Wednesday 20th September, 2017
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FEC approves $1.3bn international loans to float new bank

FEC approves $1.3bn international loans to float new bank

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.”

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