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How is Abia planning to repay the $200m AfDB loan? By John Okiyi Kalu


The $200m AfDB facility has a moratorium period of 10 yrs with repayment spread over a 50 years period.

In simple language, Abia is not expected to pay anything for the next 10 years, after the facility is fully availed. It is anticipated that the funds will be received in batches based on pre-determined milestones.
After 10 years the state will commence repayment of the facility, which will be amortized over a 50 year period, with 0.75% interest charged on the balance remaining on the principal.
It is key to point out that with development loans like this, the lending development bank (AfDB) will monitor implementation of the concerned projects and if satisfied with the fidelity of implementation they will convert a portion of the facility to grant (free funds) as their contribution to development of the area.
So, by ensuring strict compliance with the projects implementation plan given to AfDB, Abia will automatically be entitled to a percentage "rebate" on the borrowed sum. The grant is usually between 10 and 50% of the principal sum.
Regardless of the above, as a responsible leader of his people, Governor Okezie Ikpeazu has directed the Commisioner for Finance, Mr Obinna Oriaku, to open an Escrow account that will accept expected profits from some of the investment associated with the funds.
1. We expect that with the anticipated massive reconstruction of roads at Aba and Umuahia more investment will flow into Abia State. More investment means more internally Generated Revenue (IGR) and jobs for Abians.
A portion of the improved IGR will be paid into the escrow account to support the repayment of the facility.
2. The anticipated $50m investment in sanitation will lead to a massive "waste to wealth" project aimed at profitably collecting and converting wastes at Aba, Umuahia and Ohafia.
The profit from this investment will also go into the escrow account.
By opening up rural access roads we expect that more food will be produced and transported to urban areas of the state where they will be sold with more profit by our hardworking farmers. That will further add to the state's food security project and GDP.
Another anticipated benefit of this facility is that it will free up funds previously committed to road construction. The state can use those funds to improve on regularity of salary payments as well as develop other critically required infrastructure in healthcare, education, housing, Security and social development projects of the Ikpeazu Administration.
Overall, this is a carefully planned and executed WIN for the people of Abia state, in the short and long run.
God bless the great state of Abia. Ugbo anyi agbapula oso...