The African Development Bank (AfDB) has said it plans to increase its loans to Nigeria by over $8 billion next year with investments in energy, infrastructure and agriculture. AfDB President, Akinwumi Adesina said it will grow its loan portfolio to Nigeria by more than $2 billion over the next one year.
Adeshina in an interview with Bloomberg published said the loan would be geared towards investments in energy, infrastructure and agriculture. “The total portfolio we have in Nigeria is $6 billion. We expect that by the year 2019, we will grow that into a little bit over $8 billion” he said.
Adeshina said the AfDB will pump more than $800 million into Nigeria this year, most of which will fund investments in power. “Among them is a $250 million support to revamp power-transmission lines and electricity sub-stations as well as fund a $200 million solar-power project in Jigawa state in the north,” Adeshina said.
The $400 million balance from a $1 billion loan for budget support will be disbursed directly to industries identified by the government after projects have been vetted by the bank, he said. He said the country which is making a comeback from a recession will also receive budget support and public financial management assistance from the lender, he said.
The AfDB forecasts Nigeria’s economy will grow 2.1 percent this year as the output of and the price of oil, its main export, recover. The country depends on crude exports for two-thirds of government revenue and most of its foreign income.
Brent crude, which compares with Nigeria’s export grades, has gained 26 percent in the past year, helping the recovery. Adeshina said Nigeria needs to invest more in infrastructure and boost funding to non-oil industries, which account for about 90 percent of gross domestic product.
“Oil only accounts for a small fraction of gross domestic product (GDP) so the key is to fund the non-oil sector,” Adeshina said. With increased efforts at growing the agriculture sector, he said the AfDB plans to help set up ‘staple crop processing zones’ and create agribusiness clusters across the country to curb harvest losses of as much as 70 percent for some crops.
“These zones will change our rural economy. You will be able to create markets for farmers and reduce massive post-harvest losses. You will change the structure of agriculture itself because people will see it as a business as opposed to a subsistence activity,” Adeshina added.