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Ethiopia signs $600 million loan, grant deal with World Bank

20 March 2018 Comments (0) Actualites, Africa, Economy, Infrastructure

ADDIS ABABA (Reuters) – The World Bank agreed a $600 million loan and grant to Ethiopia on Tuesday to fund roads and other infrastructure projects in urban areas.

The Washington-based bank said the funds would “help strengthen the capacity and performance of local urban governments, expand sustainable urban infrastructure and services, as well as promote local economic development”.

Ethiopia’s urban population is growing by 3.8 percent annually on average, one of the fastest rates in sub-Saharan Africa and presenting challenges to infrastructure, services and jobs, the bank said.

“To successfully manage urbanisation … cities are likely to require fiscal transfers for the foreseeable future. This programme will help cities to realise their revenue potential,” Abebaw Alemayehu, the World Bank’s team leader for the project, said in a statement.

The programme will also support projects in 73 towns across the country and benefit more than 6.6 million people, he said.

Under a 2015-2020 development plan, Ethiopia plans to set up less than 10,000 “rural development centres” in a bid to ease the influx of people to its capital Addis Ababa.

Earlier this month, the World Bank also approved a $375 million loan to Ethiopia to fund a national electrification project.

 

(Reporting by Aaron Maasho; Editing by Susan Fenton)

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Rwanda tops World Bank governance ratings for Africa

19 July 2016 Comments (0) Africa, Business, Featured

Life in Rwanda

The African nation, along with Cabo Verde, Kenya and Senegal receive the continent’s highest rankings for efforts to support growth and reduce poverty.

Rwanda, Cabo Verde, Kenya and Senegal lead the continent in the quality of their governance and institutions that support economic growth and reduce poverty, according to a new report by the World Bank.

The Evaluation Policy and Institution Investment for Africa 2015 gave Rwanda a rating of 4 of 6 possible points while the three other countries each scored 3.8. The average score for the continent was 3.2, the same as the year before. South Sudan and Eritrea had the lowest scores, 1.9.

Of the 38 countries evaluated, seven improved their ratings – Ghana, Zimbabwe, Central African Republic, Chad, Comoros, Guinea and Niger. Twelve countries saw their ratings decline, with large drops in Burundi and Gambia.

The report attributed the lack of greater progress on the continent to economic challenges in 2015.

The report ranks national governance based on 16 indicators including economic management, social inclusion policies, public sector management, and structural policies.

Significant progress cited in Rwanda

According to the World Bank, Rwanda has made significant progress in transforming from a low-income agricultural economy to one that is service-based.

The government’s “Vision 2020” plan seeks to speed growth and reduce poverty with a focus on economic transformation, youth employment productivity, rural development and government accountability. The plan seeks to increase gross domestic product per capita to $1,000 by 2018 and reduce poverty so that less than a third of the population lives below the poverty line.

Rwandan youth learning to til

“These goals build on remarkable development successes over the last decade, which include high growth, rapid poverty reduction and reduced inequality,” the World Bank said.

Rwanda, which emerged from a dark period of civil strife and genocide 20 years ago, has seen growth of its gross domestic product averaging 8 percent annually since 2001. The economy grew by 7 percent in 2014 and 2015.

However, the World Bank said poor infrastructure and lack of access to electricity are drags on private investment in the East African nation, which has a population of about 11 million people.

Cabo Verde tourism flourishes

Cabo Verde, an archipelago of islands off the west coast of Africa, has developed rapidly in recent years, thanks largely to a growing tourism industry. The government is also working to make the islands a trade and transport hub, the World Bank said.

The bank described Cabo Verde’s politics as “consensus-oriented,” with established respect for majority rule and civil liberties. It noted that since it gained independence from Portugal in 1975, Cabo Verde has not had a single coup, a distinction shared only with Senegal in West Africa.

Still, economic growth slowed to 1% in 2015 as direct foreign investment fell.

