Nigeria’s President, Bola Tinubu, made a request to the Senate on Thursday to approve a N62 billion ($800 million) loan from the World Bank. The loan aims to fund a social programme aimed at easing the impact of high fuel prices following the removal of a popular but costly petrol subsidy.
In a letter to lawmakers, the presidency stated that the loan had been previously approved by the government of former President Muhammadu Buhari to support the scaling up of the National Social Safety Net program. Tinubu highlighted the purpose of the loan, stating, “The purpose of the facility is to expand coverage of shock-responsive safety net support among the poor and vulnerable Nigerians.” He further explained that 12 million poor households would receive N8,000 ($10.32) for six months, benefiting approximately 60 million individuals.
Nigeria, Africa’s largest economy, also plans to raise the minimum wage, with final details expected to be concluded next month after talks with the main labour unions. Tinubu, who initiated significant reforms upon taking office, including the removal of the fuel subsidy, is addressing pressing issues such as the high debt burden.
The fuel subsidy, which had kept prices low for decades, had become increasingly costly, with the government spending N7.75 trillion ($10 billion) on it last year. This led to wider budget deficits and a rise in government debt. In response, Tinubu made the decision to scrap the subsidy.
In addition to the loan request, the House of Representatives, Nigeria’s lower chamber of parliament, approved Tinubu’s request to amend the 2022 supplementary budget. The amendment allows the government to allocate N500 billion to “cushion the effects of the removal of fuel subsidy.” This change enables the government to redirect previously budgeted funds from other projects.
Note: Conversion rate: ($1 = 775.0000 Naira)
