The Nigerian government has secured an $800m loan from the World Bank to provide post-petroleum subsidy palliatives for over 50 million Nigerians ahead of June 2023. The next administration after President Buhari will begin repayment of the loan. The financing agreement document for the National Social Safety Net Programme – Scale Up between the Federal Republic of Nigeria and the International Development Association of the World Bank was recently made public.
The objective of the project is to expand coverage of shock-responsive safety net support among the poor and vulnerable and strengthen Nigeria’s national safety net delivery system until June 30, 2024. The loan was concessional financing, which is below-market-rate finance provided by major financial institutions to developing countries to accelerate development objectives. The $800m loan attracts a maximum commitment charge rate of one-half of one per cent per annum on the Unwithdrawn Financing Balance, and a service charge of three-fourths of one per cent per annum on the withdrawn credit balance, according to the document.
A percentage of the principal amount of the loan is expected alongside the other charges, which will increase over time. While the first payment will be 1.65 per cent of the principal amount, the last payment will be 3.40 per cent of the principal amount. The repayment will be made in installments, with the first payment due on January 15, 2027, and the last payment due on July 15, 2051. This means that the next administration is expected to begin the repayments for the $800m loan.
The Federal Government plans to deploy Point-of-Sales agents for cash transfers during the National Social Safety Net Programme Scale Up. The agents will be deployed to reach rural communities that are not banked. The Central Bank of Nigeria had also suggested the use of eNaira for cash transfers during the National Social Safety Net Programme Scale Up to drive a cashless economy, according to the National FinTech Strategy document obtained from the website of the CBN.
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