Nigeria to loan cash-strapped states $435m

Abuja - Nigeria's government will loan its states a total of 90 billion naira (about $453m), in its latest effort to augment their monthly income and ease strain caused by plunging oil revenues, the country's finance minister says.

The funds will help tide the 36 states over for a year as they get their finances in order, said Finance Minister Kemi Adeosun. The loan is structured as about $225m for three months and then $200m for nine months.  She did not say what the interest rate on the loans would be.

Adeosun said at a meeting with state finance commissioners: "It is a loan and it is fully repayable, although it has a secured tie against future dividends, revenues and any amount that government might owe the states.

"The loan is a bond and it has been guaranteed by the federal government."

Several Nigerian states borrowed in the domestic bond market and from banks to fund infrastructure projects at the peak of oil prices. But as crude prices dropped, many states have been unable to pay bills or salaries.