Like Cabo Verde, Senegal is considered one of the most stable countries in Africa, with strong democratic institutions dating from the country’s independence from France in 1960, according to the World Bank. The Senegalese recently approved changes in the nation’s constitution that created a new assembly and will allow independent candidates to run in elections.

Senegal’s economy grew by West Africa behind Ivory Coast. High demand, stimulated by lower energy and transportation costs, as well as a government investment program, drove growth in an economy dominated by agriculture and services.

Kenya reforms economy

With assistance from the World Bank, Kenya has implemented major structural and economic reforms that have sustained economic growth for the past 10 years. While poverty and inequality persist, the bank said the country’s 2010 constitution ushered in a new political and economic governance system that has transformed and strengthened accountability and delivery of services locally.

At the bottom of the scale in the new World Bank governance ratings, South Sudan and Eritrea struggle.

One of the least developed nations in Africa, Eritrea has seen thousands of citizens fleeing the country for the European Union via Sudan and Ethiopia to escape what they describe as forced labor and other human rights violations.

In South Sudan, meanwhile, fighting between the government and rebel forces have sent refugees pouring into neighboring Ethiopia and Sudan as well.

 

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World Bank program puts Zambia on path to solar energy

22 June 2016 Comments (2) Africa, Business, Featured

solar farm zambia

The African nation will develop two solar farms that will produce more than 70 megawatts.

With an assist from the World Bank, Zambia will build two solar power projects that will provide the cheapest electricity on the continent.

First Solar Inc., the largest panel producer in the United States, along with the French company Neoen, together will build a 45-megawatt plant that will produce electricity that will sell for just over six cents per kilowatt-hour. Enel, an Italian company, will build a 28-megawatt plant that will sell power for just under eight cents per kilowatt-hour.

The two solar farms will be built near a substation that sends power to Zambia’s capital, Lusaka.

The companies are the first winners of an auction program the World Bank launched to encourage wider use of renewable energy in developing countries.

Program reduces costs, risk

The Scaling Solar program, World Bank, International Finance Corp. and Multilateral Investment Guarantee Agency pooled resources to offer financing, insurance and advice to potential solar developers. This reduces their risk and helps cut costs to build and launch projects, in hopes of attracting large developers capable of building large-scale solar farms to the continent.

The World Bank estimates that less than a quarter of the population of sub-Saharan Africa has access to electrical power. Some African countries, including Zambia, rely heavily on hydropower and have seen energy shortages and outages in recent droughts. Zambia expects to auction another 200 megawatts of solar within a year.

Solar energy development is an important piece of the continent’s plans to help fight global climate change, as approved at COP21 in Paris last year.

Senegal, Madagascar participate

Madagascar and Senegal are also participating in the Scaling Solar project and the World Bank expects to add a fourth African country later this year.

The goal is to encourage development of 850 megawatts of capacity in Zambia, Madagascar and Senegal, which would require an investment of about $1 billion.

The program could be adopted in Asia as well.

“It’s not designed for Africa” alone, said Jamie Fergusson, global lead for renewable energy at the IFC, told Bloomberg. “It’s designed for countries with limited independent power producing experience where the power buyer is a publicly-owned utility.”

Competitive auctions

Scaling Solar uses competitive auctions to award development rights and offers the endorsement of the World Bank. This can allay concerns of international banks about political risk. Using standard contracts, it also speeds development significantly.

More than 90% of Zambia’s generating capacity comes from hydropower.

Drought has brought record-low water levels at the Kariba Dam on the Zambia-Zimbabwe border, forcing significant power cutbacks and rationing.

The reservoir has been at 12%capacity this year and dam authorities cut hydropower production to 25% of capacity in January. A year earlier, the dam, which is fed by the Zambezi River, was at more than 50% capacity.

Africa turns to renewables

With renewable energy a priority on Africa’s climate change agenda, solar developments are becoming more common on the continent.

