Nigerian govt approves $200 million loan for Lagos

Governor Akinwunmi Ambode
Governor Akinwunmi Ambode

The federal government has approved a $200 million loan for Lagos State to enable the state finance its infrastructural projects.

The loan will be sourced through a World Bank unit, International Development Association, IDA.

Rising from the Federal Executive Council meeting at the Presidential Villa in Abuja on Wednesday, the minister of Information and Culture, Lai Mohammed, said the approval by FEC followed a memo from the Minister of Finance, Kemi Adeosun.

He said Ms. Adeosun had sought the approval to obtain the loan from the IDA, a window of the World Bank in support of the Lagos state Development Policy Operation, DPO.

Giving more details on the loan, Mr. Mohammed said, “It would allow the state government to complete some of its very ambitious projects, notably the 61 kilometer, 10 lane Lagos to Badagry expressway, which also includes the 27 kilometre light rail”.

He also said the loan would enable the state government to completely rehabilitate the inner roads in Apapa in addition to some other major works it is carrying out.

The minister of Works, Power and Housing, Raji Fashola, who is the immediate-past governor of Lagos State, also spoke at the briefing, saying the $200million approved by FEC on Wednesday was not actually a new loan.

“It is a segment of a programme of developmental initiatives. It was approved in 2010, a total sum of $600 million for Lagos State, to be disbursed in tranches of $200 million each year starting from 2011, 2012 and 2013,” he said.

Mr. Fashola said accessing the loan by Lagos State suffered delays after the first tranche of $200 was received, “as a result of partisan political differences in the last dispensation”.

He said there was a freeze after the first tranche was paid.

“The initial agreement we had with the World Bank was a 40-year loan, on a 10 year moratorium and 0.5% interest.

“But because of the delays that subsequently characterized the partisan interference that took place, our profile as a nation also changed.

“We had become a bigger economy, so, money was being lent to us not now as a highly indebted nation anymore.

“Because of the delay, by the time this one is approved now, we had lost the opportunity of 40 years.

“It is now a loan of 25 years, the moratorium has reduced to five years instead of 10 years, and the interest rate has gone up to 1.25%,” he said.

The former Lagos governor, however, said it was heart warming to still obtain the loan at the reviewed indices since it helps to finance infrastructure.

“Infrastructure defines how big a nation can go. It is the defining line between rich nations and poor nations. That is the best way to distribute wealth in a society,” he said.

He also said the fact that the World Bank now had the confidence to lend sums in that amount to sub national governments, was a testament to the financial discipline and strong governmental structures and the establishment of institutions put in place by the present administration.

He said it was good that rather than the World Bank writing programmes for states such as Edo, Ekiti and Rivers who have also benefitted, it is giving them direct loan through the federal government.

“This is the way to grow the economy of Nigeria, instead of states being told what to do.

“People continue to wonder how these monies are paid. Loans like this are actually deducted at source, at monthly FAAC meetings.

“The risk of default is therefore, very minimal. These are some of the deductions done to states during FAAC because the federal government is actually the recipient, as the state governments cannot directly access loans outside the country,” Mr. Fashola said.

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  • eclub

    Wow! From frying pan to fire, the story of African countries. This country is finished. The future mortgaged.

    • David Molajo

      @eclub:disqus

      This will take Lagos’ debt to 900 billion Naira – likely un-repayable against falling oil income.

      But BUHARI does not know better. He approves $200million loan which he shouldn’t approve,

      and banned local banks from receiving dollar deposits – which he should rather have approved.

      • Minotaur

        This is not Federal Gov’t problem its Lagos State’s.

    • Julius

      why is that ? . States can and do take out a loan here in the U S. so are some other countries all over the world.

      • eclub

        States in the USA own the oil, or other resources and minerals under their soil, states have their own police, and so on…

        You are comparing banana and groundnut.

        • Julius

          Bro, stop trying to be smart. We are talking about states taking out loans for projects. It has nothing to do with states resources. Either they have it or control it. Taxes usually takes care of their loans.

          • eclub

            Yes, it’s not in dispute that states, even cities, counties take out loans, but the larger point I was making is to show how autonomous the states are in the USA, they are like mini countries.

          • Julius

            True but that doent mean that Lagos state or any other states cant do same in Nigeria, take loans !

          • eclub

            The point you should realize in comparing US states to Lagos is that some states in US have bigger GDP than Nigeria itself, perhaps Africa as a whole. So stop the comparison.

          • Julius

            yo, the topic was states taking out loans. Are you saying just because they are not as big they cant take out a loan ? Do you also know that some states in the U S are smaller than Lagos state ?. Those smaller states with less GDP can still take out loans as well. Stop trying to act smart.

          • eclub

            There’s no such state, smaller than Lagos GDP.

            Some cities have bigger GDP than Nigeria

          • eclub

            The topic is comparing apples to apples.

            Just because they’re both called states doesn’t mean they have same abilities.

            I’m pointing out why the US states can borrow internationally, and Nigeria’s can’t.

  • Kekedu

    Nice one… Just about 10% of Dasuki loot.

  • Akiika

    Here is what i don’t get, where are the revenues to service these loans? All of these governors have been borrowing from time immemorial, yet they are so extravagant in their spending and even loot the debt.
    There is really no state that is independent. I wonder the situation with other states if Lagos state is this insolvent.
    #embracecommonsensegovernance

    • Minotaur

      True from memory Lagos has borrowed from World Bank over $500 millions with interest.
      $200 Millions would have been better spent in dredging the River Niger

  • Julius

    Lets hope the money would not be shared by the politicians !

  • ayobamiba

    Money spent to finance APC presidential project must be repaid.lagosians must continue to bear the burden of fashola,tinubu and APC presidential project conspiracy. Already 500 billion debt is on ground and repayment plans are becoming more difficult and world bank have to raise the interest from 0.5% to now 1.5% and yet fashola is resorting to using jargons to hoodwink his gullible bewitched hollow minded free educated followers.

  • joe

    Jonathan and his 40 thieves were not only looting the treasury , but also sabotaging every effort to move the country forward and bring Nigerians out of poverty. Never again a Never-do-well as President!