Economy

President Buhari Approves Borrowing From World Bank, China And Japan

Published

8 years ago

September 9, 2016

Nigeria’s presidency has approved plans for external borrowing from the World Bank, China and Japan.

Nigeria will take on debt from institutions including the World Bank, African Development Bank, Japan International Cooperation Agency and Export-Import Bank of China, the presidency commented on Twitter.

This will include “low-cost, long-term” loans with interest rates of 1.25 percent and maturities of 20 years, according to the tweets. Details of a Eurobond will be announced “in due course.” The government is now waiting for lawmakers to approve the plans, the presidency said.

President Muhammadu Buhari announced a record 6.1 trillion naira ($19.4 billion) spending plan this year to try and stimulate the economy, which contracted in the first two quarters as oil revenue plunged. He said he expected the government to raise about $5 billion from the Eurobond market and multilateral and bilateral lenders.

Nigeria’s Debt Management Office last month asked banks to place bids by Sept. 19 if they wished to manage a $1 billion Eurobond sale. Finance Minister Kemi Adeosun told bond investors in London in June that Nigeria was close to securing around $3 billion of funding from the World Bank and African Development Bank.

Nigeria, which vies with South Africa as the continent’s biggest economy, has issued dollar bonds twice, the last time in 2013. Yields on its $500 million of securities due in July 2023 fell 11 basis points to 6.24 percent by 1:01 p.m. in Lagos, their lowest level since June 2015 and down more than 300 basis points since hitting a record 9.4 percent on Jan. 18.