Morocco this year turned on the first phase of what will be a 580-megawatt farm that will be the world’s largest and serve more than one million people when it is completed in 2018.

Noor 1, the first section located near Ouarzazate, currently produces 160 megawatts of power.

Morocco, which imports more than 90% of its energy, wants to generate 40% of its energy from renewable sources by 2020, with a third of that total coming from solar, wind and hydropower each.

In South Africa, George Airport will use electricity from a 750-kilowatt solar project. Projects that will provide hundreds of megawatts are underway in the nation, where clean energy investment rose to $4.5 billion last year.

Entrepreneurs boost small efforts

Smaller efforts are also taking shape as “solarpreneurs” enter the market.

In Ghana, a local company named Volta builds small solar projects for hospitals, health clinics and schools and lets them pay over time. According to the company’s founder, Mahama Nyankmawu, a 45% reduction in energy costs puts repayment well within reach for his customers.

Another company, Off-Grid Electric, said it is installing more than 10,000 solar units a month in Rwanda and Tanzania. The company recently raised $70 million in investment to expand its operations.

As interest in solar grows on the continent, the World Bank’s Scaling Solar project should help quicken the pace of development.

Antonio Cammisecra, head of business development at Enel in Rome, said the World Bank program for Zambia “accelerated our entry by as much as a couple of years.”

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The World Bank names Mauritius as Africa’s top business destination

28 May 2016 Comments (0) Africa, Business, Featured

business mauritius

An annual report from the World Bank has picked out Mauritius as the best place to conduct business in Africa, so just how has the island nation achieved this?

Mauritius has been named as Africa’s most business friendly country by the annual “Doing Business” report from the World Bank. The report seeks to help potential investors (and governments) identify how easy it is to create startups and investment opportunities across the globe. While Africa as a continent does not fare particularly well, Mauritius came in at number 32 on the global list, which made it the comfortable winner in Africa.

The top 5 African nations showed a diverse geographic spread, with Rwanda, Botswana, South Africa and Tunisia following, in that order, on the heels of Mauritius. A quick glance at Africa’s worst performing nations would provide no surprises, as Eritrea propped up a bottom 5 of the DRC, Central African Republic, South Sudan and Libya.

Any nation struggling with armed conflicts and political unrest is not going to provide the ideal base for creating new business opportunities, so while the bottom of the table comes as no surprise, what is it about Mauritius that has seen it take the top position?

Stability, simplicity and low taxes

Mauritius is first and foremost a fairly safe country. Not only does it not suffer from the unrest of many African nations, but it has low crime rates, and a small population which is governed by what the Economist Intelligence Unit called Africa’s only “full democracy” back in 2011. While this may no longer be fair to other nations, it is clear that Mauritius is a society with low levels of corruption and good personal safety.

Prime Minister's Office in Mauritius

Prime Minister’s Office in Mauritius

In addition to this, the Mauritian government has gone out of its way to reduce the amount of red tape involved in starting up a business. This ongoing strive to create a business-conducive atmosphere is highlighted by the 2014/15 changes to building permit rules, in which the process was streamlined to allow new ventures to start running as quickly as possible.

It now only takes 14 days to register a property, and 3-6 days to start up a new business. To help ensure the wheels on each sector of the economy run smoothly, the government has also invested heavily in education. The net result of this focus is that Mauritius has the highest rate of literacy in Africa, at 86%.

South Africa’s high commissioner to Mauritius, Nomvuyo Nokwe, told South African media that not only had Mauritius made it simple to register new businesses but that its development of education was also key. Nokwe stated, “It has highly skilled professional people…it’s made doing business easy, because you have [educated] people to work for you.”

