Roundup: Nigerian Senate rejects president's external loan request

The Nigerian Senate on Tuesday voted against a request by President Muhammadu Buhari for its approval to source a loan up to 29.9 billion U.S. dollars from the World Bank.

Buhari, in a letter to the Nigerian Senate last week, had requested the upper legislative chamber to approve borrowing of the money from the world apex bank.

The president stated that it was meant for the prompt implementation of projects which cut across all sectors with special emphasis on infrastructure, agriculture, health, education, water supply, growth and employment generation, poverty reduction through social safety net programs, governance and financial management reforms, among others.

Without considering it for a debate, members of the Senate overwhelmingly voted against the loan request when it was introduced by a Senate leader on Tuesday.

Senate President Bukola Saraki conducted voting two times, with the legislators turning down the request on both instances.

The Senate's rejection of the loan request trended among Nigerian netizens, most of them expressing displeasure at the borrowing plan, saying it might impose a huge debt burden on the West African nation.

The country's opposition Peoples Democratic Party, while strongly objecting to the borrowing plan, had described it as "anti-people" and a move that would drag Nigeria into the capitivity of the Paris Club of debtor nations.

Nigeria's highest external borrowing between 2010 and 2014 was 5.2 billion dollars in 2014, according to a report by the Central Bank of Nigeria.

In his letter requesting approval for the loan last week, Buhari had explained the 2016-2018 borrowing plan was considered following the huge infrastructure deficit currently being experienced in the country, and the enormous financial resources required to fill the gap in the face of dwindling resources and the inability of annual budgetary provisions to bridge the infrastructure deficit.

"I would like to underscore the fact the projects and programs in the borrowing plan were selected based on positive technical economic evaluations as well as the contribution they would make to the socio-economic development of the country, including employment generation and poverty reduction and protection of the most vulnerable and very poor segment of the Nigerian society," the Nigerian leader wrote in his letter to the Senate.

With the drastic drop in oil revenues, Nigeria is facing additional challenge in financing gap in public revenues estimated at about 20 billion dollars every year amid its present economic downturn.

Abraham Nwankwo, director-general of the country's Debt Management Office said government must seriously embrace "conventional public borrowing" to fund critical projects to pull the economy out of recession.

According to him, it was clear the country needed to invest about 25 billion dollars per annum for seven to 10 years to cover its huge infrastructure deficit, long before the drop in global crude oil prices in mid-2014.

Nwankwo said the external loan request was not intended to impose a debt burden on Nigeria, as more than 75 percent of the loans taken by the government come from concessionary sources.

The loans are long-tenured for about 20 to 30 years, with an interest rate of 1 to 3 percent, he explained.

Nwankwo said since the Nigerian government plans to reduce imports in the next five years, especially through agriculture and import substitution, savings made will help defray the nation's debt burden. Endit