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$915m World Bank Loan: Wherein lies the truth?

By Luka Binniyat

TEMPERS flared at Thursday plenary session of the House of Representatives, after members of opposition All Nigerian Peoples Party (ANPP) staunchly tried but failed to stop  a motion authorising the Federal Government to borrow $915 million from the World Bank.

The loan, according the motion, is to finance some aspect of the  2010 budget deficit.

This was sequel to a letter to the Speaker of the Reps, Dimeji Bankole, Acting President Jonathan Goodluck. It was dated 21 April, 2010 as reproduced below:

“I hereby forward to Your Excellency, the Summary of the 2010 External Borrowing Plan of Government as a major component of the 2010 appropriation.

Please recall our discussion during our interaction on the 2010 budget of the Federal Government held on 20th  April, 2010, to formally transmit the 2010 External Borrowing Plan of the Federal Government to you for consideration and approval. You may also further recall that the House of  Representatives Committee on Finance had on several occasions, invited the Executive to present the 2010 Borrowing Plan and explain its content including sustainability and impact on the economy. This is in compliance with due process. The Borrowing plan for 2010 is hereby presented for your kind consideration and approval.

Acting President Goodluck Jonathan with the Senate President, David Mark, Deputy Speaker, House of Representatives, Usman Nafada and Presidential Adviser on National Assembly, Senator Muhammed Abba Aji as he signed the 2010 Appropriation Bill into law in Abuja, recently. Photo by Abayomi Adeshida

You may wish to note that Nigeria is in dire need to fund the huge infrastructure deficit critical to rapid development and the highly concessionary credit facilities offered by Multilateral Agencies to which Nigeria belongs and commits substantial resources to compliment the budgetary allocations as appropriate.

The World Bank Portfolio of facilities totalling $915 million out of which $179 million would be drawn in fiscal 2010, is of particular essence as it would be deployed to Urban Water and Transport, Human Capacity Development and Power infrastructure projects across the country.

 In view of the above, Your  Excellency may wish to consider the Borrowing Plan for 2010 in order to facilitate legislative consideration.

But in a rather curious twist, the Minister of Finance, Mr. Olusegun Aganga, denied in an interview with State House Correspondents, that same day, that the Federal Government had such a plan.

He said: “This is absolutely wrong. We are not borrowing a $1 billion to fund the budget …”

The Leader of the Minority of the House of Reps, Ali Ndume (ANPP/Borno), and his deputy, Abdurrahamman Suleiman Kawu (ANPP/Kano) made  passionate and emotive  arguments on why the  $915 million was poisonous to Nigeria, and then walked out  to address a press conference.

Ndume speaking  on  the April, 20  meeting between the leadership of the National Assembly and the acting president warned that presidential economic aides had convinced Jonathan to raise the Value Added Tax (VAT) from the present 5% to 15% “very soon”.

 His words, “When we arrived we were served very good meals and we ate well. After that, were taken into an office where the acting president and his aides were waiting for us.

“The acting president told us that he had problems with about 12 areas in the 2010 budget and that he needed to point it out to us so that we could find a way out of it.

“From what I found out, what the executive considers as ‘grey’ areas in the budget are what affect their own interest.

“The executive had added about N400 billion into the original appropriation bill submitted last November since the coming of the acting president.

“Anywhere we cut down, say N2 billion on insurance, medical bill on a their sub_head, they have a problem with it.

“But, the Senate president told the acting president to just append his signature on the budget, that after that, he could bring it up for amendment.

“This is Nigeria, you know, we were told that if we refuse to cooperate, that it could mean that we would not get …. (winked sideways and made gestures with hands)  … I am sure you understand”, he said, amidst laughter, and continued:

“He then agreed to sign the budget without delay, and he actually did so.

“But, what the Senate President said, to me, was unconstitutional and impracticable.

“You cannot amend an Appropriation Act, I don’t know how that can be done.

“The acting president then said that he had two other issues to inform us. “It turned out that our invitation was actually based on these two issues.

According to Ndume, the issues were the $915m World Bank loan and the intention of government to raise VAT to 15%..

“He said that he has been informed that all the West African countries, with the exception of Ghana, have increased their VAT to 15%.

“He  then called on the minister of finance to brief us more.

“The minister brought out some charts , spread them in his front and started making analysis.

“He talked for a long time, and nothing made sense to me because the man was never in government, and was not living in Nigeria for decades.

 According to him, he told the   acting president that the two issues were not in the interest of Nigeria.

“I said, ‘Mr. Acting President, this man is coming from Goldman Sach as one of its executives.

“But here, you have made him your Finance Minister.

“Don’t listen to those people, they don’t mean well, I told him, even though some of us there were not comfortable with the way I was saying it.

“I told him that If you raise VAT to 15%, we the opposition will join hands with the Nigerian Labour Congress (NLC) and all the workers and ordinary people  of this country to fight you.

“I told him that we will resist the move with all legal instruments at our disposal.” A 15% increase in VAT, he observed, would mean that most goods and services would jump up by 15%.

“If other West African charge 15% on VAT, so what?

“Do you want to compare Nigeria with Togo, Benin Republic or Republic of Niger? “The World Bank loan will add no benefit to Nigeria, but would only benefit the West.

“Out of the $915 million, they would say, ‘hey! You must buy all the facilities you need from America, Britain and Germany, so that the money would go back to them,

“The World Bank loan is just another means the West is trying to check the rising influence of China on Africa, especially Nigeria”.


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