Nigeria’s government is responding to the economic impact and health challenges of the coronavirus crisis by seeking as much as $6.9 billion in loans from international lenders.
Nigeria is Africa’s largest economy and most populous country with 204 million people. Nigeria has 254 confirmed cases of COVID-19. Six Nigerians have died from the virus.
Nigeria’s economy could contract by 3.4 percent in 2020 due in a large part to the pandemic, according to a McKinsey report.
That would be the most since 1983 when demand for Nigerian oil reduced sharply and a global recession added further pressure to the country’s economy in a year that ended with a bloodless coup as the military took charge of the government.
The Nigerian government plans to ask for $3.4 billion from the International Monetary Fund (IMF), $2.5 billion from the World Bank and another $1 billion from the African Development Bank, according to Nigerian Finance Minister Zainab Ahmed.
Nigeria’s external debt owed to numerous countries and lenders amounts to $86 billion. The West African country spent 50 percent of its revenue from oil on debt repayment in 2018, according to Punch.
Nigeria owes development corporations at least $11.91 billion. The country owes the World Bank $9.81 billion, a figure that rose by $1.3 billion in the last year, according to data from Nigeria’s Debt Management Office. The country owes the African Development Bank $2.1 billion.
The Washington D.C.-based IMF monitors the financial and economic policies of its member governments around the world. Of the 189 IMF members, 54 are in Africa.
IMF bailouts usually include austerity measures or certain economic conditions imposed on the lending country, but Ahmed said that a loan from the IMF would “not be tied to any conditionalities”, according to APANews.
This is because the loan would be provided through the fund’s rapid-credit facility set up to assist countries with coronavirus relief funding without the need to enter into an IMF program, AlJazeera reports.
The World Bank, also based in Washington D.C., is an international financial institution, funded by its 189 member countries, that provides loans to reduce poverty and build shared prosperity in its member countries.
The African Development Bank is an Ivory Coast-based development finance institution aimed at contributing to the economic development and the social progress of African countries.
Adekunle Hassan, a Nigerian soccer scout in Houston, is concerned that the loans from international lenders, while necessary during the COVID-19 crisis, will leave Nigeria in a debt spiral.
“We (Nigeria) were already in debt before this and the coronavirus issues have made things even worse. I get that we may need some loans to prepare a proper response and help the economy but this could leave us buried in debt that we cannot recover from,” Hassan told Moguldom.
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His sentiments have been echoed by many Nigerians back in his home country.
Nigerian student Emmanuel Ubong-Abasi tweeted, “I honestly thought the national consensus was that the IMF is a tool of imperialism whose data is skewed to permanently paint Nigeria in bad light. How the mighty plead for loans.”
Nigerian political consultant Dr. Elmo Atiku Abubakar laid the blame on the shoulders of the country’s president, Muhammadu Buhari.
“Buhari has gone begging again, this time, he is requesting for a loan of $3.5bn from IMF, AfDB to support the implementation of the 2020 Budget. #drelmoatiku says if Buhari doesn’t sell Nigeria, he’ll never rest. #StaySafe,” Dr. Abubakar tweeted.
