COVID-19: AfDB approves $288.5m loan for Nigeria

The Board of Directors of the African Development Bank has approved a $288.5 million loan to help Nigeria tackle the COVID-19 pandemic and mitigate its impact on people and businesses.

The AfDB said the loan would bolster the government’s plans to improve surveillance and response to COVID-19 emergencies, ease the impact on workers and businesses and strengthen the social protection system.

Nigeria, Africa’s most populous nation and the continent’s largest oil producer, is facing twin crises – a health epidemic caused by COVID-19 and an economic crunch largely occasioned by a global oil price plunge.

According to a statement, the loan is the bank’s initial response to help mitigate the slump in oil prices and its impact on the national economy.

“The proposed programme will ensure that the fiscal position and the economy are sufficiently supported to weather the COVID-19 shocks, thereby limiting its potential adverse impact on livelihoods and the economy more generally,” Ebrima Faal, Senior Director of the AfDB for Nigeria said.

The bank said prior to the COVID-19 outbreak, Nigeria’s economy was projected to grow by 2.9 percent of GDP in 2020 and further expand by 3.3 percent in 2021.

But with the advent of the pandemic and the slump in crude prices, the economy is expected to shrink by between 4.4 percent under a conservative baseline scenario, and 7.2 percent should the pandemic persist to end-2020, according to AfDB.

Faal said beyond the country’s immediate economic recovery needs, the bank and other development partners would dialogue with the government on proposals for medium-term structural reforms to diversify and boost domestic revenues away from the oil sector.

He said the bank had instituted strong fiduciary measures to monitor the use of COVID-19 funds, and would maintain dialogue, particularly with the Office of the Auditor General in Nigeria, to ensure adherence to the transparency and accountability of the funds.