The Federal Executive Council (FEC) has approved the requests for three international loans worth $1.3 billion for the takeoff of the newly established Development Bank of Nigeria (DBN).
The FEC also cleared a N550 million contract for project managers and verification consultants to register 200,000 personnel of the Nigerian armed forces into the Integrated Personnel Payroll Information System (IPPIS) for more efficient disbursement of salaries and emoluments.
The entire military is expected to be on IPPIS by the third quarter of 2017.
The Minister of Finance, Mrs. Kemi Adeosun, disclosed the outcome of the FEC meeting to State House correspondents. The meeting was chaired by President Buhari at the Aso Rock Villa.
She said that the World Bank had made available to Nigeria $500 million loan repayable over 21 years while the African Development Bank (AfDB) was giving the country another $450 million.
Also, KfW Development Bank based in Frankfurt, Germany would lend Nigeria $200 million, just as the French Development Agency had earmarked $130 million for the country as well, all at concessional rates.
Adeosun explained that the approval would be forwarded to the National Assembly for ratification, adding that small and medium scale enterprises will benefit greatly from the loans to DBN.
She said: “The FEC enthusiastically approved these facilities which are long tenured, meaning that the DBN will be able to lend to our SMEs over much longer periods and at much lower rates. So, the impact on the SMEs will be quite considerable.”
Adeosun further rationalised the latest borrowing, saying that “currently, our debt to Gross Domestic Product (GDP) ratio is just 13% while many African countries are 60% and in the West some have 100% and above.
The minister continued: “Take this loan today for instance, $1.3 billion, 45% of Nigeria’s economy is SME and only 10% can get loans at the moment. It is either they don’t have loans and they are asked to go and bring one document and the other that they don’t have or the interest is so high.”
On the IPPIS contracts, the minister said that “we have assurances about the savings that we typically generate when we bring agencies on IPPIS.”