The payback of the $800 million loan sanctioned by the World Bank as a subsidy palliative would commence under the following administration after that of the President, Major General Muhammadu Buhari (ret.)
Zainab Ahmed, the minister of finance, budget, and national planning, stated last week to State House reporters that the federal government has received $800 million from the World Bank to offer over 50 million Nigerians with post-petroleum subsidy palliatives before June 2023.
The PUNCH on Tuesday was able to secure the finance agreement document between the Federal Republic of Nigeria and the International Development Association of the World Bank for the National Social Safety Net Plan - Scale Up.
The project's goals are to strengthen Nigeria's national Safety Net delivery system through June 30, 2024, and to increase coverage of shock-responsive safety net support among the poor and vulnerable.
The loan was disclosed to be concessional financing in the document dated August 16, 2022 and signed by the Nigerian finance minister and Shubham Chaudhuri, the country director for Nigeria at the World Bank.
Concessional financing, according to the World Bank, is financing given to poor nations at rates below market to expedite development goals. These organizations include development banks and multilateral funds. According to the document, the Federal Government's $800 million loan has a maximum commitment fee rate of 0.5 percent annually on the Unwithdrawn Financing Balance and a service charge of 0.7 percent annually on the Withdrawn Credit Balance.
Also, it stated that the interest rate on the remaining balance of the withdrawn credit is 1.5% per year.
Together with the other fees, a percentage of the loan's principal amount is also anticipated, and it will rise with time.
The first payment will be 1.65% of the total debt, and the last payment will be 3.40% of the whole principle.
Starting on January 15, 2027, there will be two payment dates every year: January 15 and July 15. All payments will be made in US dollars.
The loan will be repaid over time in a series of payments, with the first installment becoming due on January 15, 2027, and the last one on July 15, 2051.
A new president of Nigeria is anticipated to take office on May 29, 2023, and to rule the nation until May 29, 2027. On May 29, 2023, Bola Ahmed Tinubu, the president-elect, is anticipated to take office.
This indicates that the $800 million loan repayments are anticipated to start under the incoming administration.
The Federal Government would use Point-of-Sale agents for cash transfers during the National Social Safety Net Plan Scale Up, The PUNCH exclusively reported in January of this year.
The agents will be placed, according to the finance minister, in order to reach unbanked rural areas.
In a move to promote a cashless economy, The PUNCH also exclusively reported in February of this year that the Central Bank of Nigeria had considered using eNaira for cash transfers during the National Social Safety Net Project Scale Up.
This was stated in the National FinTech Strategy paper that was downloaded from the CBN website.
"The central bank can utilize a pre-programmed eNaira to pay intended recipients on the social register," the document stated. "This eNaira may only be accepted for a specific purpose and at explicitly authorized sites.
"This use case will guarantee the appropriate use of social funds, ensuring that high-quality data can be gathered on the effectiveness of these programs, and aid to avoid money leakage or diversion. In financial services and related ecosystems where it is important to preserve the integrity of funds and the purposes for which they are used, this capability could be expanded to other use cases.
