Nigeria Secures N12.88trn World Bank Loans Over Two Years

The World Bank has approved a total of $8.40bn (N12.89tn) in fresh loans to Nigeria over the past two years, according to data obtained from the bank’s official website. The approvals, covering June 2023 to August 2025, cut across 15 projects in energy, education, healthcare, rural infrastructure and governance.

The amount, converted at the official exchange rate of N1,535.93/$ as of Monday, August 11, 2025, comprises $1.95bn (N2.99tn) from the International Bank for Reconstruction and Development and $6.50bn (N9.98tn) from the International Development Association.

The International Bank for Reconstruction and Development provides loans on commercial or near-commercial terms to middle-income and creditworthy low-income countries, while the International Development Association offers highly concessional loans and grants to the world’s poorest nations.

It was further observed that Nigeria secured $122.19m (N187.56bn) in grants for two projects. In a statement on Monday, the World Bank disclosed that a new loan of $300m (N460.78bn) was approved to Nigeria on August 7, 2025, for the Solutions for the Internally Displaced and Host Communities Project.

The loan is expected to strengthen resilience and expand access to essential services for Internally Displaced Persons and their host communities in Northern Nigeria. The project is expected to benefit up to 7.4 million people, including about 1.3 million IDPs, by adopting an integrated development strategy aligned with Nigeria’s long-term development vision.

The statement read, “The World Bank has approved on August 7, $300m in financing for the Solutions for the Internally Displaced and Host Communities Project. This initiative will enhance access to essential services and economic opportunities for Internally Displaced Persons and host communities in selected Local Government Areas in Northern Nigeria.

“By adopting an integrated development strategy, the SOLID Project seeks to help both IDPs and host communities move towards greater self-sufficiency and resilience, in line with Nigeria’s long-term development goals.”

The project will build on the Nigerian government’s existing initiatives, previous international interventions, and the earlier World Bank-funded Multi-Sectoral Crisis Recovery Project, which focused on short-term recovery.

“We are glad to support this initiative, which has tremendous potential to help Nigeria in addressing development challenges associated with protracted displacement in a sustainable way,” the World Bank Country Director for Nigeria, Mathew Verghis, said.

“The project’s integrated approach, aligned with the National IDP Policy and the Federal Government’s long-term vision, will ensure that IDPs and host communities can transition from dependency on humanitarian assistance to self-reliance and resilience, opening up better economic opportunities.”

The bank said the project would be implemented through a coordinated, community-driven approach involving all tiers of government, with strong collaboration from international stakeholders.

It was further observed that two of the biggest loan approvals came on June 13, 2024, when the Bank cleared $750m (N1.15tn) each for the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing, designed to strengthen the economic policy framework, and the NG Accelerating Resource Mobilisation Reforms Programme-for-Results, which seeks to raise non-oil revenues and safeguard oil and gas revenues.

Another $750m (N1.15tn) facility was approved in December 2023 for the Nigeria Distributed Access through Renewable Energy Scale-up Project to expand private sector-led access to clean and reliable electricity. The education sector received $700m (N1.07tn) in September 2023 for the Additional Financing for the Adolescent Girls Initiative for Learning and Empowerment to improve secondary education opportunities for girls in participating states.

The Nigeria for Women Program Scale-Up Project also received $500m (N767.97bn) in June 2023 to institutionalise women’s economic empowerment platforms and improve opportunities for unbanked women. In March 2025, the HOPE for Quality Basic Education for All Project secured $500m (N767.97bn) to improve foundational learning outcomes and strengthen education systems.

Healthcare programmes also benefited, with $500m (N767.97bn) each approved in September 2024 for the Primary Healthcare Provision Strengthening Program and the Human Capital Opportunities for Prosperity and Equity Governance Project. In March 2025, $80m (N122.88bn) was committed to the Accelerating Nutrition Results in Nigeria 2.0 Project.

Infrastructure funding included $500m (N767.97bn) for the Rural Access and Agricultural Marketing Project – Scale Up approved in December 2024 to improve rural connectivity and resilience, and $500m (N767.97bn) in March 2025 for the Nigeria Community Action for Resilience and Economic Stimulus Program to expand livelihood support and food security services.

