Nigeria’s efforts to secure funds from international lenders to help haul it out of recession have stalled because it has not submitted the required economic reform plans, according to one of the banks and sources close to the matter.
The government has been in loan talks with the World Bank for a year. It had told the lender it would present its proposed reforms to make the economy more resilient and attractive to investment by the end of December, according to Western diplomats and a Nigerian official who declined to be named as they are not authorised to speak publicly.
But this has not happened and as a result of the delay, which the government has not explained, the Washington-based bank has not been able to consider a loan yet, the sources said.
Nigerian finance minister Kemi Adeosun declined to comment.
The African Development Bank (AfDB), meanwhile, is holding back the second tranche of a $1bn loan for Nigeria, AfDB president Akinwumi Adesina told Reuters on the sidelines of the World Economic Forum in Davos, Switzerland.
“We are waiting for the economic policy recovery programme and the policy framework for that,” said Adesina, without specifying when the AfDB had expected to receive the reform plans.
The World Bank told Reuters in an email that Nigeria was currently preparing its plan “on the basis of which the World Bank will determine with the government the most appropriate lending instrument
to support the implementation of the reform plan”.
Nigeria has said it is seeking to borrow $4bn in total from the World Bank and other foreign institutions and $1bn through Eurobonds to plug a yawning budget deficit and fund badly needed infrastructure projects.
The country, which relies on oil revenue for most of its income, has been hit hard by the sharp fall in crude prices since 2014 and is struggling to drag itself out of its first recession in 25 years.
It is unclear why the government has not submitted reform plans to the international lenders. The funding deadlock could throw into doubt badly needed infrastructure projects planned for this year, including new roads and improvements to power infrastructure.
The failure to secure the funds, and to present a reform programme, could also deter some investors from Nigeria’s planned $1bn Eurobonds sale in March.
A Nigerian financial source said the government was working with a consultancy on putting together a package of proposed reforms. The source, who declined to be named as the matter is confidential, did not elaborate. Read the full story here.