The Federal Executive Council on Wednesday approved an additional $200m loan from the International Development Association, an arm of the World Bank, in support of Lagos State Development Policy Operation.
The Minister of Information and Culture, Alhaji Lai Mohammed; and the Minister of Power, Works and Housing, Mr. Babatunde Fashola, briefed State House correspondents at the end of the meeting presided over by President Muhammadu Buhari.
Mohammed explained that the loan would enable the Lagos State Government to complete some if its ambitious projects, such as the 61Km 10-lane Lagos-Badagry Express way.
He said the facility would also enable the state government to rehabilitate the inner roads in Apapa in addition to some other major ongoing works.
Fashola explained that the facility was not a new loan but a segment of a programme of developmental initiatives which was approved in 2010 with a total sum of $600m for Lagos State.
He said the sum was meant to be disbursed in tranches of $200m each year starting from 2011 to 2013, regretting that the arrangement suffered delays as a result of partisan political differences in the last dispensation.
He said, “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 and 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 have become a bigger economy. Though money was being lent to us, we are no longer taking it as a highly indebted nation.
“So by the time this one was approved, 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-warming about it is that it helps to finance infrastructure.”
The minister added that the fact that the World Bank had the confidence to deal with sub-national government is a testament of financial discipline, strong governmental structures and the establishment of institutions.
While saying that is the way to grow the economy, Fashola disclosed that Edo, Ekiti and Rivers State had also benefitted from similar gesture.
He explained that such loans are deducted at source at monthly FAAC meetings; therefore the risk of defaults is minimal.
When asked why his state which also belongs to the ruling All Progressives Congress is the first beneficiary of such approval under the present government, Fashola said, “I mentioned partisan differences because I remember when the delays came up, I was told by the then Minister of Finance that she was getting complaints from PDP Governors that it was only APC states that were benefitting at the time from the Word Bank loans.
“So we got access when we were in opposition because we qualified and we met the competitive conditions.”
