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The Federal Government on Wednesday gave approval for the release of the second tranche of the $600 million World Bank loan for the Lagos State Government to complete its road projects.
Minister of Information and Culture, Lai Mohammed and his Power, Works and Housing counterpart, Babatunde Fashola, who disclosed this after a Federal Executive Council (FEC) meeting said the loan would enable the state government to complete some of its very ambitious projects.
Lagos is the commercial capital of the country and the loan would enable the state government improve on major public infrastructure in the city of 20 million people.
Former Nigerian president, Goodluck Jonathan, had on October 24, 2013 sought the approval of the National Assembly to include the Lagos State Development Policy Operation (DPO) of $200 million into the 2012-2014 Medium Term Borrowing Plan (MTBP), saying the fund formed part of the credit of $600 million granted to the Lagos State Government in 2010 for implementation in three batches.
The loan was initially approved in 2010 by the Federal Government with an initial moratorium of 10 years and a repayment period of 40 years.
Speaking on the loan, Minister for Works, Power and Housing, Mr. Babatunde Fashola, who is a former governor of Lagos, said: “The point to make is that this is not a new loan, it’s a segment of a programme of developmental initiatives and it was approved in 2010 with a total sum of $600 million for Lagos State to be disbursed in tranches of $200 million each year starting from 2011-2013. But it suffered delays as a result of partisan political differences in the last dispensation. After the first tranche was disbursed, there was a freeze on the second tranche.
“The initial agreements we had with the World Bank was a 40-year loan, a 10-year moratorium, 0.5 percent interest. But because of the delays that subsequently characterised the partisan interference that took place, our profile as a nation also changed; we had become a bigger economy so money was being lent to us not now as a highly indebted nation anymore. So by the time this one was approved now because of the delays, we had lost the opportunity of 40 years as it is now a loan of 25 years, the moratorium has reduced to five years instead of 10 years. The interest rate had gone up to 2.5 percent.
“But what is still heart-warning about it is that it helps to finance infrastructure. When we look at road construction and the value chain that people benefit from it, labourers, those shops that sell iron rods, artisans, craftsmen, that means, really globally, economies are being reflated and infrastructure defines how big a nation can grow; it is the defining line between poor and rich nations.”
