The World Bank’s $800 million palliative loan aimed at alleviating the impact of recent government policies, including the removal of fuel subsidies, has benefited no fewer than three million poor and vulnerable households across Nigeria.
According to a restructuring paper released by the World Bank to bolster its social safety net programs amid rising inflation and economic challenges, the loan has provided critical support to households affected by the policy changes. Of these beneficiaries, approximately 700 thousand households are from rural areas, while about 2.5 million are from urban centers.
The document, obtained from the World Bank’s website on Wednesday, highlighted that the National Social Safety Net Program-Scale Up (NASSP-SU) project has covered 1,652 urban wards through its targeting system, aiming to provide shock-responsive cash transfers.
The Federal Government has requested an 18-month extension, shifting the project’s closing date from June 30, 2024, to December 31, 2025. This extension seeks to realign project timelines and enhance the efficacy of the cash transfer program.
Despite earlier interruptions due to alleged malfeasance in scheme management, efforts are underway to restart the cash transfer initiative. The government has proposed transferring project oversight from the Ministry of Humanitarian Affairs and Poverty Alleviation to the Ministry of Finance as part of restructuring efforts.
The loan, which has seen disbursement of only 39.38% of its total amount to Nigeria thus far, aims to distribute N75,000 over three months to 15 million households to mitigate the impact of inflation and economic reforms.
However, the project has faced security challenges, including fatal incidents involving project staff, prompting the preparation of a Security Risk Assessment and Management Plan to safeguard project implementation.
The loan agreement stipulates a commitment charge rate of one-half of one percent per annum on the Unwithdrawn Financing Balance, with a service charge of three-fourths of one percent per annum on the withdrawn credit balance. Additionally, an interest charge of one and a quarter percent per annum applies to the withdrawn credit balance, with varying percentages of the principal amount expected for payment over time.
The restructuring aims to enhance financial management and procurement practices, ensuring effective utilization of the loan to support vulnerable populations amidst economic hardships.
