A $2.25 billion loan from the World Bank with a remarkably low interest rate of 1% has been secured by the Central Bank of Nigeria. Following the news disclosed by the Finance Minister, Wale Edun, who called it “virtually a grant” due to the extended 40-year repayment period with a 10-year grace period before repayments begin.
Ultimately, this looks favourable to the Nigerian economy, while the loan provides a financial boost, the government acknowledges the importance of increasing revenue in the long term. They outlined a two-way approach namely, oil Production Increase and tax revenue diversification.
Wale Edun further explains that the president, Bola Tinubu aims to raise oil production from 1.6 million barrels per day to 2 million barrels per day. This is expected to bring in more revenue for the government.
Meanwhile, tax revenue is also estimated to increase from 10% to 18% of GDP and double non-oil revenue to 22% within a few years. An approach to reduce the nation’s reliance on oil, creating a more sustainable financial future.
The country is also currently negotiating with the African Development Bank and additional budgetary support with low-interest rates, like foreign investors across multiple sectors, aiming to secure substantial investments.
Following the recent increase in the price of electricity unit in Nigeria, the country is also aiming for a significant share of the World Bank’s planned electrification project targeting 300 million Africans by 2030.
Overall, Nigeria’s economic outlook appears to be improving. The favorable loan from the World Bank provides immediate financial relief, while the focus on revenue generation and attracting investment aims to create long-term economic stability in the country.