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Senate Wants CBN to Let Go N188bn COVID-19 Loan

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Senate President Ahmed Lawan- Investors King

A senate ad-hoc committee has urged the Central Bank of Nigeria and NIRSAL Micro Finance Bank to let go of the recovery of credits given to Nigerians under the Targeted Credit Facility.

The Targeted Credit Facility disbursed by NIRSAL MFB and supervised by the CBN is amounting to about N188 billion given to Nigerians as soft loans during the COVID-19 pandemic to mitigate the hardships suffered by individuals and businesses from loss of revenue and income.

Upon allegations of uneven disposal of loans, grants, and interventions in the six-geopolitical regions, NIRSAL MFB was summoned to appear before the Senate ad hoc committee investigating the allegations.

After the NIRSAL MFB’s presentation, where they gave an explanation on how the loan was disbursed, the senator representing Ondo Central Senatorial District, Ayo Akinyelure, stated that NISRAL had given out the loan as grant to the beneficiaries.

The senator stressed that the N188 billion loan was difficult to recover hence another loan should be arranged to be disbursed to Nigerians who can pay back the loan.

“since recovering this money will be difficult for NISRAL MFB, because of the time it was disbursed, let’s request that CBN should give them fresh funding so they can be able to give it out to persons that they can recover the money from.”

 “The money, about, N188bn outside, is gone and we can’t wait until it is recovered before another fund can be disbursed. Countries like the United States gave their citizens free money about four times. So, for this agency to meet its objectives, fresh funds should be released to them.”

The senator also suggested that agencies under CBN like NIRSAL MFB should have their functions spelt exclusively so as not to have clash of functions with the apex bank.

“Creations like this (NIRSAL MFB) should try and be differentiated from the CBN, as the CBN stands as a regulator for the financial sector. And I don’t see why it will put itself in work with micro and macro sectors of the economy. I don’t think it is wise for us”.

He further called for continued funding for the NIRSAL MFB for small business owners to access quick and affordable loans without stringent conditions.

Loans

Senate Initiates Probe into N30tn Ways and Means Loans under Buhari Administration

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Muhammadu Buhari

The Nigerian Senate has embarked on a comprehensive investigation into the disbursement and utilization of the N30 trillion Ways and Means loans obtained by the Central Bank of Nigeria (CBN) during the administration of former President Muhammadu Buhari.

The Ways and Means facility allows the CBN to provide financial support to the government to cover budget shortfalls.

The decision to probe the massive loans comes amid concerns about the transparency and accountability surrounding the utilization of these funds, particularly as the country grapples with economic challenges, food crises, rising inflation, and worsening insecurity.

The Senate’s investigation aims to shed light on how the substantial overdrafts from the CBN were acquired and expended under the leadership of former President Buhari.

There is growing apprehension that the indiscriminate spending of the overdrafts, particularly during Godwin Emefiele’s tenure as CBN governor, may have contributed significantly to the current economic predicament facing the nation.

The probe will delve into the details of the N30 trillion overdrafts, with a specific focus on examining the purpose for which the funds were allocated and how they were utilized.

Also, the Senate will scrutinize the N10 trillion disbursed under the Anchor Borrowers Scheme, as well as the utilization of $2.4 billion out of the $7 billion earmarked for forex transactions.

The initiative underscores the Senate’s commitment to ensuring transparency, fiscal responsibility, and prudent financial management in the country’s economic affairs.

It is anticipated that the probe will unearth vital insights into the financial transactions of the past administration, enabling corrective measures to be taken to address any mismanagement or discrepancies discovered.

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Foreign Loans Dominate Nigeria’s 2023 Capital Importation, Hits $2.31bn – NBS Report

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US Dollar - Investorsking.com

In 2023, foreign loans dominated Nigeria’s capital importation, according to the latest report from the National Bureau of Statistics (NBS).

The report reveals that out of the total $3.91 billion foreign investment inflow, foreign loans accounted for $2.31 billion, representing 59.1% of the total capital importation.

The NBS data indicates a substantial increase in foreign capital inflow compared to previous quarters.

The final quarter of 2023 saw a notable surge, with foreign capital importation rising from $654.65 million in the third quarter to $1.09 billion.

This surge reflects increased investor confidence and interest in Nigeria’s economic prospects.

However, the dominance of foreign loans in the capital importation landscape raises concerns about Nigeria’s debt profile and sustainability.

While foreign loans can provide crucial funding for development projects and infrastructure, excessive reliance on borrowing poses risks to the country’s fiscal health and economic stability.

It underscores the urgent need for prudent debt management and strategies to diversify funding sources.

The breakdown of the capital importation further reveals that Nigeria received $433.87 million in the first quarter, $771.53 million in the second quarter, $507.71 million in the third quarter, and $594.75 million in the fourth quarter as foreign loans.

The report underscores the importance of addressing structural challenges and creating an enabling environment to attract diverse forms of foreign investment beyond loans.

It emphasizes the need for policies that promote sustainable economic growth, attract foreign direct investment, and reduce reliance on external borrowing.

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Nigeria’s Debt May Exceed N107.38tn with New Borrowings

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Loan - Investors King

Nigeria faces a looming debt crisis as recent approvals for fresh borrowings could propel the nation’s total debt to surpass N107.38 trillion.

The approval initiated by President Bola Tinubu’s administration includes plans to borrow $7.8 billion and €100 million as part of the Federal Government’s 2022-2024 borrowing strategy.

These funds are earmarked to finance critical sectors such as infrastructure, health, education, agriculture, and security, among others.

Tinubu emphasized the necessity of foreign loans to bridge financial gaps and restore economic stability in light of recent reforms, notably the removal of fuel subsidies.

Furthermore, additional financial support from the African Development Bank and the World Bank, totaling $1 billion and $2 billion respectively, underscores Nigeria’s urgent need for economic revitalization amidst challenging times.

As of September 2023, Nigeria’s total debt stood at N87.91 trillion, comprising N31.98 trillion in external debt and N55.93 trillion in domestic debt.

The recent approvals, if fully implemented, could raise the debt burden by at least 22.15%, reaching the projected N107.38 trillion mark by 2024.

Notably, Nigeria aims to maintain a debt-to-GDP ratio of 40%, yet projections indicate this figure may soar to 53.06%, signaling potential fiscal strain.

The utilization of Ways and Means advances, a provision allowing short-term borrowing from the Central Bank, further complicates the debt landscape.

While the government emphasizes economic reforms and infrastructure development, concerns linger over the sustainability of Nigeria’s borrowing trajectory.

Analysts caution that securing and implementing these loans may prove challenging, as evidenced by delays in previous loan disbursements.

Amidst growing debt burdens, Finance Minister Wale Edun acknowledges the need for fiscal prudence, advocating for reduced reliance on borrowing to stabilize the economy.

As Nigeria navigates its financial landscape, the balance between development aspirations and fiscal sustainability remains a critical challenge.

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