World Bank approves $1.5 bln loan for Nigeria to support COVID-19 recovery
Government revenues could fall by more than $15 billion this year due to the pandemic.
The World Bank today announced that it has approved a $1.5 billion loan for Nigeria to help the recovery efforts of the country from the economic impacts of COVID-19. The bank said the loan approval came as it discussed a new five-year partnership with the country.
The loan was approved for two programmes in equal halves. $750 million would be disbursed under the Nigeria COVID-19 Action Recovery and Economic Stimulus (Nigeria CARES) programme. The loan, financed by the International Development Association (IDA), the concessional lending arm of the World Bank, will help increase access to social transfers and basic services, as well as provide grants to poor and vulnerable households. It will also strengthen food supply chains for poor households while facilitating recovery and enhancing capabilities of MSMEs.
The second programme, also funded by the IDA, is the State Fiscal Transparency, Accountability and Sustainability Programme for Results (SFTAS). World Bank said the new financing will build on the progress made across 36 States, expanding the original SFTAS programme and scaling up response to COVID-19.
According to the statement released today by the bank, the SFTAS programme will help meet the financing gap due to the sharp reduction in government revenues resulting from the pandemic. It will help increase the efficiency in spending, strengthen revenue mobilization, and enhance accountability and transparency in public resource management to further strengthen state-level COVID-19 response.
“Nigeria is at a critical juncture. With the sharp fall in oil prices as a result of COVID-19, the economy is projected to contract by over 4% in 2020, plunging the country into its deepest recession since the 1980s,” the World Bank said. “Government revenues could fall by more than 15 billion dollars this year, and the crisis will push an additional 5 million Nigerians into poverty in 2020.”
According to Shubham Chaudhuri, World Bank Country Director for Nigeria, the Country Partnership Framework will guide the bank’s engagement for the next five years in supporting the government’s strategic priorities. He said the country needed to pursue some bold reforms, and that the bank’s engagement will focus on supporting Nigeria’s efforts to reduce poverty and promote sustained private sector-led growth.
Specifically, the World Bank said its partnership with Nigeria will focus on four areas. These are: investing in human capital, promoting jobs and economic transformation and diversification, enhancing resilience by strengthening service delivery and livelihood opportunities in the Northeast and other regions grappling with insecurity, and improving public financial management.
The World Bank loan approval came over seven months after the International Monetary Fund (IMF) approved $3.4 billion emergency financial assistance for the country. The government said in April it applied to various multilateral financial institutions, including the IMF, World Bank and African Development Bank (AfDB), to support its efforts to address the severe economic impact of the Covid-19 shock and the sharp fall in oil prices.
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