Section 3: Application of loan.

The sum or sums raised under the provisions of this Act shall be appropriated and applied for lending, in accordance with such terms and conditions as may be approved by the Minister of the Government of the Federation charged with responsibility for matters relating to finance and economic development to the Government of any State, if a law has been enacted by the House of Assembly of that State-
(a)
empowering the Government of that State to borrow money from the Government of the Federal Republic of Nigeria;
(b)
providing for repayment by equal annual instalments of principal and interest combined to extinguish the loan within an appropriate period; and
(c)
providing that the purposes to which any such loans may be applied shall be limited to meeting in whole or part capital expenditure comprising part of a development programme set out in the Capital Estimates and approved by the House of Assembly of that State.