World Bank Defends $75m Loan to Edo

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The World Bank says it approved $75 million-loan for the Edo State government because it could trust Governor Adams Oshiomhole to use the funds judiciously

By Anayo Ezugwu  |  Oct 26, 2015 @ 01:00 GMT  |

THE World Bank has defended its $75 million loan to Edo State government, saying it gives significant funding only to governments it trusts would use the funds judiciously to achieve its development objectives. Speaking on Wednesday, October 14, at a three-day retreat for members of the State Executive Council and permanent secretaries in Abuja, top executives of the World Bank, said each time we came to Edo, we were quite impressed that we were taken around to see the results of these reforms and that was why it was easy for us at the World Bank to sell the reforms programmes in Edo to our Board in Washington.

Gloria Joseph Raji, senior economist, Macro-Economic and Fiscal Management, World Bank, Nigeria said, through programmes for result financing, the World Bank provides finance for governments with a focus on result and capacity building. She said disbursement of such funds is based on specific programme results that have been pre-agreed on between the bank and respective governments.

“For example, we could say, if you achieve this level of vaccination with your own resources, then we will disburse some money to you. When we disbursed $75 million under the First Developmental Policy Operation to Edo State, we did not say to Edo State, you must use it to build this hospital or this school or all of that, it was on the basis of your completion of critical policies and institutional actions which we call ‘prior actions’.

“So, the focus of Developmental Policy Financing is policy and institutional reforms. We work with you to implement certain policies and institutional reforms and on the basics of implementation of certain critical reforms and actions that we agreed on, we will disburse the entire trunk of the funds.”

Raji emphasised the need for institutional reforms as this ensures continuity of governments developmental programmes even after their tenure. She said, “Institutional reforms are very important because they outlive government regimes. So, it is important for governments to undertake reforms of their systems and processes, institutionalised them and that is what the focus of DPO are, to support policies and institutional reform efforts and the bank is usually on hand to provide policy and strategic advice, so we work with the governments in designing, in thinking through your policy and institutional reforms actions and then we provide advice as necessary.

“On the basis of the completion of certain critical policies and institutional reforms actions which has been agreed between you and the bank, the loan is approved by the bank and so, funds are transferred. The entire trunk of funds is transferred into the government bank account and they are co-mingled with your other funds. The funds are not tied to specific projects, you co-mingled them into your funds and you spend them on your needs.

Also speaking, Khwima Nthara, programme leader, Equitable Growth, Finance and Institution, World Bank, Nigeria, said, “Reforms have to be institutionalised. Edo is very lucky today to have a very reform-minded governor, next year, he leaves office. We pray that a like-minded governor takes over from him but circumstances change, you don’t know who else is going to come with the governor and that is why it is important to institutionalise reforms so that they should transcend individual personality.

“Even when Comrade Adams Oshiomhole is not here, his legacy should remain, not just what he has achieved, but the building blocks of the reform programmes must remain so that even when the regime changes, the reforms might stay. That is why institutionalising those reforms are important.”

The Senate had on August 13 approved loan for Edo State after President Muhammadu Buhari wrote to the Senate requesting for the approval of the loan.

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