N87trn Debt: SERAP Asks World Bank To Suspend Loans To Nigeria’s 36 States

The Socio-Economic Rights and Accountability Project (SERAP) has asked the World Bank President, Ajay Banga, to conduct investigation into spending of loans and other facilities by the Nigeria’s 36 state governors and to suspend any loans and funding if there is evidence of mismanagement or diversion of public funds by any of the states.

SERAP also called on the bank to suspend further applications for loans and any other funding to the 36 states until they are able to “satisfactorily explain” details of spending of loans and other facilities obtained from the bank and its partners.

This follows allegations that the 36 states are mismanaging public funds which may include loans obtained from the World Bank and its partners, and allocations from the Federal Government, which may also include loans obtained from the bank.

The Federal Government’s total public debt portfolio currently stands at about N78.2 trillion, while that of the 36 states and the Federal Capital Territory is N9.17 trillion, according to the Debt Management Office (DMO).

In a letter dated November 25, 2023 and signed by SERAP Deputy Director Kolawole Oluwadare, the organization said the “World Bank and its partners cannot continue to give loans and other funding to these states where there are credible allegations of mismanagement or diversion of public funds.”

SERAP further expressed concern that there is a significant risk of mismanagement linked to the bank’s investments in many of the country’s 36 states, adding that it is neither appropriate nor responsible lending to give loans to these states only for the loans to be misspent.

The letter, read in part: “The World Bank’s lending, and support for these states may create the impression of complicity in the allegations of mismanagement or diversion of public funds by the states which may include loans from the Bank and its partners, and federal allocations.”

“We would consider the option of pursuing legal action should the World Bank fail or fail to implement the recommendations contained in this letter, and we may join the country’s 36 states in any such suit.”

“According to Nigeria’s Debt Management Office, total public debt portfolio for the country’s 36 states and the Federal Capital Territory is N9.17 trillion. The Federal Government’s total public debt portfolio is N78.2 trillion.”

“SERAP also urges you to demand expressed commitment from Nigeria’s 36 governors to address credible allegations of mismanagement or diversion of public funds in their states and provide guarantees that loans and funding from the Bank and its partners would not be used to fund the luxurious lifestyles of politicians.”

“SERAP urges the Bank to send independent monitors to the 36 states to monitor the spending of the loans and other funding obtained from the Bank and its partners to remove the risks of mismanagement or diversion of public funds by these states.”

“The World Bank currently has a portfolio of about $8.5 billion spread across the country. The Bank has also approved several loans and other funding facilities to the country’s 36 states including the recent $750 million credit line meant to the states carry out reforms to attract investment and create jobs.”

“The accounts of Nigeria’s 36 states are generally not open to public scrutiny as many of them continue to refuse freedom of information requests seeking transparency and accountability in the spending of public funds.”

“The World Bank and its partners need to make clear to Nigeria’s state governors that it would not tolerate any mismanagement or diversion of public funds by immediately suspending any pending loans and other funding to them until the allegations of mismanagement or diversion of public funds are investigated.”