In the past 16 months, the Federal Government of Nigeria, led by President Bola Tinubu, has secured $6.45 billion in loans from the World Bank. This figure rose after the recent approval of three additional loans, amounting to $1.57 billion, with the possibility of further increases in the near future. Since 2019, the World Bank has approved 36 loan requests for the Nigerian government, totaling $24.088 billion. These funds are allocated to various development projects across the country, but concerns are growing about Nigeria’s increasing debt load and the long-term implications of these loans for the nation’s economy.
Under President Tinubu’s administration, some of the loan agreements have been designated for key areas, including $750 million for power sector recovery, $500 million for women’s empowerment, $700 million for girls’ education, $750 million for renewable energy, $1.5 billion for economic stabilization, and $750 million for resource mobilization reforms.
For many Nigerians, the government’s borrowing strategies evoke skepticism. Years of infrastructure neglect and rising unemployment have led to increased discontent whenever new loans are announced. While some citizens acknowledge that the country’s resources are stretched thin, particularly given Nigeria’s large population, there is widespread belief that previous borrowings have not yielded justifiable results.
A review of the World Bank’s records shows a consistent annual approval of credit for Nigeria since 2020. In that year alone, the Bank approved 15 loan requests totaling $6.36 billion. These loans financed projects such as the Nigeria Rural Access and Agricultural Marketing Project ($510 million), the Nigeria Digital Identification for Development project ($430 million), and an additional $750 million for COVID-19 response measures under the SATAN financing.
In 2021, Nigeria’s loan requests decreased to six projects worth $3.2 billion. The following year, in 2022, under the leadership of former President Muhammadu Buhari, Nigeria secured loans totaling $1.26 billion for six projects. These included a $500 million loan for a livestock productivity and resilience support project, approved on March 18, 2022, and $750 million for the State Action on Business Enabling Reforms Program. An additional $3.9 million was allocated to support a women’s project in the country.
By 2023, loan requests rose again to $2.7 billion for four projects. These included $750 million for the Nigeria-Accelerated Power Sector Recovery Program, $500 million for the Nigeria for Women Program Scale-Up, and another $750 million for the Nigeria Distributed Access through Renewable Energy scale-up project.In 2024, the World Bank approved $3.82 billion for five projects, including a $70 million grant. So far, Nigeria has secured $3.75 billion in loans in 2024, with additional loan approvals expected by year-end. One such anticipated loan, valued at $500 million, is slated for approval by December 16, 2024, to fund the Rural Access and Agricultural Marketing Project, Scale Up initiative.
The loans approved in 2024 have focused on critical areas such as economic reforms, resource mobilization, education for adolescent girls, and expanding renewable energy. In June 2024, the World Bank announced the approval of two significant loan packages aimed at bolstering Nigeria’s economic stability and aiding vulnerable populations. These packages include a $1.5 billion loan for the Nigeria Reforms for Economic Stabilization to Enable Transformation program and $750 million for the Nigeria Accelerating Resource Mobilization Reforms Program-for-Results. Of the $1.5 billion loan, $751.88 million has already been disbursed.
The World Bank also recently approved $1.57 billion in credit facilities to assist the Nigerian government in improving healthcare for women, children, and adolescents and enhancing resilience to climate change through improved dam safety and irrigation systems. This new financing includes $500 million to address governance challenges that hinder the delivery of education and healthcare services, $570 million for the Primary Healthcare Provision Strengthening Program, and $500 million for the Sustainable Power and Irrigation for Nigeria Project.
The latest loans, approved on September 26, 2024, demonstrate the World Bank’s ongoing commitment to strengthening Nigeria’s human capital and increasing resilience to climate-related challenges like floods and droughts. These projects also aim to improve service delivery in basic education and primary healthcare, which are vital for enhancing Nigeria’s human development outcomes. In addition, the Sustainable Power and Irrigation for Nigeria (SPIN) project will support better dam safety and water resource management for hydropower and irrigation in selected regions of the country.
Data from Nigeria’s Debt Management Office (DMO) shows that the country owed the World Bank $15.59 billion as of March 31, 2024. The nation’s debt servicing expenses soared to N6.04 trillion in the first half of 2024, a sharp 68.8% increase from N3.58 trillion recorded during the same period in 2023.
This significant rise in debt service obligations, likely caused by the devaluation of the naira in relation to foreign debt repayments, illustrates the growing financial burden on the government as a large portion of its revenue is now devoted to debt repayment.
