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Nigeria and World Bank loan
By Sun News Publishing
Monday, November 17,
2008
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The World Bank group under its International Development Assistance
(IDA), is currently dangling a credit facility of $3bn (US dollars),
or N351bn (at the current exchange rate) to Nigeria. The loan which
is open to the Federal Government between 2009 and 2011 will, if
accepted, be used to address infrastructural development projects
such as poverty eradication, healthcare, roads, education and agriculture.
The bank officials said the loan, if taken by the Nigerian government,
is concessionary and interest-free, but Nigeria will pay what it
calls “administrative charges” over the three-year period
that the credit facility will be drawn down.
The move for the $3bn loan, we learnt, came on the heels of disclosures
by the Minister of State for Finance, Mr. Remi Babalola, that Nigeria
urgently needs a whopping $100 billion (about N11.70 trillion) to
fix critical infrastructural problems, mainly in the power sector.
From all indications, the federal government is disposed to accepting
the loan.
Ordinarily, the idea of an interest-free loan would have been a
piece of good news to the recipient country and its citizens. However,
we are hesitant in endorsing the latest loan from the World Bank.
There is no doubt that the sectors listed to have urgent need for
the loan require financial bailout, but they are sectors that government
can address sufficiently with the financial provision in the current
budget and the proposed Appropriation Bill for next year without
resorting to external borrowing.
It is in this light that we support the resolution of the House
of Representatives, asking the federal government to reject the
loan. Only recently, Nigerian-born Managing Director of the World
Bank and former Minister of Finance, Dr. Ngozi Okonjo-Iweala, advised
the federal government and Nigerian banks to be cautious in taking
foreign loans. This is a timely advice from an insider that should
be taken seriously.
The truth of the matter in Nigeria is that paucity of fund has rarely
been our problem. Our main malaise is efficient management of resources
for development projects such as the sectors under reference in
the proposed World Bank loan. Undoubtedly, our experience, past
and present, shows pointedly that government and its officials have
never properly managed or utilized resources for projects earmarked.
This, it must be said, has become the occupational disease of relevant
government agencies and officials charged with administering loans
taken from external agencies such as the World. Bank. There is no
guarantee that the current loan being contemplated will not be squandered,
or even diverted to private pockets even if World Bank officials
are directly involved in the implementation.
We acknowledge that the idea of a loan in itself is not bad. It
is how it is invested or managed that matters, and Nigeria has been
deficient in this area of transparency and leadership accountability.
In fact, the proposed loan is not exceedingly necessary. We are
suspicious of the contents and the so-called “administrative
charges” embedded in the credit facility terms. We see this
loan offer as a bait to trap and enslave Nigeria. We had thought
that the federal government would have been more circumspect and
stay away from any external borrowing to enable the country recover
from the cliff-hanger of our recent exit from the creditor nations.
However, if government remains adamant to this advice, and feels
it must take the loan for whatever reason, we urge that it critically
weighs the options against our own domestic needs, because, incontrovertibly,
many loopholes do exist for countries that opt for World Bank loans.
And defaulting to pay back when due, is an open invitation to austerity
measures with its concomittant hard times that await the citizens
like Satan standing at heaven’s gate. In this case, prudence
is a critical factor if government insists on taking this loan.
A delicate balancing is crucial. In all, a decision, to take or
not to take, requires leadership. This will make all the difference
in this matter.
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