Perhaps one of the most significant aspects to Mauritius’ burgeoning business growth, and yet one with some controversy, is its low taxation. The Africa 2016 Wealth Report referred to the huge growth in millionaires in Mauritius, but this included many from other nations who had moved there. The report found that “Mauritius was the top performing African country for millionaires during this period, with growth of 160 per cent…company and personal income tax rates are only 15 per cent, with no inheritance or capital gains tax.”The controversy around this is that some feel the nation is just a tax haven for the wealthy, and moreover that much of the money coming into the country is simply passing through. There are concerns around the rich, from nations like Kenya, using Mauritius for tax purposes, as its income tax rate is an attractive 15%.

Does the economy match the reputation?

Dipolelo Moime, chief executive of business risk consultancy Legato Services, believes it is more innovation that has attracted outsiders, saying, “Mauritius is continually reinventing and reforming itself massively to ensure the country is as business-friendly as possible, in order to attract multi-national corporations.”

Despite this, the issues around money just passing through cannot be ignored. There is an entire business strategy known as “The Mauritius Route”, which describes how investors in India use the island nation as a conduit to connect them to Indian markets. In fact, 39.6% of foreign direct investment to India, between 2001 and 2011, made its way via Mauritius.

However, this money does not pass through Mauritius in a vacuum, and the banking and legal processes it utilizes are legitimate businesses which create revenue streams for the host nation.

As things stand, Mauritius is not one of Africa’s largest economies, but the World Bank report did not base its findings on GDP, it based them on how easy it was to set up a new business in a nation, how well developed infrastructure was, and how attractive a destination was for new investment. In these measures, Mauritius must warrant its ranking.

As of 2016, Mauritius can boast the highest per capita GDP in Africa, with a 2016/17 predicted GDP growth of 5.7%. In addition, the nation’s stock exchange is widely regarded as one of the best in Africa and is worth over $7 billion. These figures are for a nation of only 1.2 million inhabitants.

Most significantly, the government is not resting on its laurels. The Mauritian government has drawn up a blueprint to diversify the economy, and invest in new industries, while continuing to develop existing ones. “Green growth” is at the forefront of plans to maximize the nation’s coastlines, with a goal of 8-9% economic growth per annum, which will ultimately lead to Mauritius being a high income status nation by 2025. The plans have worked thus far, so investors from far and near will be watching with interest.

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Congo to seek up to $500 million in budget support from World Bank

17 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

KINSHASA (Reuters) – Democratic Republic of Congo will seek between $250 million and $500 million in budgetary support from the World Bank this year, pending a review of its economy by the International Monetary Fund next month, the government said on Tuesday.

Africa’s leading copper producer has been hit hard by a fall in commodity prices since last year. This month the government proposed a 22 percent reduction in the 2016 budget and cut its annual growth forecast to 6.6 percent from 9 percent.

It also announced on Monday that it would scale back the size of a planned international bond issue to finance infrastructure projects to 256 billion francs from 653 billion francs ($686 million).

The support would allow the central bank to boost its foreign currency reserves, which have fallen from $1.48 billion at the end of 2015 to $1.2 billion this week due to a slowdown in exports, said Vincent Ngonga, a deputy chief of staff to the prime minister.

After years of exchange rate stability, a lower supply of dollars has heaped pressure on the franc, causing it to lose more than 2.5 percent of its value against the dollar this year.

“The advantage of budgetary support is that it affects the reserves because, once you have the support, it’s in dollars,” Ngonga said. “The reserves increase but the revenues of the state increase too.”

However, the negotiations with the World Bank can only begin if the IMF certifies Congo’s conformity with governance and macroeconomic standards during a visit next month, he added.

The IMF called off a $530 million loan programme in 2012 after the government failed to provide sufficient details on the cession of mining assets by state miner Gecamines to a company based in the British Virgin Islands.

Ngonga said it was not clear when the government could expect to receive the first tranche of support. The World Bank’s office in Congo was not immediately available for comment.

Ngonga said the government would also seek budgetary support from the African Development Bank (AfDB) but said that too depended on the IMF’s blessing. The AfDB was also not immediately available for comment.

