Senate okays Buhari’s $16.23bn, 1.02bn Euro loan, $125m grant requests without terms, conditions

Tunde Opalana & Haruna Salami, Abuja

The Senate, again, on Wednesday, gave nod to President Muhammadu Buhari’s loan requests by approving sums of $16.230, 077,718 billion, 1.020,000,000 Euro loan and $125,000,000 million grant under the 2018-2021 Federal Government External Borrowing (Rolling Plan).

However, the approval was done without consideration of terms and conditions from borrowing agencies. Hence, the Senate asked the government to avail the legislature details of terms and conditions from funding agencies prior to execution of listed projects.

These followed consideration and approval of the report of the Senate Committee on Local and Foreign Debts on the 2018-2021 Federal Government External Borrowing (Rolling Plan) during plenary.

Funding agencies that were expected to provide terms and conditions for facilities they are giving include World Bank, China Exim Bank, Industrial & Commercial Bank of China, China Development Bank, African Development Bank, French Development Agency, European Investment Bank, International Capital Market, and Standard Chartered Bank.

The total amount approved by the National Assembly, the sum of $3,529,300,000 billion would be sourced from the World Bank; $5,078,441,252 billion from China EximBank; $3,902,267,260 billion from Industrial & Commercial Bank of China; $2,893,693,930 billion from China Development Bank; and $698,500,000 billion from the African Development Bank (AfDB).

In addition, €345,000,000 million euros is expected to be sourced from the French Development Agency (AFD); €175,000,000 million euros from the European Investment Bank; $190,255,276 million USD from European ECA/KfW/IPEX/AFC; €500,000,000 euros from the International Capital Market; and $62,120,000 USD from Standard Chartered Bank/SINOCURE.

Senators took turns to analyse the recommendation of the committee that concurrent approval be given to the request and the terms.

Senate President, Ahmed Lawan asked the committee chairman if he will avail the Senate details of terms and conditions from funding agencies.

Sen. Solomon Adeola (Lagos West) said the committee is asking for loan approval but raised concern that it may be awkward to be seeking terms and conditions after the loan has been approved.

Also, Deputy Senate President, Ovie Omo- Agege (Delta Central), said going by the committee’s recommendation, the Senate has not given approval to terms and conditions.

“We are saying the terms and conditions will be brought back to us here. It will be very embarrassing later to note that terms and conditions are written in Chinese language not known to us”, he said.

Also, former governor of Ogun State, Ibikunle Amosun said the President is seeking approval for the loan. He added that “concurrence is assuming we have seen the terms and conditions”.

In his presentation, the Chairman of the committee, Sen. Clifford Ordia (Edo Central), read its recommendations to include “that the Senate do approve the under listed ongoing negotiation of external borrowing in the sum of $16,230,077,718 (Sixteen Billion and Two Hundred and Thirty Million, Seventy Seven Thousand, Seven Hundred and Eighteen usd) €1,020,000,000 (One Billion and Twenty Million euros) and a Grant component of $125,000,000 (One Hundred and Twenty Five Million usd) under the 2018-2020 External Borrowing (Rolling) plan.

“That the Senate do approve the request relating to the Bank of Industries for the issuance of €500,000,000 (Five Hundred Million Euros) but no more than €750,000,000 (Seventy Hundred and Fifty Million Euros) Eurobond in the International Capital Market.

“That the terms and conditions of the loan from the funding agencies be forwarded to the National Assembly prior to the execution of the same for proper documentation”.

However, the Committee further noted that Nigeria’s debt service figures, which continues to increase, reached an all-time high of around 95% of our retained Revenue and 35.6% of annual expenditure, which no doubt constitutes a huge drain on revenue, thereby limiting resources available for national developmental projects and human capital development.

“The Committee notes that a good number of the projects in respect of which financing is being requested under the 2018-2020 External Borrowing (Rolling) Plan are mostly ongoing projects and programmes in respect of which External Borrowed funds have been spent in the past, including loans and grants.

“The Committee observes that these projects, some of which requires additional financing, will have a great multiplier effect on stimulating economic growth through infrastructure development, job creation, poverty alleviation, health care and improve our security architecture.

“The projects will also stimulate a rebirth of Commercial and Engineering activities and the consequent tax revenues payable to Government as a result of these productive activities will increase”, said Ordia.

The Senate on Tuesday, the 1st of June 2021 considered the request from the President of the Federal Republic of Nigeria requesting for the Senate’s approval of the Federal Government 2018-2020 External Borrowing (Rolling) plan as contained in a communication dated 6th May 2021.

The 2018-2020 External Borrowing (Rolling) Plan contained a request for approval in the sum of $36,837,281,256 (Thirty Six Billion, Eight Hundred and Thirty Seven Million, Two Hundred and Eighty One Thousand, Two Hundred and Fifty Six United States Dollars) plus €910,000,000 (Nine Hundred and Ten Euros) and Grant Component of $10,000,000 (Ten Million United State Dollars).

The communication together with the attached Schedule was referred to the Committee on Local and Foreign Debt for further legislative action and after legislative interaction, deliberations and due diligence, a report No. 1 was laid by this Committee before the Senate in July 2021 recommending approval of the sum of $8,575,526,537 (Eight Billion, Five Hundred and Seventy Five Million, Five Hundred and Twenty Six Thousand, Five Hundred and Thirty Seven United States Dollars) and €490,000,000 (Four Hundred and Ninety Million Euro).

It would be recalled that the Senate at Plenary in July 2021 approved financing for projects as recommended by the Committee above whilst the Committee continued further legislative action and consideration of the outstanding request.

Subsequently, on the 15th of September 2021, the President of the Senate of the Federal Republic of Nigeria read another Communication from the President and Commander in Chief of the Armed Forces, Containing an addendum to the 2018-2020 External Borrowing (Rolling) Plan in the sum of $4,054,476,863, €710,000,000 and Grant Component of $125,000,000 for various projects and same was also referred to the Committee for further legislative action.

The request of Mr. President is in compliance with the provisions of the Debt Management Office (Establishment) Act 2003 (DMO) and the Fiscal Responsibility Act 2007 (FRA) which both enjoin the President to seek and obtain the approval of the National Assembly in respect of the External Borrowing programme of the Federation and the States.