Nigeria’s fight against rising inflation and economic woes has prompted the government to request an extension on a World Bank loan aimed at bolstering its social safety net programs.
The Federal Government has formally requested an 18-month extension on the closing date of the World Bank’s $800 million National Social Safety Net Program-Scale Up (NASSP-SU) project. This loan, approved in December 2021, aims to provide financial assistance to Nigeria’s poorest and most vulnerable citizens.
The extension request, detailed in a restructuring paper submitted to the World Bank, seeks to extend the project’s closing date from June 30, 2024, to December 31, 2025. This extended timeframe is intended to “realign project timelines and enhance the efficacy” of the NASSP-SU program, according to the document.
Rationale for Extension
In a letter dated March 4, 2024, Nigeria’s Federal Ministry of Finance formally requested the extension to ensure a comprehensive rollout of project activities.
While the government’s recent reforms, including subsidy removal and exchange rate unification, are expected to yield long-term benefits, they have also caused short-term economic hardship. The requested extension aims to provide additional time for managing cash transfers and strengthening the social safety net delivery system, ultimately mitigating the impact of these reforms on vulnerable populations.
Nigeria’s decision to seek an extension stems from the country’s ongoing battle with high inflation. In early 2024, inflation reached a peak of 33.2%, further exacerbated by the removal of fuel subsidies and a weakening exchange rate.
NASSP-SU Project Status and Progress
The NASSP-SU project was launched in December 2021 with the objective of providing financial assistance to Nigeria’s most vulnerable citizens. Despite a delayed start due to legislative hurdles, the project has made significant strides. As of May 2024, approximately 30 million Nigerians have benefited from the program, with roughly 3 million poor and vulnerable households receiving cash transfers.
Project implementation faced a temporary halt in early 2024 due to a government review process. Following recommendations from a multi-ministerial panel, the project resumed operations with a renewed focus on beneficiary verification using biometric identification. This enhanced verification system, leveraging the integration of the National Social Register (NSR) with the National Identification Number (NIN) system, aims to improve targeting accuracy and ensure that assistance reaches those who need it most.
However, only 39.38% of the total loan amount has been disbursed to Nigeria as of May 2024. This indicates a pending balance of approximately $485 million. The extension would allow the Nigerian government to access the remaining funds and continue providing crucial support to its most vulnerable citizens.
Potential Impact of the Extension
Granting Nigeria’s request for an extension on the World Bank loan could have a significant positive impact on the country’s social safety net. Here’s a closer look at the potential benefits:
Expanded Reach: The extension would provide additional time to identify and register more vulnerable Nigerians in need of assistance, ultimately expanding the program’s reach.
Enhanced Targeting: Utilizing biometric verification through the NSR-NIN integration can improve the accuracy of beneficiary selection, ensuring that aid reaches those who qualify most.
Continued Support: The additional 18 months would allow for uninterrupted cash transfers and continued program implementation, providing a crucial safety net for vulnerable Nigerians during this challenging economic period.
Read Also: World Bank Loan $1.5 Billion to Nigeria Hinges on Reform Progress
If You Ask Me
Nigeria’s plea for an 18-month extension on the World Bank’s NASSP-SU project reflects its commitment to bolstering social safety nets amid ongoing economic reforms and challenges. The extension aims to enhance the reach and effectiveness of cash transfer programs, crucially supporting vulnerable populations amidst high inflation and economic adjustments. As Nigeria awaits the World Bank’s decision, the outcomes could significantly shape the nation’s path towards economic recovery and stability, ensuring that vital assistance continues to reach those who need it most.
