The Federal Government has requested an 18-month extension for the $800 million palliative loan from the World Bank, aiming to extend the scheme’s closure from June 30, 2024, to December 31, 2025. This scheme, designed to mitigate the effects of recent economic policies, such as the removal of fuel subsidies, has benefitted approximately three million households, including 700,000 rural and 2.5 million urban households.
The World Bank disclosed these details in a restructuring document addressing its social safety net programs amidst escalating inflation and economic challenges. The document highlighted that the National Social Safety Net Program-Scale Up has reached 1,652 urban wards and aims to integrate the National Social Register with the National Identification Number to improve its targeting system.
Launched on December 16, 2021, and operational since January 30, 2023, the NASSP-SU project provides shock-responsive safety nets to Nigeria’s poor and vulnerable populations. The government had initiated a monthly cash transfer program but suspended it due to a probe into alleged mismanagement by the Ministry of Humanitarian Affairs and Poverty Alleviation. The restructuring plan includes shifting the project’s national steering committee chairmanship to the Minister of Finance.
The extension request arises amid Nigeria’s struggle with high inflation, which peaked at 33.2% in early 2024. The restructuring aims to realign project timelines and enhance cash transfer benefits, proposing N75,000 per household, distributed in three monthly payments.
Despite delays, the project is crucial for providing temporary support to those affected by inflation and recent economic reforms. The World Bank will continue to support the project to improve financial management and procurement practices.
To date, 39.38% of the loan has been disbursed, leaving a balance of $485 million. The government plans to reach 15 million households with the remaining funds. The loan, attracting various service and interest charges, includes a commitment charge rate of 0.5% per annum and a service charge of 0.75% per annum on the withdrawn credit balance. The interest charge is 1.25% per annum, with principal repayments starting at 1.65% and increasing to 3.40% over time.
Additionally, the World Bank is developing a Security Risk Assessment and Management Plan following two fatal incidents involving project staff, ensuring the safety of all project participants.
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