Economic Recession: Adesina meets Buhari, Economic Team as AfDB offers Nigeria $10bn

To help Nigeria out of the current recession, the African Develop­ment Bank (AfDB) has offered the country a grant of $1 billion as budget support, cumulative loans and financial investments of $10 billion with­in the next four years.
President of the AfDB, Dr. Akinwunmi Adesina, disclosed this to journalists after he led the continental bank’s delega­tion to a meeting with the Na­tional Economic Management Team (EMT) chaired by Vice President Yemi Osinbajo at the State House, Abuja.

Only on Monday, The AU­THORITY had exclusively re­ported a $30 billion package from the AfDB, development institutions and private sector leaders to transform the agri­culture sector in Africa. In the report, the paper had said that Nigeria will get the lion’s share of the investments and grants.
Noting that Nigeria is the largest shareholder in the bank, Adesina said the gesture was in recognition of the bold efforts the government had made to get out of recession.
He said: “I think the times are difficult and there is no doubt about that, but I want to commend the government for being bold in taking the right decisions”.
The former Nigerian Min­ister of Agriculture explained that “we have said that we are going to support the Nigeri­an government with a budget to be able to deal with some of the fiscal imbalances they have. We are looking to consider for an award of $1 billion to help deal with that particular deficit.
“In addition to that, there are other challenges that the economy has in terms of di­versifying and deepening the level of diversification in crit­ical sectors; so agriculture, sol­id minerals, manufacturing as well as industrial sector are very important.
“So, the bank is going to provide in total between 2016/2017, $4.1 billion to Nige­ria in various sectors of power, infrastructure, agriculture and for the private sector, the SMEs financing and lending.
“I expect that our portfolio in Nigeria will not decrease, it will actually grow. We expect to invest in Nigeria by 2019, a to­tal of $10 billion.”
Adesina, however, hinted of the bank’s concerns on the need for the Central Bank of Nigeria and the Ministry of Finance to be on the same page regarding the nation’s monetary and fiscal policies so as to ensure macro-economic and fiscal stability in the country.
“We have asked for the need for better synergies between the macro policy side and mon­etary policy side and also the fiscal policy side of the econo­my”, he stated.
Adesina also talked of the AfDB’s proposed investments in Nigeria’s power, financing, women empowerment and oth­er sectors.
According to him, “we ex­pect in our portfolio this year to invest a total of 1.400 meg­awatts of projects to focus on the energy sector and by 2017 we plan to invest in 1,387 meg­awatts of project for the sector”.
The AfDB will support the Development Bank of Nigeria (DBN) with $500 million which will help to provide cheap fi­nancing for the real sector.
“We are also providing $100 million to the Bank of Indus­try (BoI) to be able to lend to small and medium size enter­prises. We also want to finance the Bank of Agriculture for it to reform itself to get more financ­ing”, he said.
Noting that Nigeria’s fis­cal deficit against its GDP is about three or 3.5 percent, way below the five percent for the Fiscal Responsibility Act, he explained that “if you look in terms of the debt to the GDP ratio for Nigeria, it is 15 per­cent.
“So, there is no debt crisis in Nigeria; what you have is li­quidity problem and we are try­ing so that the country will be able to drive down inflation and make sure we are working with the government to be able to provide incentives to the pri­vate sector.”
The Minister of Finance, Kemi Adeosun, disclosed that the interest rate on the loans is “way below two percent and is about 1.2 percent. We are not over-borrowing; what we are trying to do is to ensure that this money we are borrowing is used on key infrastructures that will drive the economy.”
Adesina later met with President Muhammadu Buha­ri who commended him for the way he has been running the AfDB and the offer of help, as­suring him that “we will not let you down. Your country won’t disappoint you.”
The AfDB President gave Buhari a further breakdown of the assistance to Nigeria to in­clude: $1 billion of budgetary support; $300 million to create jobs for 185,000 youths; $250 million towards North East in­frastructure development; $1 million grant to deal with chal­lenges of Internally Displaced Persons (IDPs); $300 million for infrastructure development around Abuja; $200 million for Transmission Company of Ni­geria (TCN) to deepen facili­ties, among others.
Adesina expressed delight with what he called “President Buhari’s push on anti-corrup­tion, and stance on govern­ance,” adding that building in­stitutions was critical.
To that end, he said the AfDB would give a total of $4.8 million as grant for institution­al support, with the Economic and Financial Crimes Commis­sion (EFCC) getting $2 million, and $1 million to Independent Corrupt Practices and other related offences Commission (ICPC).