Monday, September 26, 2016 6:15 pm
The African Development Bank (AfDB) says it will increase its investment in Nigeria by $4.1 billion between 2016 and 2017 and raise it up to $10 billion by 2019.
The Bank’s President, Dr Akinwumi Adesina, gave the indication while speaking with State House Correspondents after its delegation met with Vice President Yemi Osinbajo and the Economic Management Team.
Adesina said that the bank would support the Federal Government in its budget to enable it to deal with the current economic challenges.
“We will support Nigerian government with the budget support to be able to deal with some of the domestic fiscal imbalance that they have.
“We are looking to consider for the board $1 billion to help them to deal with that particular deficit that is there.
“In addition to that, there are other challenges that the economy has which is in terms diversifying and deepening the level of diversification in critical sectors.
“So agriculture, solid minerals very important; manufacturing as well as industrial sector is very important.
“So the bank will provide in total between 2016 and 2017 a total of $4.1 billion to Nigeria in various areas of power, infrastructure to agriculture and the private sector for SME financing and lending.
“I expect that our portfolio in Nigeria will not decrease; it will actually grow.
“We expect to invest in Nigeria by 2019 a total of $10 billion in terms of our portfolio.’’
Adesina said Nigeria is the bank’s biggest shareholder adding that the bank came to talk with the administration on the challenges and opportunities which abound in the country.
He said the times were difficult in Nigeria but commended the federal government for taking bold decisions in a number of things such as economic diversification.
He said the low crude oil price was a big challenge adding that 98 per cent of the nation’s foreign revenue came from that sector thus creating a lot of reverberations.
He said it was necessary to device means of stemming the difficulties adding that the bank would support the country in that regard.
According to him, there is the need to deepen the diversification and making sure there is micro economic and fiscal stability in the country and to have synergy between the micro, monetary and fiscal sides.
“We also recognize that power is perhaps the most important challenge that is driving inflation in the country.
“We expect from our portfolio this year to invest in over 1,400 megawatts of projects that are going to be focused on the energy sector.
“By 2017 we plan to invest in about 1,387 megawatts of generation projects for the sector,’’ he said.
Adesina added that the discussion also dwelt on investment on women, youth and job creation as well as opportunities to support access to finance by banks.
Accordingly, he said AfDB will support the development bank of Nigeria with $500 million to help in cheap financing of the country’s real sector.
He said AfDB would also provide $100 million support to the Bank of Industry for lending to Small and Medium Enterprises and finance the Bank of Agriculture to carry out reforms and obtain financing.
The AfDB president said the country support was on a concessionary interest rate of 1.2 per cent.
Adesina also dispelled fears being expressed in some quarters about the country being in debt crisis.
He said the country was facing tough times but added that it was not in debt crisis but rather having liquidity problems.
“We are here to provide very strong support for the Nigerian government.
“Let me just say that Nigeria has tough times but Nigeria is not falling apart.
“When people talk about debt crisis, Nigeria is not in a debt crisis.
“If you look at the fiscal deficit of this country with regard to the GDP, it is just about 3 per cent or 3.5 percent; it is still below the 5 per cent for the Fiscal Responsibility Act.
“If you look in terms of the debt to GDP ratio for Nigeria, it is 15 per cent.
“So there is no debt crisis in Nigeria, what you have is a liquidity problem and we are trying our best to be able to help the country to solve that to be able to drive down inflation.
“To be able to also make sure that working with the government, they provide the necessary incentives to the private sector because to come out of recession needs more than government.
“It needs the private sector, so incentives are going to be very important.
“The Minister of Finance talks of all raft of incentives they are going to give and I think that is the right direction.
“Am I happy to be here? I just want to say that Nigeria is not falling apart; I think we are here to support Nigeria.
“Nigeria will come of this as a better more diversified and more resilient economy than it went through recession. I believe that.’’
The AfDB president said the organization was not a fair weather friend of the country but was there to provide very strong support for the Federal Government.
The Minister of finance, Mrs Kemi Adeosun, said that government had indicated earlier that it would go for the cheapest money (loans) first which was why it approached the AfDB and the World Bank.
“We have stuck to that strategy and we have very conservative debt profile.
“That is a great flexibility on the comfort of the country and we have not over-borrowed.
“What we have to do and what we are doing is to make sure that this money we borrowed is used on key infrastructure that will drive the economy.
“And I am going to assure you all those things,’’ the minister added.