top 10 International Development Association (IDA) borrowers' list. This ranking was maintained despite the country accumulating an additional $1.3 billion in debt within one year.
The World Bank's fiscal year 2022 audited financial statement revealed that Nigeria moved up to the fourth position on the list with an IDA debt stock of $13 billion as of June 30, 2022. However, the fiscal year 2023 audited financial statement shows that Nigeria's IDA debt stock increased to about $14.3 billion as of June 30, 2023, but the country still holds the fourth position on the list
In the fiscal year 2023, Nigeria was among the top 10 countries acquiring fresh IDA loans, with the World Bank committing $1.55 billion to the country, making it the ninth-highest beneficiary.
It's worth noting that Bangladesh became the topmost IDA debtor, with a debt of $19.3 billion, surpassing India, which fell to the second position with $17.9 billion in debt, while Pakistan maintained its third position with $16.9 billion in debt. Nigeria remains the highest IDA debtor in Africa, while the top three borrowers, Bangladesh, India, and Pakistan, hail from Asia.
