Nigeria seeks 18-month extension on World Bank’s $800m palliative loan

The Nigerian government has reportedly requested an 18-month extension on the closing date of the World Bank’s $800 million palliative loan, initially set for June 30, 2024, to December 31, 2025.

The loan is part of the federal government’s effort to boost its social safety net programmes and to provide temporary cash transfer support to citizens affected by high inflation, following the removal of fuel subsidies and other macroeconomic challenges.

According to a World Bank restructuring paper, about three million poor and vulnerable households have benefited from the $800 million palliative loan. Of these beneficiaries, 700,000 households were from rural areas and about 2.5 million households were from urban areas.

“Since its start, about 30 million beneficiaries have been covered by social safety net programs, and about three million poor and vulnerable households have received shock-responsive cash transfers as of May 2024. Of these beneficiaries, 700 thousand households were from rural areas and about 2.5 million households were from urban areas. 1,652 urban wards have been covered through the targeting system developed under the project,” the document read.

The extension also reportedly seeks to realign project timelines and improve the efficacy of the National Social Safety Net Programme-Scale Up, with the project’s targeting system covering 1,652 urban wards.

The Federal Government intends to use this loan to fund a monthly cash transfer programme for poor and vulnerable Nigerians who have been disproportionately affected by recent policies such as the elimination of fuel subsidies.

The document read: “This paper seeks approval from the Country Director for a Level II restructuring of the National Social Safety Net Program Scale-Up project (NASSP-SU, P176935, Credit No. 7019-NG), an US$800 million Investment Project Financing (IPF).

“The restructuring will extend the project closing date by 18 months from June 30, 2024 to December 31, 2025. The benefit size and duration of the cash transfers under component 1 will also be changed.

“Despite earlier delays, the project remains central to the government’s ambitious plan to provide temporary cash transfer support to the population affected adversely by high inflation, particularly in the wake of the fuel subsidy removal and other macroeconomic reforms the government is undertaking.

“No financial or audit reports are pending, and there are no changes in the audit requirements. There have been some delays in procuring key service providers, and contract management practices are being improved by building the capacity of the PIU’s procurement team. The World Bank will keep providing embedded support to the project to improve the financial management and procurement practices.

“Finally, the chairmanship of the project’s national steering committee will be changed from the Minister of Humanitarian Affairs and Poverty Alleviation to the Minister of Finance. This is the first restructuring and extension of the project’s closing date.”