Nigeria Seeks $1.5bn Loan From World Bank to Ease Dollar Shortage as Naira Falls to Its Lowest
- The Nigerian government is discussing with the World Bank to get a $1.5 billion loan
- The fund is expected to be used as budgetary support to improve the supply of foreign exchange
- The finance minister said the unavailability of dollars in the official market led people to seek from the unofficial market
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The federal government has entered into discussion with the World Bank to secure a $1.5 billion loan.
Wale Edun, the minister of Finance and Coordinating Minister for the Economy, said this in an interview with Bloomberg.
Source: UGC
He said that borrowing is needed to improve the supply of foreign exchange and soften the pressure on the exchange rate.
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He said:
“We’re hoping to get $1 billion or $1.5 billion from the World Bank for budgetary support. It is a matter of discussion at the moment, but we think we will get the support because we are continuing with our reforms.”
This comes as the naira fell to a record low of N1,320 per dollar on Wednesday following strong demand on the parallel market.
The Guardian reported that the amount is 3.03% or N40.00 lower compared to the N1,280 at the close of trading on Tuesday and marks the lowest the naira has come.
Dollar remains scarce
Nigeria continues to use an official exchange rate and offers dollars to consumers at that level through the central bank.
However, because there aren't enough dollars on the domestic market, businesses are waiting in line to exchange their naira for US dollars so they can pay their bills and repatriate their profits.
Due to this, trade has shifted to the unofficial market, where the value of the naira is substantially lower than that of the dollar.
CBN reduced Forex backlog
The minister disclosed that the Central Bank of Nigeria (CBN) has reduced the forex exchange backlog to $5 billion.
According to the minister, the estimated $5 billion current backlog could be cleared easily if steps to lift oil revenue and mobilize dollars in the economy succeed.
He said:
“There is actually liquidity within the banking system and there should be a way of getting the banks to actually help with that backlog, either on a spot or a forward-rate basis. We believe that if we coral the available dollars, we can pay down that backlog almost in one fell swoop.”
“The priority is to stabilize the naira, that means getting in the additional liquidity – number one from oil revenue. We’re also looking to make sure we tap Nigerian savings, in particular domestic dollar savings both inside and outside the formal market. There’s a lot of cash in the Nigerian economy."
BOI to begin disbursement of N75bn loans
Legit.ng reported that in partnership with the Bank of Industry (BOI), the Nigerian government has perfected plans to disburse N75 billion to Micro, Small, and Medium Enterprises (MSMEs) across the country in January 2024.
The Senior Special Assistant to the President on MSMEs and Job Creation (Office of the Vice President), Temitola Adekunle-Johnson, disclosed this on Tuesday, December 19, 2023.
He said the beneficiaries would enjoy a 9% single-digit loan interest, stating that the scheme targeted women and youths.
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