In a move geared towards economic diversification and industrial development, Nigeria’s federal government signed a Memorandum of Understanding (MoU) with the African Export-Import Bank (Afreximbank) to establish a $3 billion Nigeria Industrialisation Financing Facility.
The signing took place on the sidelines of the ongoing Afreximbank Annual Meetings (AAM) 2024 in Nassau, The Bahamas, with Minister of Industry, Trade, and Investment, Dr. Doris Udoka-Anite, representing Nigeria.
The agreement aims to create special economic and agro-processing zones across Nigeria, expected to generate approximately 20,000 jobs. The financing facility will support several key sectors, including the automotive industry and the Compressed Natural Gas (CNG) value chain, promoting the development of cleaner alternatives to traditional fuels.
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The package also includes technical and financial support for a diaspora investment fund framework, encouraging investments from the Nigerian diaspora.
In partnership with Arise IIP and Afreximbank, the MoU aims to revamp Nigeria’s cotton and textile industry, once a significant contributor to the economy in the 1980s and 1990s. This effort is expected to attract over $2 billion in investments and create thousands of jobs, revitalizing the country’s manufacturing capabilities. The facility will also support state-wide investment projects focused on the healthcare sector, ensuring technical viability and improving healthcare infrastructure across Nigeria.
“This is going to cut across the cotton belt in Nigeria and also create a lot of jobs in Nigeria’s core strength in terms of cotton and textile production which used to be the pride of the country 1980s and 1990s. So, we are bringing it back and working together to get that done,” Afreximbank announced.
This partnership is part of the Nigerian government’s commitment to economic diversification, moving away from an over-reliance on oil revenues.
The MoU with Afreximbank follows closely on the heels of another significant financial intervention by the World Bank, which approved a total of $2.25 billion to support Nigeria’s economic reforms and non-oil resource mobilization. The World Bank’s support includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing Program (DPF), aimed at strengthening Nigeria’s economic policy framework, creating fiscal space, and protecting the poor and vulnerable.
Additionally, $750 million has been allocated for the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) Program-for-Results (PforR), focused on tax and excise reforms, improving tax revenue and customs administration, and safeguarding oil revenues.
Concern over rising public debt lingers
Despite these promising financial packages, there is growing concern among Nigerians about the government’s spending patterns. Historically, the government has been criticized for its extravagant expenditures, particularly for the luxurious lifestyles of public officeholders.
Recently, the House of Representatives Committee on National Security and Intelligence recommended the purchase of new aircraft for President Bola Tinubu and Vice President Kashim Shettima, citing the current fleet’s poor condition. This recommendation has raised alarms that a portion of the financial support from international institutions could be diverted to fund these high-cost purchases, neglecting the primary goals of economic stabilization and support for the vulnerable population.
Such moves have sparked debates about the government’s priorities, especially at a time when inflation has significantly eroded spending power, crippling economic activities and making it difficult for businesses and ordinary citizens to thrive.
Adding to the public’s concern is Nigeria’s rising debt profile, which has become a significant issue. The government is currently spending more than 90 percent of its revenue on debt servicing, a situation that severely limits the ability to fund critical infrastructure, education, healthcare, and other essential economic projects. The heavy debt burden deprives the country of necessary investments in sectors that could drive long-term growth and improve the quality of life for its citizens.
While the $3 billion MoU with Afreximbank represents a significant step towards Nigeria’s industrial and economic development, economic experts say to truly benefit from this and other financial support packages, the Nigerian government must ensure transparency and accountability in the use of funds. They note that prioritizing the intended economic reforms and support for the poor will be crucial in restoring public trust and achieving sustainable growth.