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Tuesday, April 16, 2024

SERAP threatens legal action against World Bank over $800m loan

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Socio-Economic Rights and Accountability Project (SERAP) has vowed to sue the World Bank if it fails to halt the disbursement of an $800 million loan to the Nigerian government. The loan is intended to provide palliatives for vulnerable Nigerians affected by the removal of fuel subsidies. SERAP has raised concerns about the risks of corruption and mismanagement associated with disbursing the loan to the outgoing government of President Muhammadu Buhari. In a letter to World Bank President David Malpass, SERAP called for the loan to be suspended and for discussions to be reopened with the incoming administration of President-elect Bola Tinubu.

SERAP has argued that the government has not provided satisfactory justification for the loan, especially given the lack of clarity on its use and the country’s crippling debt burden. The organization has also criticized the lack of transparency and accountability in the spending of loans obtained so far. SERAP maintains that the World Bank must comply with its Articles of Agreement in disbursing any loans and ensure that the government is transparent and accountable to Nigerians in any discussion to obtain loans, credits or grants from the bank.

The loan is reportedly intended to fund the National Social Safety Net Programme (NASSP), which aims to transfer N5,000 per month to 10.2 million poor and low-income households for a period of six months. However, the spending on the programme has been mostly shrouded in secrecy, according to SERAP. The organization has called on the World Bank to seek transparency and accountability commitments from the incoming government if it decides to use the loan for NASSP.

SERAP has cited Article 1 of the World Bank Articles of Agreement, which states that the bank’s purpose is to assist in reconstruction and development. Under Article 3 section 4(vii) of the agreement, loans made or guaranteed by the bank “shall be for the purpose of specific projects of reconstruction or development.” The organization has argued that the government has not satisfactorily explained or justified the need for the loan, especially given the disproportionately negative impact of removing fuel subsidies on poor Nigerians.

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