Fuel subsidy: Suspend disbursement of $800m loan to FG, SERAP urges World Bank

• Social Action asks Senate to reject Buhari’s request

SOCIO-Economic Rights and Accountability Project (SERAP) has urged World Bank President, David Malpass, to suspend any disbursement of $800 million loan to the Federal Government.

SERAP also urged Malpass and the World Bank to reopen discussion on the loan with the incoming administration, to clarify details on rationale and use of the facility because President Muhammadu Buhari’s term of office ends in May 2023.

This came as Social Development Integrated Centre (Social Action), a non-governmental organisation based in the Niger Delta, also called on the Senate, yesterday, to “immediately reject President Buhari’s request to borrow $800 million from the World Bank,” adding: “This is necessary to prevent funds diversion, embezzlement and plundering of scarce foreign exchange, while the country is plunged further into a debt trap.”

The Federal Government, in April, announced plan to spend the loan as “part of its subsidy palliatives measures”. Also, last week, Buhari requested Senate’s approval for the credit.

In a letter, dated May 13, 2023, and signed by SERAP’s deputy director Kolawole Oluwadare, the organisation urged the World Bank to comply with its own Articles of Agreement in disbursing any loans.

“The Bank should not sacrifice international standards in the rush to disburse the loan to the government,” SERAP said. Suspending any disbursement to the government, the organisation said, would reduce risks and vulnerability to corruption and mismanagement.

The body noted that the government has not satisfactorily explained or justified need for the loan at this time, especially given lack of clarity on its use, a crippling debt burden, and disproportionately negative impact of retrogressive measures on poor Nigerians.

SERAP said: “The World Bank cannot close its eyes to these important transparency, accountability and human rights issues.

“The National Economic Council (NEC), on April 27, reportedly suspended the planned removal of subsidy on petroleum products at the end of the Buhari administration.”

SERAP threatened to pursue legal action if the World Bank refuses to suspend disbursement of the loan.

The organisation said: “The crippling debt burden is a human rights issue because, when the entire country is burdened by unsustainable debts, there will be little money left to ensure access of poor and vulnerable Nigerians to legally enforceable socio-economic rights.”

SERAP noted that there is lack of transparency and accountability in the spending of loans so far obtained.

“The details of the projects on which approved loans are spent are often shrouded in secrecy. The Bank has a responsibility to ensure that the Federal Government is transparent and accountable to Nigerians in any discussion to obtain loans, credits or grants from the bank and how it spends any approved loans, credits or grants.”