To reach $462.81 million as of the end of June, 23 Nigerian states had increased bilateral loans by 64.26 percent over the previous six months.
The Punch reported that the majority of the loans were obtained from France, China, India, and other nations.
This was true despite the naira’s ongoing decline, which raised the cost of loans in dollars.
The rate cap on the naira at the official Investors and Exporters’ Window of the foreign currency market was ordered to be removed by Deposit Money Banks by the Central Bank of Nigeria in June 2023.
As a result, by the end of June 2023, the naira had dropped from 471 to 750 per dollar and had kept going down.
The rise in bilateral loans indicated that state governors’ desire for these kinds of borrowing was expanding. 23 states increased their borrowing from China (Exim Bank of China), India, France (Agence Francaise de Développement), Japan International Cooperation Agency, and Germany (Kreditanstalt Fur Wiederaufbua), according to data on external debt from the Debt Management Office.
The AFD was the recipient of the majority of the bilateral loans, with debt to France increasing by 21.84% to $306.32 million as of the end of June. Loans from China, India, and other countries increased by 415.79% to $156.49m as of June 2023.
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, Kogi $3.82 million, Kwara $3.82 million, Lagos $130.67 million, Niger $9.14 million, Ogun $32.29 million, Ondo $8.50 million, Osun $8.95 million, Oyo $3.82 million, Plateau $8.50 million, and Sokoto $3.82 million.
In 2018, Nigeria obtained a $475 million loan from France for the construction of projects in the states of Kano, Lagos, and Ogun.
The credit agreement was signed by the CEO of the Agence Francaise Development, Mr. Rey Rioux, and then the minister of finance, Mrs. Kemi Adeosun.
The loan was broken down into a $75 million loan for the implementation of water projects in Kano State and a $200 million loan facility grant to Lagos for the execution of transport projects by AFD.