Nigeria has secured a fresh $750 million loan from the World Bank, meant to help the country actualize its Nigeria State Action on Business Enabling Reforms (SABER) Programme-for-Results.
This was disclosed through a statement by the Washington-based lender titled? “Improving the Business Enabling Environment in Nigeria to Create Jobs and Boost Inclusive Growth.”
The loan, which is in the form of an International Development Association (IDA) credit, is consistent with Nigeria’s National Development Plan (NDP), which establishes an ambitious strategy for sustainable private-sector-led economic growth targeted at creating 21 million full-time jobs and raising 35 million people out of poverty by 2025.
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The statement said the loan will help Nigeria accelerate the implementation of critical actions that will improve the business-enabling environment in states.
“The World Bank today approved the Nigeria State Action on Business Enabling Reforms (SABER) Program-for-Results. The $750 million International Development Association (IDA) credit will help Nigeria accelerate the implementation of critical actions that will improve the business enabling environment in states.
“Nigeria has made headway in pushing changes to remove barriers in the business climate, particularly through efforts spearheaded by the Presidential Enabling Business Environment Council (PEBEC),” it said.
But the bank warned that, in comparison to its counterparts, Nigeria’s ability to attract local and foreign investment remains limited. It said Nigeria’s 36 states and the Federal Capital Territory (FCT) are capable of catalyzing private investment, although their efforts and capacity to do so differ greatly.
“Given the importance of state-level reforms, the government developed a new program—SABER—to accelerate the implementation of critical actions that improve the business enabling environment in Nigeria’s states.
“The government’s SABER program builds on the successes of PEBEC. It aims to strengthen the existing PEBEC-National Economic Council subnational interventions by adding incentives, namely results-based financing to the states, and the delivery of wholesale technical assistance–available to all states–to support gaps in reform implementation,” the bank added.
In principle, the World Bank explained that all states in Nigeria and the Federal Capital Territory (FCT) are eligible for participation in the SABER program due to their capacity to implement significant reforms in areas such as land administration, public-private partnerships (PPP), frameworks and services for investment promotion, and the regulatory environment that supports business.
“Following the significant progress made by states on fiscal reforms through the State Fiscal Transparency, Accountability, and Sustainability (SFTAS) program, the SABER program endeavors to offer similar support to the states to undertake critical business-enabling policy and institutional actions that will incentivize private sector development.
“Private sector investments remain the major vehicle to create more jobs, increase revenues to the states and improve social and economic outcomes for citizens,” Shubham Chaudhuri, World Bank Country Director for Nigeria said.
SABER is designed, among other things, to assist states in enhancing the effectiveness of their land administration, the legal framework for private investment in fiber optic infrastructure, the services offered by investment promotion organizations and PPP units, and the effectiveness and transparency of their government-to-business interactions.
“Overall, the SABER program looks to consolidate and deepen business enabling environment reforms across more states,” said Bertine Kamphuis, task team leader for SABER. “The use of the Program-for-Results model, which ensures disbursement of funds after achieving results, helps the government in strengthening its own program by incentivizing institutional performance at the state level through results-based financing. States will be responsible for achieving the program results and thus will be leading the implementation of the program.”
However, the loan has come at a time when concern about Nigeria’s public debt is on the rise. Nigeria’s public debt has risen to N42.84 trillion as at June, according to data published by the Debt Management Office.
The concern has been that, amidst dwindling revenue, Nigeria will be spending more than 100% of its revenue soon on debt servicing.