World Bank’s Drastic Step – No More Loans to Nigerian States

Socio-Economic Rights and Accountability Project (SERAP) has issued a critical appeal to Mr. Ajay Banga, President of the World Bank, urgently demanding a thorough investigation into the utilization of loans and financial facilities by Nigeria’s 36 state governors. SERAP implores the immediate suspension of loans and funding in cases where substantial evidence surfaces, indicating mismanagement or diversion of public funds by any state entity.

Expressing deep concern over the alleged mismanagement of public funds by several of Nigeria’s states, SERAP highlighted the risks associated with funds acquired from the World Bank and its associates, alongside allocations from the Federal Government. The organization stressed the need for transparency in accounting for these loans and funds.

In an official communication dated November 25, 2023, signed by SERAP’s deputy director Kolawole Oluwadare, the organization stated the World Bank and its partners should not extend further financial support to states unable to transparently explain the utilization of loans. Failure to address these concerns may result in legal action, as SERAP emphasizes the gravity of the situation at hand.

The alarming figures disclosed by Nigeria’s Debt Management Office, revealing a total public debt portfolio of N9.17 trillion for the country’s 36 states and the Federal Capital Territory, raise serious apprehensions regarding financial mismanagement. Additionally, Nigeria’s total public debt stands at a staggering N78.2 trillion.

SERAP has urged the World Bank to secure explicit commitments from Nigeria’s governors to address allegations of financial mismanagement and ensure these funds are not channeled towards the extravagant lifestyles of politicians. The organization insists on the deployment of independent monitors to oversee the expenditure of funds allocated by the Bank and its partners, reducing the risks associated with misappropriation or diversion of public funds.

Highlighting the World Bank’s substantial investment in Nigeria, totaling approximately $8.5 billion across the country, SERAP emphasized the necessity of ensuring these funds are utilized for their intended purposes, rather than being squandered or misused. Moreover, the lack of transparency regarding the states’ accounts necessitates immediate corrective action to enforce accountability and responsible fiscal practices.

In light of this crisis, SERAP underscores the World Bank’s legal obligations to uphold Nigeria’s constitutional and domestic laws, specifically referencing the Fiscal Responsibility Act of 2007. The organization emphasizes the need for stringent measures to be taken against suspected offenders and the recovery of mismanaged public funds to restore financial integrity across the states.

The grave situation also highlights the plight of millions of Nigerians who continue to be deprived of essential public services due to financial mismanagement by state authorities. Reports of exorbitant spending on non-essential items, luxurious travels, and unnecessary expenses further exacerbate the urgency of the matter.

SERAP concludes by calling upon the World Bank and its partners to align their actions with international anticorruption and human rights laws. These obligations include championing transparency, preventing the mismanagement of public funds, and addressing any potential breaches of public trust.

This appeal serves as an urgent plea to safeguard Nigeria’s financial stability and ensure responsible fiscal governance across all states, emphasizing the pivotal role of the World Bank in promoting transparency, accountability, and ethical fiscal practices.