 

(By Aaron Ross. Editing by Matthew Mpoke Bigg and Gareth Jones)

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World Bank and Nigerian president discuss the country’s economic crisis

27 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – The World Bank held talks with the Nigerian president on Wednesday on how it could help Nigeria overcome an economic crisis caused mainly by a sharp fall in crude prices eating into its oil revenues.

On her second day of meetings with Nigerian officials, World Bank Managing Director and Chief Operating Officer Sri Mulyani Indrawati met President Muhammadu Buhari, who plans to stimulate the flagging economy with a record 6 trillion naira ($31 billion) budget.

Nigeria will have to borrow 1.8 trillion naira from abroad and at home to help fund the budget, which has been delayed by several months and wrangling with parliament, if it goes ahead.

Although Nigeria has held talks with the World Bank over a possible loan or credit facility in recent months, Indrawati did not address this when speaking to reporters after the meeting.

“We would like to know how we can help Nigeria to make the very important decisions, whether on micro economic policy and other sectoral policy, that will make this economy move forward to become a strong middle income country,” she said.

Indrawati, who met Finance Minister Kemi Adeosun on Tuesday, said she and Buhari discussed the government’s “commendable goals to improve tax collection and crackdown on corruption.

Nigeria’s economy, the largest in Africa, grew by 2.8 percent last year, its slowest pace since 1999.

 

(By Felix Onuah. Writing by Alexis Akwagyiram; Editing by Raissa Kasolowsky)

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World Bank set to provide Egypt with first $1 billion of $3 billion loan

13 April 2016 Comments (0) Latest Updates from Reuters, Middle East, Politics

CAIRO (Reuters) – The World Bank will provide the first $1 billion tranche of a $3 billion loan to Egypt after parliament approves the government’s economic programme, World Bank vice president Hafez Ghanem said at a news conference late Tuesday.

Parliament is expected to pass the program in April.

Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolt and ease a dollar shortage that has crippled import activity and hampered recovery.

The lender had agreed to provide the first $1 billion in December but is waiting for the government’s economic programme, which outlines the broad strokes of its reform plans, to be passed by parliament.

The government presented a programme to parliament in late March that aimed to reduce the budget deficit while protecting the poor.

The World Bank told Reuters in December that the first tranche was focused on “10 prior actions for policy and institutional reforms” already implemented. The second and third tranches are linked to additional reforms the government plans.

A long-delayed Value Added Tax (VAT) that has yet to be implemented but was included in the government programme was one of the reforms agreed to as part of the first tranche, Ghanem said.

Ghanem said that there would not be specific conditions placed on future tranches but highlighted certain changes the lender would like to see, such as a shift in food subsidy policy away from reduced prices to direct cash transfers for the poor.

Egypt has delayed a number of difficult reforms, from a VAT that would increase government revenues and a civil service law that would trim the country’s public workforce, to an ambitious plan to wean the country off costly energy subsidies that has since been scaled back.

Egypt’s economy is currently growing at around 4.2 percent with a budget deficit of about 11.5 percent, the prime minister said last month.

Saudi Arabia, along with other Gulf oil producers, have pumped billions of dollars, including grants, into Egypt’s flagging economy since the army toppled President Mohamed Mursi of the Muslim Brotherhood in 2013 after mass protests against his rule.

But Egypt has said it would rely less on grants from its neighbours moving forward and would focus instead on attracting foreign investment that could relaunch its dollar starved economy.

Last week it signed an agreement with Saudi Arabia to set up a 60 billion Saudi riyal ($16 billion) investment fund among other investment agreements including an economic free-zone to develop Egypt’s Sinai region.

 

($1 = 3.7488 riyals)

 

(Writing by Eric Knecht; Editing by Toby Chopra)

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World Bank sees faster Kenyan economic growth this year and next

31 March 2016 Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s economic growth is expected to accelerate both this year and next, helped by low oil prices, improved agricultural output, a supportive monetary policy and infrastructure investments, the World Bank said on Thursday.

