Disbursement of $800m loan to FGN should be stopped, says SERAP

A call has been extended to the President of the World Bank, Mr David Malpass, to suspend any disbursement of the $800m loan to the Federal Government of Nigeria (FGN) and to request the incoming administration to provide satisfactory explanations for the loan.

The request was made today by a Lagos-based rights group, Socio-Economic Rights and Accountability Project (SERAP), through a statement issued by its Deputy Director, Kolawole Oluwadare. 

SERAP equally urged the World Bank and its helmsman, “To reopen a discussion on the reportedly approved $800m loan with the incoming administration to clarify the details on the rationale and use of the loan because the term of office of the government of President Muhammadu Buhari ends in May 2023”.

It would be recalled that the FGN had in April announced its plan to spend the $800 million loan as part of its subsidy palliatives measures. 

President Buhari had also last week requested the Senate’s approval for the World Bank loan. It is, however, unclear whether the request to the Senate is for a fresh loan or the one announced in April.

Referencing its letter dated May 13, 2023, the group posited that, "The World Bank should comply with its Articles of Agreement in disbursing any loans. The Bank should not sacrifice international standards in the rush to disburse the $800m loan to the government.

“Suspending any disbursement of the loan to the government would reduce the risks and vulnerability to corruption and mismanagement”.

While expressing concern that the FGN is seeking to spend the loan when it has barely two weeks to leave office and when the project objectives and intended purposes for which the loan is reportedly approved and will be disbursed remain unclear, SERAP insisted that “The government has not satisfactorily explained or justified the need for the loan at this time, especially given the lack of clarity on its use and the crippling debt burden, and the disproportionately negative impact of these retrogressive measures on poor Nigerians.

“The World Bank cannot close its eyes to these important transparency, accountability, and human rights issues.

“The National Economic Council (NEC) on April 27 reportedly suspended the planned removal of subsidy on petroleum products by the end of the Buhari administration.

“We would consider the option of pursuing legal action should the World Bank refuse to suspend the disbursement of the loan to the Federal Government and to implement the other recommendations contained in this letter, and we may join the government in any such suit.

“The crippling debt burden is a human rights issue because when the entire country is burdened by unsustainable debts, there will be little money left to ensure access of poor and vulnerable Nigerians to legally enforceable socio-economic rights.

“There is also a lack of transparency and accountability in the spending of the loans so far obtained. The details of the projects on which approved loans are spent are often shrouded in secrecy.

“The Bank has a responsibility to ensure that the Federal Government is transparent and accountable to Nigerians in any discussion to obtain loans, credits, or grants from the Bank and how it spends any approved loans, credits, or grants.

“The Bank’s power to provide loans is coupled with a fiduciary responsibility to ensure that the spending of such funds by the government meets international standards of transparency and accountability, including those entrenched in article 5 of the UN Convention against Corruption.

“The World Bank should also seek transparency and accountability commitments if the incoming government decides to use the loan to implement the National Social Safety Net Programme (NASSP) because the spending on the programme has been mostly shrouded in secrecy.

“Under the programme, the government reportedly plans to transfer the sum of N5,000 per month to 10.2 million poor and low-income households for six months”.

All rights reserved. This material and other digital volumes on this website, may not be reproduced, published, broadcast, rewritten, or redistributed in whole or in part without prior express written permission from THE NEWS ACCELERATOR NETWORK.

For advert placement, please contact thenewsacceleratornetwork@gmail.com or 08033599492