'1% interest rate' — Nigeria secures $2.25bn World Bank loan

‘1% interest rate’ — Nigeria secures $2.25bn World Bank loan

April 21

17:38 2024

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Wale Edun, minister of finance and coordinating minister of the economy, says the country has qualified for a World Bank loan of $2.25 billion.

Edun spoke during a press conference held at the annual meetings of the International Monetary Fund (IMF) and World Bank Group on April 20.

The package, he said, was approved by the board of directors of the World Bank, and offers a 40-year term, a 10-year moratorium, and a one percent interest rate.

“If you look at the fact that we have qualified for the processing, just this week to the board of directors of the World Bank of a total package of $2.25 billion,” he said.

“There is no such thing as a free lunch but it is the closest you can get to free money.

“It is virtually a grant. It is about 40 years, 10 years moratorium and about one percent interest. That also is part of the flow that you can count.”

In addition, he said the country has also secured similar budgetary support and low-interest funding from the African Development Bank (AfDB).

“Clearly, there are also ongoing discussions with foreign direct investors,” Edun said.

“Some of these things take longer than you expect but they are relatively advanced discussions on major foreign direct investments flows into the country, specific transactions with specific companies, institutions, and authorities.”

‘DUTY WAIVERS COSTING ONE PERCENT OF GDP’

Edun said there is a relatively expensive set of incentives, duty waivers and exemptions on tax which costs about one percent of Nigeria’s gross domestic product (GDP).

According to the minister, the country is looking to increase the tax-to-GDP ratio to 18 percent from about 10 percent in a few years.

He said the government is also looking to ramp up overall government revenue from about 12 percent to “about 22 percent, to virtually double it”.

“So, you might say how would this be done,” he said.

The minister said the country has a tax reform and fiscal reform committee that will roll out a list of measures to improve efficiency in the tax sector and increase revenue.