Palliative loan: World Bank disburses $299.99 million to Nigeria

 The recent disbursement of approximately $299.99 million by the World Bank to Nigeria marks a significant milestone in the implementation of the National Social Safety Net Program-Scale Up. This disbursement, confirmed by an inside source within the World Bank, constitutes about 37.5% of the approved $800 million for the program.

Despite this substantial disbursement, a pending balance of around $442.88 million remains, according to information from the Bretton Woods institution. The National Social Safety Net Programme-Scale Up, sanctioned by the World Bank on December 16, 2021, is slated to continue its operations until June 30, 2024. The responsibility for executing this $800 million program lies with the Federal Ministry of Humanitarian Affairs & Poverty Alleviation.

The primary objective of this financial support is to facilitate a monthly cash transfer program initiated by the Federal Government, specifically targeting poor and vulnerable Nigerians grappling with the repercussions of recent policy shifts, including the removal of the fuel subsidy. In October 2023, President Bola Tinubu formally launched a promised conditional cash transfer program designed to benefit 15 million households nationwide, each set to receive N75,000 within three months.

In tandem with the cash transfer program, the Federal Government is presently in the process of upgrading the system responsible for its implementation. Seeking the expertise of a consulting firm, the government aims to enhance the functionality of the system for optimal performance. The World Bank's statement outlines the scope of the consulting services, emphasizing the development, implementation, deployment, and maintenance of a user-friendly, web-based Management Information System (MIS) to support the National Social Safety Net Program-Scale Up.

This upgrade is deemed necessary as the National Economic Council (NEC) decided not to utilize the social register from the previous administration due to credibility concerns.

The financing agreement document reveals that repayment for the $800 million loan will occur in installments. The first payment is slated for January 15, 2027, while the final payment is due on July 15, 2051. The terms of the loan specify a maximum commitment charge rate of one-half of one percent per annum on the Unwithdrawn Financing Balance, along with a service charge of three-fourths of one percent per annum on the withdrawn credit balance. Additionally, an interest charge of one and a quarter percent per annum on the withdrawn credit balance is applicable. Notably, a percentage of the principal amount of the loan, alongside other charges, will incrementally increase over time, with the first payment at 1.65% of the principal amount and the final payment at 3.40%.