’The Federal Ministry of Finance, Budget and National Planning is expected to spend $53 million on hiring staffers, office administration, committee overheads and other logistics such as training and workshops out of the $800 million the Federal Government has secured from the World Bank to mitigate the effects of petrol subsidy removal on vulnerable Nigerians.
The agreement between the Ministry of Finance, Budget and National Planning and the International Development Association (IDA), the concessional lending arm of the World Bank Group, spells out how the money will be expended to execute activities that would make the project implementation seamless.
Nigeria’s special drawing rights (SDR) with the International Monetary Fund (IMF) totals 565.3 million, an amount deposited as collateral at the IDA to access the concessional facility of $800 to fund the subsidy removal palliatives as well. This implies that for every unit of SDR entitled to, the country gets approximately $1.415 in loan.
In line with the executed document, $747 million or 93.4 per cent of the total sum will be disbursed to beneficiaries while the balance will go into federal and state bureaucracies and logistics to be set up to the satisfaction of the IDA.
The agreement says the Federal Government will establish a National Social Safety Nets Coordinating Office (NASSCO), which means doing away with officials of the Federal Ministry of Humanitarian Affairs already trained to carry out such tasks. The Minister of Humanitarian Affairs presides over NASSCO national management team.
The document also details terms of the loans, interest rate and repayment schedules, which will spread till 2051. Apart from NASSCO, the National Steering Committee (NSC) is expected to “have been duly established” to ensure the effectiveness of the project, as stipulated in the agreement.
The loan conditionality leans heavily on logistics in the implementation phase with a National Cash Transfer Office (NCTO) in place throughout the implementation “with functions and resources satisfactory to the Association (lender), and with staff in adequate numbers plus terms of reference, qualifications, integrity and experience satisfactory to the Association.
“The NCTO shall be responsible for, inter alia, managing the implementation of parts one and two of the project in collaboration with the participating states,” it adds.
There shall also be a state steering committee (SSC) with responsibilities for budget planning, with active involvement of the Commissioners for Finance, Health, Education, Agriculture and Water Resources in the state execution planning.
According to the signed agreement, participating states would also set up a state operations coordination unit (SOCU) with “functions and resources satisfactory to the Association (lender).” Staff of SOCU are expected to be in adequate number, experiences, qualifications and integrity to meet the threshold of the lender.
As in the case of federal, participating states are also mandated to maintain state cash transfer units (SCTU) to coordinate cash transfer at local government areas (LGAs), such as preparing lists of beneficiaries eligible for cash transfer payments, coordinating behaviour change communication training of the project and sundry responsibilities.
The Federal Government also agreed that participating states would keep open communication with the funder on the progress of the scheme, sharing views on critical behavioural changes throughout the implementation. In the course of the project, an implementation manual is to be produced and shared with the funding partner for review.
Nigeria will, by the agreement, pay 0.5 per cent as a yearly maximum commitment charge rate on un-withdrawn financing balance with the Association, while 0.75 per cent share will be paid as a service charge on all withdrawn credit balances yearly.
The concessional facility attracts an interest of 1.25 per cent yearly on the withdrawn credit balance on the loan valued with January 15 and July 15 serving as payment dates each year.
The total value of the Association’s facility designated as special drawing rights (SDR) is 565.3 million (equivalent to $800 million). According to the document, the spending is aimed at expanding and strengthening “safety nets delivery systems through increased integration and the use of digital technologies.”
With the contract signed on August 16, 2022, the project is deemed to have taken effect. According to the agreement, the effective date is 120 days after the signature date, which pins the effective date on December 13, 2022.
The agreement, which was executed on August 16, 2022 by the Minister of Finance, Budget and National Planning, Zainab Ahmed and Nigeria’s Country Director of the World Bank, Shubham Chaudhuri, with section 1.2 sub-section (a) partly reading: “The recipient shall maintain, throughout the implementation of the project, a National Social Safety Nets Coordinating Office (NASSCO) in FMHADMSD with functions and resources satisfactory to the Association, and with staff in adequate numbers and with terms of reference, qualifications, integrity and experience satisfactory to the Association.”
On the conditional cash transfer disbarment, section 1.3 sub-section (a) is categorical that a National Cash Transfer Office be established for this singular purpose must be established.
“The Recipient shall maintain, throughout the implementation of the Project, a National Cash Transfer Office (NCTO) in FMHADMSD, with functions and resources satisfactory to the Association, and with staff in adequate numbers and with terms of reference, qualifications, integrity and experience satisfactory to the Association.”
On trainings, seminars on the processes expected for the disbursement, section 34 of the agreement states: “Training and workshops” expenditures associated with project related study tours, training courses, seminars, workshops and other training activities, not included under service providers’ contracts, following the annual work plans and budgets and approved by the Association, including costs of training materials, space and equipment rental, travel, accommodation and per diem costs of trainees and trainers, trainers’ fees, and other training-related miscellaneous costs.”
With the ‘consultancy’ and ‘logistics’ consuming a large chunk of loans and facilities Nigeria obtains, experts have called on the Federal Government to follow Zambia by banning all sorts of consultancy going forward.