Nigeria’s Debt Stock Hits N42.7tn As Senate Approves Fresh $16bn Loans

The Senate has approved the federal government’s foreign loans request of $16bn and €1.02bn, making Nigeria’s debt stock of N35.5tn rise to N42.7tn.

President Muhammadu Buhari had sought to borrow the sum of $16.2bn, €1,02bn and a grant component of $125m to fund some “legacy projects.”

The $16.2bn loans are equivalent to N6.7tn using the Importers and Exporters’ Window exchange rate of N411.24/$1, while the €1.02bn is equal to N485.5bn CBN’s exchange rate of N476/ €1. These bring the value of the loans to be acquired to N7.2tn.

The Senate also approved the request of the Bank of Industries for the issuance of €500m, but not more than €750m Eurobond in the international capital market.

The federal lawmakers’ approval of the loan requests was, however, accompanied by a resolution that the terms and conditions of the loans from the funding agencies be forwarded to the National Assembly prior to their execution for approval and proper documentation.

The approval followed the consideration of a report by the Senate Committee on Local and Foreign Debt on the proposed 2018-2020 External Borrowing (Rolling) Plan.

Senator Clifford Ordia, Chairman of the committee, in his presentation, said Buhari’s request was in compliance with the provisions of the Debt Management Office (Establishment) Act, 2003 and the Fiscal Responsibility Act, 2007.

Ordia said the provisions of the statutes enjoined the President to seek and obtain the approval of the National Assembly in respect of the external borrowing programme of the federation and states.

The senator explained that out of the total amount approved by the National Assembly, $3,529,300,000 would be sourced from the World Bank.

He said $5.07bn would be sourced from the China Exim Bank; and $3.9bn from the Industrial and Commercial Bank of China.

Ordia stated that $2.8bn was being expected from the China Development Bank; and $698m from the Africa Development Bank.

He added that €345m was being expected from the French Development Agency; €175m from the European Investment Bank; and $190m from the European ECA/KfW/IPEX/AFC.

The lawmaker also said €500m would be sourced from the international capital market; and $62.1m from Standard Chartered Bank/SINOCURE.

Ordia explained that the committee noted the serious concerns of Nigerians about the level and sustainability of the country’s borrowing in the last decade.

The senator said the development constituted a drain on the nation’s economy and limited resources available for national development.

Citing the need for a more proactive approach to revenue enhancement, the lawmaker observed that “there are noticeable improvements in our revenues, but the growth is not sufficient or rapid enough to catch up with the pace of development required for our nation.”