Nigeria’s Buhari Seeks Approval of $7 Billion Borrowing Plan

LAGOS (Capital Markets in Africa) – Nigerian President Muhammadu Buhari asked lawmakers to approve a plan for the government to borrow $7 billion through 2018 from abroad to develop railroads and support an economic recovery.

The Export-Import Bank of China approved $6 billion of loans for railroad projects, including $3.5 billion to build a line connecting the commercial capital, Lagos, with the south eastern city of Calabar, according to a letter from Buhari to the lawmakers, which Bloomberg saw on Thursday. The planned debt also includes $575 million from the World Bank to help a recovery in northeastern Nigeria, which has been hit by an Islamist-militant insurgency, and $500 million for social-safety net projects.

The request “was referred to the House Committee on Loans, Aid and Debt Management,” Yakubu Dogara, Speaker of the House of Representatives, said on Twitter, citing Buhari’s letter. The 2017 budget won’t be sufficient to cover the expansion of social programs which commenced in January, Dogara said.

The Nigerian economy shrank 1.5 percent in 2016, the first contraction in a quarter century, mainly because of plummeting revenue that resulted from a decline in the price and output of oil, the West African nation’s biggest export. The government last month announced a plan to help the economy rebound and create 15 million jobs by 2020 by pumping more crude, opening farmlands and increasing infrastructure spending.

Loans from the World Bank to support recovery in north eastern Nigeria were part of Buhari’s earlier request for $30 billion foreign debt that the Senate turned down on Nov. 1, 2016, on “technical grounds.” The earlier request was based on the need to consolidate relative peace at the time after government forces destroyed militant group Boko Haram’s stronghold in the Sambisa forest, Buhari said in the letter. The militants, who have been trying to impose their version of Islamic rule, have killed tens of thousands of civilians and caused $9 billion of damage since 2009, according to the United Nations.

“There is need for urgent consideration of the identified projects which will enable us to start reconstruction and rehabilitation of the region in order to create jobs for the people and rehabilitate the schools to get children off the streets.” Buhari said.

Source: Bloomberg Business News