Link to the article: https://www.reuters.com/world/africa/nigeria-senate-approves-buharis-58-billion-borrowing-request-2021-12-15/
On Wednesday, December 15th the Nigerian parliament approved the Nigerian president Muhammadu Buhari’s request for taking a loan of $5.8 billion dollars from international leaders. The money is ultimately coming from the World Bank, China Export and Import Bank, German Consortium and Islamic Development Bank, and other leaders. The money would be used for power, water and sanitation, combating malaria, and agricultural projects. The need for this large sum of money comes from the 2021 budget to deal with the coronavirus and the drop of oil prices that hit Nigeria’s economy hard as oil sales makeup 90% of the country’s foreign revenue. Nigeria continues to rack up debt for infrastructure and now with a significant recession and a fragile economy from the coronavirus, the country is creating much more.
Nigeria’s economy, along with many other sub-saharan countries, has suffered tremendously as a result of the pandemic. Although worldwide economies took a toll as the result of the pandemic, Nigeria’s was hurt disproportionately due to their holdings in the oil and gas industry. The money they will borrow in this $5.8 billion deal will help them to improve infrastructure and build their economy back up. Although it will increase their national debt, in the end it will enable them to have a good economy in order to payback the money that they owe. It will also build good political relations between the countries involved – Germany, China, and others – as money dependency plays a huge role in the development of relationships.
The geography and location of Nigeria causes the country to be more susceptible to economic hardship as the oil and gas industry fluctuates. Nigeria is Africa’s largest oil producer and home to vast energy reserves that could be used for fuel development, however, the shift to renewable energy and the changes in the consumption of gas during the pandemic has taken a toll on many fuel-rich countries. The less developed countries tend to take a harder hit from this shift and have a lower ability to adapt to the new climate-friendly world. This money will help Nigeria to reach Buhari’s pledge to reach net zero emission by 2060.