FG Seeks 18-Month Extension for $800M World Bank Palliative Scheme

In a bid to alleviate the impacts of recent economic policies, the Federal Government of Nigeria has requested an 18-month extension for the $800 million palliative loan from the World Bank. This initiative, initially set to close on June 30, 2024, aims to support Nigeria’s poor and vulnerable households through cash transfers and other social safety net programs.

Since the program’s inception, around three million households have benefited from the disbursement, with 700,000 households in rural areas and 2.5 million in urban regions. The World Bank’s restructuring paper highlighted these achievements amidst rising inflation and economic challenges.

The extension request seeks to shift the closing date to December 31, 2025, allowing for better alignment of project timelines and enhancing the National Social Safety Net Program-Scale Up (NASSP-SU). The government also aims to address delays caused by alleged mismanagement within the Ministry of Humanitarian Affairs and Poverty Alleviation.

To improve oversight, the Federal Government has proposed transferring the project’s national steering committee chairmanship from the Minister of Humanitarian Affairs and Poverty Alleviation to the Minister of Finance. The project, which began on January 30, 2023, was initially approved on December 16, 2021.

A significant feature of the program is the planned digital payment mechanism, which will deliver funds directly to beneficiaries’ accounts or wallets, further supported by integrating the National Social Register with the National Identification Number system.

Despite earlier delays, the project remains critical in providing temporary support to households affected by high inflation, especially following the removal of fuel subsidies. The government aims to reach 15 million households with N75,000 distributed in three monthly payments, a substantial increase from the previous N30,000 spread over six months.

Only 39.38% of the loan has been disbursed so far, leaving approximately $485 million pending. To address ongoing security concerns, a Security Risk Assessment and Management Plan is in preparation after two fatal incidents involving project staff.

The loan terms include a maximum commitment charge rate of 0.5% per annum on the unwithdrawn balance, a service charge of 0.75% per annum on the withdrawn balance, and an interest charge of 1.25% per annum on the withdrawn balance, with principal repayments starting at 1.65% and increasing to 3.40% over time.