Economic analysts have called on the Federal Government to strategically allocate the anticipated $4.4 billion loan from the World Bank and the Africa Development Bank to productive sectors of the economy to stimulate growth. In conversations with The PUNCH, experts emphasized that investing the loan in sectors like agriculture and manufacturing would have a significant positive impact on Nigeria’s economic landscape.
Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, praised the loan as a potential economic booster if used to enhance production capacities. “If the loans are spent in a way that would improve the capacity of the affected sectors to produce more, that will be very positive for the economy. We need to scale up productivity in agriculture to tackle food inflation, which is one of our biggest problems today. Effective spending in agriculture through this loan will be very beneficial,” Yusuf stated.
He further explained that components of the loan disbursed in foreign exchange could bolster Nigeria’s foreign exchange supply. By converting the funds to naira for spending, the government could support the foreign exchange cash flow, thus aiding economic stability.
Olusegun Ajibola, a Professor of Economics at Babcock University, acknowledged the mixed feelings surrounding Nigeria’s borrowing but affirmed the potential benefits of the $4.4 billion loans if tied to specific, monitorable sectors like agriculture. Ajibola stressed the importance of regular audits to ensure the loans are effectively utilized. He recommended that only a minimal portion of the loan be directed towards consumption needs, such as salaries or palliatives, to maximize its impact on economic production.
Conversely, Olusola Obadimu, Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, expressed concerns about the loans. He criticized the government for often exceeding its budget relative to earnings, which he argued contributes to the weakening of the naira. “This is one of the factors that contribute to weakening the currency. Productively, we are doing less than we used to. Our exports are declining, even crude oil, and we are earning lower than we should,” Obadimu remarked.
These insights highlight a consensus among economic analysts on the necessity for the Federal Government to direct the $4.4 billion loan towards enhancing productivity in key sectors. By doing so, Nigeria could potentially overcome some of its economic challenges, such as high inflation and a weak currency, while fostering sustainable growth and development.
