$114.28m COVID-19 Credit: SERAP cautions World Bank over funds disbursement to Nigeria

The Socio-Economic Rights and Accountability Project, (SERAP) has sent an open letter to the World Bank President Mr David Malpass, urging him to use his “good offices to encourage the Federal Government and 36 state governments to publicly commit to transparency and accountability in the spending of the $114.28m credit and grant for COVID-19, which the Bank’s Board of Directors recently approved for Nigeria, including by publishing details on a dedicated website.”

SERAP also urged Mr Malpass to “put pressure on authorities and the 36 state governors to accept voluntary scrutiny by Nigerians and civil society regarding the spending of the funds and use of the resources, including on how they will spend the money to buy medical equipment, and improve access to clean water, sanitation and hygiene.”

The World Bank Board of Directors last Friday approved a $114.28 financing “to help Nigeria prevent, detect and respond to the threat posed by COVID-19 with a specific focus on state level responses.” According to the Bank, the $100 million credit with Project ID number: P173980, is due to be paid back over 30 years, with additional 5 years grace period.

In the letter dated 8 August, 2020 and signed by SERAP deputy director Kolawole Oluwadare, the organisation said: “The World Bank has a responsibility to ensure that federal authorities and state governments are transparent and accountable to Nigerians in how they spend the approved credit and grant. The Bank should tread carefully in the disbursement of funds or distribution of resources to states if it is to reduce vulnerability to corruption and mismanagement.”

SERAP expressed “serious concerns that the money and resources may be stolen, diverted or mismanaged by state governors without effective transparency and accountability mechanisms, especially given increasing reports of allegations of corruption and mismanagement of COVID-19 funds by agencies of the Federal Government and state governments, and impunity of perpetrators.”

SERAP said: “Insisting on transparency and accountability would ensure repayment of the credit, and protect the project objectives and intended purposes for which the funds and resources are approved, disbursed and distributed.”

According to SERAP, “The Bank’s power to provide credits and grants is coupled with a fiduciary responsibility to ensure that governments spending such funds meet international standards of transparency and accountability, including those entrenched in the UN Convention against Corruption to which Nigeria is a state party.”

The letter copied to Shubham Chaudhuri, World Bank Country Director for Nigeria, reads in part: “Implementing these recommendations would prevent a repeat of alleged diversion and mismanagement of recovered Abacha loot disbursed by the Federal Government to state governments.

“The World Bank should make clear to all the governors that it will cancel the credit and grant should they renege on their transparency and accountability commitments to spend the money and use the resources exclusively for COVID-19 related projects, and not to steal, divert or mismanage them.

“As the level of Federal Government monitoring of the spending of the credit and grant and use of the resources by state governors may be based on political considerations, the Bank’s influence might be the only restraining force state governors will take seriously.

“SERAP encourages you and the World Bank in any future engagements with state governments in Nigeria to insist on accessing information on how governors are spending security votes, and the amounts of public funds states are allocating to pay former governors life pensions, among others, as well as consider the level of corruption within each state before approving any credits and grants.

“SERAP also encourages you and the World Bank not to sacrifice international standards of transparency and accountability in the rush to provide COVID-19 credit and grant to the 36 state governments.

“According to our information, the World Bank Board of Directors on Friday, 7 August, 2020 approved a $114.28 financing “to help Nigeria prevent, detect and respond to the threat posed by COVID-19 with a specific focus on state level responses.

“This includes $100 million credit from the International Development Association (IDA) and $14.28 million grant from the Pandemic Emergency Financing Facility.

“SERAP notes that the Government of Nigeria is expected to disburse the money and distribute the resources to the 36 state governments and the Federal Capital Territory (FCT) as ‘immediate support to break the chain of COVID-19 local transmission and limit the spread of coronavirus through containment and mitigation strategies.’

“The approved money will also “help to finance federal procurements of medical equipment, laboratory tests, and medicines to be distributed to the states based on their needs, and to provide support to laboratories for early detection and confirmation; equipping and renovating isolation and treatment centers including community support centers; and improving in patient transfer systems through financing of ambulances and training.”

SERAP therefore urged Mr Malpass and the World Bank to:

1. Disclose and widely publish the terms and conditions of the credit and grant, and the exact amount repayable by Nigeria in 30 years’ time, including the details of the interest, if any; and the consequences of Nigeria defaulting;
2. Ask President Muhammadu Buhari to instruct the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) to jointly track and monitor spending of the credit and grant by state governments;
3. Ask state governments to allow the media to freely report on their spending of the funds and use of the resources, and not to clampdown on journalists and the media in the exercise of their constitutional responsibilities to expose corruption and hold governments to account;
4. Ask state governments to explicitly commit to encouraging and protecting whistle-blowers as a way of ensuring that the funds and resources are not stolen, diverted or mismanaged;
5. Clarify if, to the Bank’s knowledge and information, the credit and grant have been approved by Nigeria’s National Assembly pursuant to its constitutional duties, including its oversight functions under Section 88 of the 1999 Constitution (as amended);
6. Ensure increased transparency of sanctions and terms and conditions of the credit and grant to each state to enable Nigerians to ask questions as to the spending of the money and use of the resources from their state governments.