Nigeria is pitching for a new tranche of concessionary lending from World Bank. The loan amount is said to be in the vicinity of US$2.5 billion. Nigeria had received US$ 2.4 billion last year from World Bank.
Being an oil rich country, the public perception is that Nigeria has a comfortable external and internal debt position. But the reality is different. If this loan gets fructified, Nigeria’s debt burden would rise to US$ 83 billion. One may wonder how the oil rich Nigeria is beset with such a massive debt burden. It faces revenue shortfalls on account of drop in oil prices and cut in output of oil. World Bank will insist Nigeria to carry out structural reforms to see that the country is not caught up in the debt trap. It seems that World Bank is preparing to give some suggestions to the country including increase in the rate of value added tax from the present level of 5% to 7.2% to jack up the revenue realization to ensure that the loan is repaid upfront. Non-repayment of loan money is a common problem being faced by multilateral organizations while lending to poorer countries in Africa and elsewhere.
It may be recalled that Nigerian President Muhammadu Buhari’s had undertaken a trip to the United States last year to contract more loans from that country to fund massive import of defence equipment to combat growing incidences of terrorist’s activities in the state.
