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SERAP objects to the World Bank’s new state loans.
SERAP objects to the World Bank’s new state loans.
The Socio-Economic Rights and Accountability Project (SERAP) has urged the World Bank to suspend loans to Nigeria’s 36 states until previous ones are accounted for.
This is due to recurring allegations of mismanagement of public funds by state governors, including loans that may have been obtained from the World Bank.
This is contained in a letter addressed to the President of the World Bank, Mr. Ajay Banga, and signed by SERAP deputy director Kolawole Oluwadare on Saturday, November 25, 2023.
In the letter, SERAP asked the World Bank “to promptly, transparently, and effectively conduct an investigation into the spending of loans and other facilities by the country’s 36 state governors and to suspend any loans and funding if there is relevant admissible evidence of mismanagement or diversion of public funds by any of the states.”
SERAP pointed out that the World Bank and its partners cannot continue to give loans and other funding to these states where credible allegations of mismanagement or diversion of public funds abound.
“We are concerned that there is a significant risk of mismanagement or diversion of funds linked to the bank’s investments in many of the country’s 36 states. It is neither appropriate nor responsible lending to give loans to these states only for the loans to be missed,” SERAP stated.
The organization said that the World Bank’s continuous lending and support to the Nigerian states may create the impression of complicity in the allegations of mismanagement or diversion of public funds by the states.
SERAP also pointed out that the total public debt profile of Nigeria’s 36 states and the Federal Capital Territory amounted to N9.17 trillion, according to the Debt Management Office.
SERAP’s recommendations to the World BankIn the letter, SERAP recommended several measures the World Bank could apply to address the alleged mismanagement of public funds, including loans obtained from the Bank by state governments in Nigeria.
The organization advised the World Bank to demand that the state governors who have obtained loans and other funding from the bank account for how the loans were spent.
Furthermore, SERAP urged the World Bank to deploy independent monitors to the 36 states to monitor how the loans and other facilities obtained from the bank are being spent.
SERAP said the World Bank needed to make state governors in Nigeria understand that it would not tolerate any mismanagement or diversion of public funds.
In addition, the organization noted that the World Bank had legal obligations to observe and promote compliance with the Nigerian Constitution of 1999 [as amended] and domestic laws, including the Fiscal Responsibility Act of 2007.
“We would consider the option of pursuing legal action should the World Bank fail or fail to implement the recommendations contained in this letter, and we may join the country’s 36 states in any such suit,” SERAP added.Here’s SERAP’s recommendation to the World Bank, as contained in the letter:
“SERAP also urges you to demand expressed commitment from Nigeria’s 36 governors to address credible allegations of mismanagement or diversion of public funds in their states and provide guarantees that loans and funding from the Bank and its partners would not be used to fund the luxurious lifestyles of politicians.”
“SERAP urges the Bank to send independent monitors to the 36 states to monitor the spending of the loans and other funding obtained from the Bank and its partners to remove the risks of mismanagement or diversion of public funds by these states.”
“The World Bank currently has a portfolio of about $8.5 billion spread across the country. The Bank has also approved several loans and other funding facilities for the country’s 36 states, including the recent $750 million credit line meant to help the states carry out reforms to attract investment and create jobs.”
“The accounts of Nigeria’s 36 states are generally not open to public scrutiny as many of them continue to refuse freedom of information requests seeking transparency and accountability in the spending of public funds.”
“The World Bank and its partners need to make clear to Nigeria’s state governors that they will not tolerate any mismanagement or diversion of public funds by immediately suspending any pending loans and other funding to them until the allegations of mismanagement or diversion of public funds are investigated.”
“The Bank has a legal responsibility to ensure that suspected perpetrators are brought to justice and that any mismanaged or diverted public funds are returned to the treasuries of the states.”
“The World Bank has the legal obligation to observe and promote compliance with the Nigerian Constitution 1999 [as amended] and domestic laws, including the Fiscal Responsibility Act of 2007.”