However, the bank also warned of possible risks, stemming partly from uncertainty over Kenya’s presidential, parliamentary and regional government elections scheduled for August 2017.

“These (risks) include the possibility that investors could defer investment decisions until after the elections, that election-related expenditure could result in a cutback in infrastructure spending and that security remains a threat, not just in Kenya, but globally,” it said in a report on Kenya.

Other risks to the outlook include subdued prices of coffee and tea, key hard currency earners, the World Bank added.

Kenya’s gross domestic product will increase by 5.9 percent in 2016 and by 6 percent in 2017, above an estimated 5.6 percent expansion last year, the bank said.

The east African nation’s government expects the economy to grow by 6.0 to 6.5 percent in 2016.

The World Bank cited the benefits of cheaper oil, good weather that is supporting farming, an appropriate monetary policy stance and sustained investments in roads and railways.

But while Kenya’s economy is faring better than others on the continent, it is still struggling to create enough jobs, which means a large section of the population is not enjoying the benefits of the economic expansion, the bank said.

Most of the jobs being created are of low productivity in the informal services sector, the World Bank said.

In the next decade, nine million young people are expected to join the labour market, with most of them getting work in small businesses due to a scarcity of formal sector jobs, it added.

“Formal firms will not create jobs for all young Kenyans,” the bank said in its twice-yearly Kenya Economic Update.

The World Bank said in another report in early March that while Kenya’s economic growth in the past decade may be remarkable by Kenyan standards, it was not even close to stellar when viewed from a broader perspective.

 

(By George Obulutsa. Editing by Duncan Miriri and Gareth Jones)

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Egypt sees World Bank funds arriving soon, eyes more Saudi aid

4 February 2016 Comments (0) Latest Updates from Reuters, Middle East, Politics

CAIRO (Reuters) – Egypt expects to receive a $1 billion World Bank loan approved in December once outstanding paperwork is finalised and is negotiating to secure more aid from Saudi Arabia, International Cooperation Minister Sahar Nasr said on Thursday.

Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolt and ease a dollar shortage that has crippled import activity and hampered recovery.

The first $1 billion tranche of a three-year, $3 billion loan from the World Bank to support Egypt’s budget was approved by the lender in December and was expected to arrive soon after.

But Egyptian media has questioned whether the money would come as the programme is linked to the government’s economic reform programme, including plans for value-added tax (VAT).

Egypt’s new parliament, which held its first session last month, ratified the vast majority of economic laws passed by presidential decree during the three years in which Egypt did not have a legislative house. But it has yet to ratify the government’s economic plan or the World Bank loan itself.

“We are just working on submitting the required documentation. It is nothing. We are normal. There is nothing (to say) about it,” Nasr told Reuters in a telephone interview.

“We need all the documentation, any law, any decree that we put we have to submit in English … Decrees on subsidies, laws for the establishment of industrial zones, fiscal reforms … I thought I would wait for parliament to ratify everything meanwhile.”

The World Bank told Reuters in December that the first tranche was focused on “10 prior actions for policy and institutional reforms” already implemented. The second and third tranches are linked to additional reforms the government plans.

“The whole reform programme will need to be done and not just the VAT being out. We need to have executive regulation in place and be operational,” said Nasr, an ex-World Bank official.

Nasr said a $500 million loan for budget support from the African Development Bank, part of a $1.5 billion three-year programme also signed in December, had been transferred.

Since those loans were approved Egypt has secured multi-billion-dollar aid commitments both from China and Saudi Arabia and signed major investment deals with Russia.

 

MORE SAUDI AID?

Egypt was in talks with Saudi Arabia to secure more aid, Nasr said, declining to give details.

Egypt was also working to iron out the details of a Saudi pledge to invest $8 billion in Egypt but Nasr said she was taking time to approve projects that were ready to go.

Egypt has previously signed preliminary deals on big-ticket investments that were later downsized or delayed.

