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Nigeria to Receive $750 Million Loan to Improve Business Environment in the Country

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CEM REPORT, GOVERNANCE| To support the Nigeria State Action on Business Enabling Reforms (SABER) Program-for-Results, the World Bank has approved a $750 million loan to Nigeria.

The funds which will be disbursed through the International Development Association (IDA) would help Nigeria accelerate the implementation of critical actions that will improve the business-enabling environment in states.

The Washington-based institution disclosed the approval in a statement on the same day the federal government declared that it was considering further fiscal policy actions in support of Micro, Small and Medium Scale Enterprises (MSMEs), as work progresses in the preparation of the Finance Act 2022 for the 2023 fiscal year.

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“The World Bank today approved the Nigeria State Action on Business Enabling Reforms (SABER) Program-for-Results. The $750 million International Development Association (IDA) credit will help Nigeria accelerate the implementation of critical actions that will improve the business enabling environment in states.”

The statement noted that the program was in line with Nigeria’s National Development Plan (NDP) which sets an ambitious strategy to pursue sustained private sector-led economic growth that is aimed at generating 21 million full-time jobs and lifting 35 million people out of poverty by 2025.

The World Bank in its statement stated that although Nigeria’s ability to attract domestic and foreign investment remains low compared to its peers it added that Nigeria has made progress in advancing reforms to eliminate constraints in the business environment, especially through actions driven by the Presidential Enabling Business Environment Council (PEBEC).

“Nigeria’s 36 states and the Federal Capital Territory (FCT) are capable to catalyse private investment but vary significantly in their efforts and ability to do so. Given the importance of state-level reforms, the government developed a new program—SABER—to accelerate the implementation of critical actions that improve the business-enabling environment in Nigeria’s states.

“The government’s SABER program builds on the successes of PEBEC. It aims to strengthen the existing PEBEC-National Economic Council subnational interventions by adding incentives, namely results-based financing to the states, and the delivery of wholesale technical assistance–available to all states–to support gaps in reform implementation.”

It also noted that the Program-for-Results supports the most critical state-level business enabling reforms of the government’s SABER program.

The World Bank added that the program is open to all states in Nigeria and FCT, given their ability to take concrete steps towards addressing major business-enabling environment challenges around land administration, regulatory framework for private investment in fibre optic infrastructure, public-private partnerships (PPP) and investment promotion frameworks and services, and business enabling regulatory environment,

Commenting on the development, World Bank Country Director for Nigeria, Shubham Chaudhuri said the SABER program provides various states in the country the support to put in place policies that will create a better business-enabled environment, especially for the private sector.

“Following the significant progress made by states on fiscal reforms through the State Fiscal Transparency, Accountability and Sustainability (SFTAS) program, the SABER program endeavours to offer similar support to the states to undertake critical business-enabling policy and institutional actions that will incentivize private sector development.

“Private sector investments remain the major vehicle to create more jobs, increase revenues to the states and improve social and economic outcomes for citizens.”

SABER is anticipated to assist states in enhancing the effectiveness of their land administration, the legal framework for private investment in fibre optic infrastructure, the services offered by investment promotion organizations and PPP units, and the effectiveness and transparency of their government-to-business interactions.

“Overall, the SABER program looks to consolidate and deepen business enabling environment reforms across more states,” said Bertine Kamphuis, task team leader for SABER. “The use of the Program-for-Results model, which ensures disbursement of funds after achieving results, helps the government in strengthening its own program by incentivizing institutional performance at the state level through results-based financing. States will be responsible for achieving the program results and thus will be leading the implementation of the program.”

The Task Team Leader for SABER, Bertine Kamphuis said: “Overall, the SABER program looks to consolidate and deepen business enabling environment reforms across more states.

“The use of the Program-for-Results model, which ensures disbursement of funds after achieving results, helps the government in strengthening its own program by incentivising institutional performance at the state level through results-based financing. States will be responsible for achieving the program results and thus will be leading the implementation of the program.”

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