International bank for reconstruction and development international development association international finance corporation
Summary of Program Implementation
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- Partnerships and Leveraging
8.Summary of Program Implementation
The Bank support to Nigeria has grown since the start of the CPS period, with net International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD) commitments totaling US$7.7 billion compared to US$5.24 billion of IDA commitments at end FY13. The significant increase in the commitment value was accompanied by a moderate increase in the number of projects (from 26 at end FY13 to 30 in FY16), reflecting efforts to consolidate portfolio and deliver fewer, larger projects. Nigeria represents International Finance Corporation (IFC)’s fifth largest global country exposure, with a committed volume of US$1.8 billion. Nigeria has been one of IFC’s fastest growing portfolios (13 percent Compound Annual Growth Rate since FY06) due to its steady growth of exposure to the financial markets. Successful engagement during FY14 and FY15 led to a growth in IFC’s yearly commitments to Nigeria to more than US$1 billion, as concerted efforts to rebalance the portfolio towards the real sector resulted in new exposures in gas, chemicals and electric power. Project implementation slowed in the period prior to and following the elections. The FY16 disbursement ratio was only 13 percent, compared to 19 percent in FY15 and 21 percent in FY14. The political transition impacted portfolio performance, notably at the state level, where about 54 percent of the Bank portfolio is implemented and where 21 out of 36 states have new governors, many of whom are engaging with the WBG for the first time. Portfolio implementation was also affected by delays in providing counterpart funding, weak capacity, and, in some instances, fiduciary challenges. The introduction of a Treasury Single Account (TSA) delayed disbursements due to time needed to clarify the impact of these new arrangements on the Bank’s projects. The political transition also caused delays in undertaking proactivity actions to address problem projects. The situation has begun to improve and the planned proactivity actions are expected to accelerate program implementation. The strategy for improving the IDA/IBRD portfolio performance and achieving faster delivery of results has centered on three elements:
To improve portfolio quality, IFC will leverage its strong and diversified client network to ensure swift commitments/disbursement rates while maximizing its development impact through projects in power, agriculture and the financial sector. In FY16, as a result of the current macroeconomic turmoil, IFC portfolio quality deteriorated slightly, with a number of downgrades and restructurings across various sectors. Within this context, IFC experienced a slowdown in direct investment opportunities and client engagement in FY16.
The WBG is an active partner in donor coordination and collaborated with other partners in engaging with the new authorities. The WBG and development partners prepared and delivered five joint policy notes to the new administration (Strengthening the Use of Evidence in Policy Formulation and Implementation in Nigeria; Deepening Federal-State Coordination in Economic Policy; Addressing Regional Inequalities; Creating Jobs for Shared Prosperity; and Delivering Macroeconomic Stability). Over the last two years, the Bank has established the strong collaboration with DFID on several agendas. DFID provided important support for the Recovery and Peace Building Assessment (RPBA), institutional self-assessment tool for federal agencies, collaboration with the Presidency Delivery Unit, technical assistance on state-level Public Finance Management (PFM), Doing Development Differently agenda, and poverty analysis including a database on conflict and poverty. Through its partnership efforts, WBG has successfully leveraged resources from the private sector and other partners. The Development Finance Institution project has helped to mobilize more than US$1.3 billion of approved debt and equity commitments in support of lending to Medium, Small and Micro Enterprises (MSMEs)11. The two IDA-supported Public Finance PFM operations have leveraged over US$150 million from European Union (EU). In the water (Urban Water 2 and 3) and transport (Rural Access and Mobility Project 2) sectors, IDA leveraged in total US$138 million from French Development Agency (AFD) and US$200 million from African Development Bank (AfDB). The WBG Joint Energy Business Plan has played an important role in leveraging private investment in the sector. For the Azura Edo Independent Power Producer project, IFC is providing loans of US$80 million and mobilized US$213 million of third-party direct foreign investment loans; IBRD is providing up to US$245 million in guarantees (debt and liquidity), and Multilateral Investment Guarantee Agency (MIGA) is providing US$492 million in guarantees to cover commercial bank debts, equity, and interest rate hedging. IFC has also invested in domestic gas producer Seven Energy (equity of US$75 million and anchor investor in a US$500-million bond) and MIGA is providing US$200 million guarantee to Seven Energy for its investment into Accugas Ltd.
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