Nasr said the government was still negotiating the details of a Saudi pledge to provide Egypt with petroleum aid over five years. Egypt signed an initial three-month deal with Riyadh to meet immediate needs while talks were ongoing.

“I wanted to make sure the three months are covered and to give myself time to make an even better deal for a five-year plan,” she said.

Egypt spends roughly $700 million a month on petroleum product imports. While it has benefited from plummeting global oil prices, a forex shortage has made it harder for import-reliant Egypt to finance shipments.

Last month, a BP tanker carrying liquefied natural gas was diverted from Egypt in what traders said was a sign that the currency crisis was jeopardising energy supplies.

BP and the government denied any payment problems and said the shipment was delayed by mutual agreement.

Nasr said the shipment was delayed because Egypt had managed to secure its needs more cheaply elsewhere.

“If we get a better deal at a better rate for this month, we will take the better rate,” she said.

 

(By Lin Noueihed. Editing by Michael Georgy and Alison Williams)

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Nigeria, Angola seek World Bank help as oil revenues slide

2 February 2016 Comments (1) Africa, Latest Updates from Reuters, Politics

LAGOS/LUANDA (Reuters) – Nigeria and Angola, Africa’s two biggest oil producers, are both in talks with the World Bank about support to help cope with low crude prices, weakening currencies and strained public finances.

Nigeria has held exploratory talks with the World Bank onborrowing to help fund a record budget in 2016 but has notapplied for any emergency loans, Finance Minister Kemi Adeosunsaid on Sunday.

Angola also held talks with the World Bank between Jan.25-29 about securing funding support in a deal that would seeAfrica’s second biggest oil producer implement unspecifiedreforms, the state news agency reported.

The World Bank and other institutions like the InternationalMonetary Fund have recommended that Nigeria and Angola devaluetheir currencies which both trade officially at huge premiumsto the secondary market. Devaluations could form part of loan deals, two bankingsources said on Monday. Nigerian President Muhammadu Buhari isagainst devaluing the naira.

The naira trades at around 197 against the dollarofficially compared to street rates as weak as 305, whileAngola’s kwanza is worth 155/$ but changes hands at morethan 400 against the greenback on the secondary market.

Nigeria is planning to borrow as much as $5 billion to helpfund a budget deficit due to a slump in vital oil revenues, ofwhich $4 billion might come from international institutions andthe rest from Eurobonds, Adeosun had said earlier this month.

“We have held exploratory talks with the World Bank. We havenot applied for emergency loans,” she told Reuters on Sunday.

Borrowing from international institutions such as the WorldBank would be a cost-effective way to raise money to fund theincreased capital expenditure in the 2016 budget, she said.

World Bank spokesman David Theis said the multilateral lender was in discussions with Nigeria to provide Development Policy Operation funding, which can take the form of a loan, grant or credit.

“Our support will be for a program of policy reform,” Theis said in an e-mailed statement, adding that the proposal will be submitted to the World Bank’s board of directors later this year.

The Financial Times had earlier reported that the WestAfrican nation had asked the World Bank and the AfricanDevelopment Bank for $3.5 billion in emergency loans.

In a written statement, Adeosun’s ministry also saidAfrica’s biggest economy was looking at “options” to borrow fromthe African Development Bank and export credit agencies such asChina Exim Bank “due to their concessionary rates of interest”.

Nigeria expects a budget deficit of 3 trillion naira in2016, up from 2.2 trillion naira previously estimated, as aslump in oil revenues has eroded public finances and hit itscurrency.

Oil exporters worldwide are experiencing similar fiscal strains amid surging crude output and slumping demand. The World Bank and International Monetary Fund are now consulting with Azerbaijan regarding its financing needs.

 

(By Alexis Akwagyiram and Herculano Coroado. Additional reporting by David Lawder in Washington; Writing by Joe Brock and Ulf Laessing; Editing by Toby Chopra, Bernard Orr)

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