OrderPaperToday – The Ministry of Finance has told the Senate Committee on Local and Foreign Debts that government needs a $500 million loan from the World Bank for a “social safety net” programme to empower the poor.
The Permanent Secretary of the Ministry, Mammud Isa-Dutse who said this at a meeting with the committee on Tuesday, however, stressed that government is focusing the intervention on the north-east even though all parts of the country are eligible to benefit.
According to Isa- Dutse, close to 60 million Nigerians are below the poverty line and one of the problems in the country is the disconnect between the growth in the economy and its impact on the people.
He said: “It is beneficial for the government to target the poorest household in the economy. Water, education among others would improve the economic situation and once this program is put in place, conditions are set to improve.”
Speaking on the parameters used in selecting the poorest households, the permanent secretary said: “There would be capacity to identify meaningfully those that are poor. Communities would be used to identify those that are really poor.”
He however could not develop the point because the stakeholders meant for the implementation of the project from the office of the vice president were absent.
He said the programme tagged, ‘Social Safety Net’ will be funded in partnership with the World Bank and the International Development Association, IDA.
The chairman of the committee, Shehu Sani (Kaduna-APC) had earlier sought explanation from Mr. Isa-Dutse on how the loan will be sourced, utilised and serviced.
Sani said: “We must ensure that the loan is absolutely necessary and of interest to us. The country has seen season of social intervention projects but poverty is still on the rise.
“Systemic intervention is necessary. We need to have a system that would address these areas. Inviting you is to justify this request. If you are sharing these monies to people, there is no way you can receive it but if you invest it, it is guaranteed.”
Sen. Aruwa Gyunka (PDP, Nassarwa) who is vice chairman of the committee, sought to know why the focus is on the north-east and also the terms of repayment.
In response, Mfr. Isa-Dutse said: “This is a national project. All the 36 states, including the FCT, are eligible. Although conditions will be set, states will be free to apply provided they satisfy the conditions and sign a memorandum of understanding with the Federal Government.
“However, North- East will be the fastest to be incorporated.”
On details of the loan, he explained that “the programme is supported by World bank and it is actually $1.8 billion project but we are receiving 500 million. We went to the concessionary arm of World Bank which gives the softest terms.
“The maturity term of the loan is 25 years, inclusive of a grace period of five years. So, we won’t start to pay until after five years. The interest rate is 1.25 per cent; it comes with a service charge of 0.75 per cent and a commitment charge of 0.5 per cent.
“It is also approved by the Federal Executive Council.”
According to him, Nigeria’s debt to GDP ratio is low compared to other countries, noting further that “debt service of revenue is what is worrisome but giving need to spend on infrastructure or social intervention project would spur us out of recession. The ratio of debt service to revenue will improve. The loan is at a fixed variable throughout the 25 years tenure.”
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Author: Titilope Fadare