23 states grow foreign loans by 64%

At the end of June, 23 Nigerian states had increased bilateral loans by 64.26 percent over the previous six months to $462.81 million.

The majority of the loans came from China, India, France, and other nations.

Despite the naira’s ongoing decline, which raised the cost of loans in dollars, this was the case.

The official Investors and Exporters’ Window of the foreign exchange market will no longer have a rate cap on the naira as of June 2023, according to instructions from the Central Bank of Nigeria to Deposit Money Banks.

As a result, the naira dropped from 471 to 750 dollars as of the end of June 2023 and kept going down.

The rise in bilateral loans indicated a growing desire among state governors for these kinds of loans. Data from the Debt Management Office on foreign debt shows that 23 countries increased their borrowing from China (Exim Bank of China), India, France (Agence Francaise de Développement), Japan International Cooperation Agency, and Germany (Kreditanstalt Fur Wiederaufbua).

The majority of the bilateral debt was owed to the AFD, with debt to France increasing by 21.84% to $306.32m as of the end of June. As of June 2023, loans from China, India, and other countries increased by 415.79% to $156.49 million. A breakdown of the states showed that Abia’s bilateral loans grew to $3.82m; Adamawa grew to $4.75m; Akwa Ibom grew to $3.82m; Bauchi grew to $3.82m; Cross River fell to $46.85m; Ebonyi took a first-time bilateral loan of $31.29m; Enugu’s debt fell to $4.75m; Imo’s grew to $26.04m; Jigawa secured a first-time loan of $864,535.16; Kaduna grew its loan to $91.47m; Kano grew to $24.39m.

The bilateral loan profile for Kebbi was $3.82 million; for Kogi and Kwara, it was $3.82 million; for Lagos, $130.67 million; for Niger, $9.14 million; for Ogun, $32.29 million; for Ondo and Osun, $8.95 million; for Oyo and Sokoto, $3.82 million; and for Plateau, $8.50 million.

For the construction of projects in the states of Kano, Lagos, and Ogun, Nigeria received a $475 million loan from France in 2018.

The financing agreement was signed by Mr. Rey Rioux, CEO of the Agence Francaise Development, and the then-Minister of Finance, Mrs. Kemi Adeosun.

The loan was broken down into three separate loans: a $200 million loan facility grant to Lagos for the execution of transportation projects by AFD; a second $200 million loan for a project to combat land degradation in Ogun State; and $75 million for the execution of water projects in Kano State.