The African Development Bank is looking to provide a total of $4.1 billion to Nigeria over 2016 and 2017, its president said on Monday, as Africa’s biggest economy seeks to bridge its budget deficit and improve weak infrastructure.
Akinwumi Adesina said the funds would be used to develop the power and agriculture sectors in the west African country, which has slipped into recession for the first time in over 20 years, largely due to low oil prices.
He was speaking after holding talks with the finance minister, Kemi Adeosun, and Vice President Yemi Osinbajo in the capital, Abuja.
Oil sales, the economy’s mainstay, generate 70 percent of government revenues. Attacks on energy facilities in the Niger Delta have cut crude production by around a third since the start of the year.
The OPEC member has been left struggling to fund a record 6.06 trillion naira ($18.6 billion) 2016 budget that aims to stimulate growth by tripling capital expenditure.
Adeosun said Nigeria had asked for a $1 billion loan to help cover its 2016 budget deficit. She said it would be concessional and carry an interest rate of 1.2 percent.
Adesina later said the pan-African lender was looking to provide $4.1 billion over 2016/2017.
He said “deepening the level of diversification in critical sectors” such as agriculture, solid minerals and manufacturing, was of particular importance.
Aside from a wealthy elite who have profited from oil wealth, most of the 180 million people in Africa’s most populous nation live on less than $2 a day. Development has been held back for decades by a poor power, road and rail network.
“I expect that our portfolio in Nigeria will not decrease – it will actually grow. We expect to invest in Nigeria, by 2019, a total of $10 billion,” said Adesina, a former Nigerian agriculture minister.
The finance minister said the country was not over-borrowing. “What we are trying to do is to ensure that this money we are borrowing, we use it on the key infrastructure that will drive the economy,” she said.
Last week the central bank left its benchmark rate at 14 percent, defying calls from Adeosun to lower rates so that the government could borrow domestically to boost the economy without increasing debt-servicing costs.
Adesina said the AfDB had “asked for the need for better synergies between the macro policy side and monetary policy side and also the fiscal policy side of the economy”.