Nigeria also received $122.19m (N187.56bn) in grants for two projects: $70.01m (N107.56bn) for the Primary Healthcare Provision Strengthening Programme, and $52.18m (N80.20bn) for the HOPE for Quality Basic Education for All.

The PUNCH further observed that Nigeria expects approval on three more loans and a grant from the World Bank before the end of 2025, a development that could push total commitments from the institution between June 2023 and December 2025 to $9.65bn (N14.82tn).

The additional $1.25bn (N1.92tn) in IDA loans and $10.5m (N16.12bn) in grant funding would raise the country’s exposure to the bank even further, despite persistent concerns over debt sustainability and sluggish revenue growth.

One of the expected facilities is the $250m (N383.98bn) Health Security Program in Western and Central Africa, Nigeria – Phase III, aimed at strengthening regional collaboration and health system capacities to prevent, detect and respond to health emergencies.

Another is the Building Resilient Digital Infrastructure for Growth Project, which seeks $500m (N767.97bn) to expand inclusive access to climate-resilient broadband internet in underserved parts of the country.

Also in the pipeline is the Nigeria Sustainable Agricultural Value-Chains for Growth Project, with a proposed $500m (N767.97bn) allocation to foster sustainable growth and job creation across selected agricultural value chains.

The Central Bank of Nigeria is set to receive a $10.5m (N16.12bn) technical assistance grant to improve technology-enabled, data-driven risk-based regulation and enhance domestic payment infrastructure for remittances.

If cleared, these commitments would come on top of the $8.40bn (N12.89tn) already approved since June 2023, underlining Nigeria’s increasing dependence on multilateral financing.

Economists warn that the rising loan pipeline, while potentially beneficial for long-term development, could deepen fiscal pressures if not matched with stronger domestic revenue mobilisation and prudent expenditure management.

Lagos-based economist, Adewale Abimbola, reacting to the rising World Bank commitments to Nigeria, said loans from multilateral institutions such as the World Bank are largely concessionary, with interest rates typically below market levels and longer repayment tenors

He noted that the critical question is not whether Nigeria should be borrowing, but whether the loans are structured and deployed effectively. “If it’s concessionary and tied to viable projects with medium-term revenue prospects, I don’t think it’s a bad idea,” Abimbola explained. “Borrowing isn’t bad, what matters is utilisation.”

He stressed that the economic impact of such loans depends on how well they are channelled into projects that can generate sustainable growth, strengthen revenue, and improve public services over time.

Development economist and CEO of CSA Advisory, Dr Aliyu Ilias, has expressed strong reservations over Nigeria’s rising debt profile in light of fresh World Bank commitments. He recalled that when former President Muhammadu Buhari left office for President Bola Tinubu, the nation’s debt stock stood at about N87tn, but has since risen to around N149tn, with fears it could approach N180tn.

While acknowledging that borrowing is not inherently bad for an economy, he questioned the rationale for taking on more debt at a time the government claims to have higher revenues.

Ilias pointed out that following the removal of fuel subsidy, Tinubu had announced increased revenue inflows. He added that both the Federal Inland Revenue Service and the Nigeria Customs Service had declared revenue surpluses, further suggesting the government should be able to fund projects without resorting to heavy borrowing.

According to him, the impact of the current borrowing spree is being felt in reduced public service delivery, particularly in capital expenditure, as debt servicing now consumes a significant portion of available revenue. He warned that this crowding-out effect limits job creation, fuels inflation, and worsens Nigeria’s foreign exchange imbalance, with the naira trading at historically weak levels.

He argued that given the claimed revenue surpluses, the Tinubu administration should not have needed to borrow within its first two years in office, let alone at the scale currently being witnessed.

Economist and CEO of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the rising World Bank commitments to Nigeria should be examined within the context of the country’s Medium-Term Expenditure Framework and annual budgets, which already provide for both domestic and foreign borrowing.

He noted that deficit financing is a common feature of budgets worldwide and is not inherently wrong, as it allows governments to make critical investments without waiting to generate all the required revenue upfront. However, he stressed that borrowing should always be backed by sound economic reasoning and clear development priorities.

Yusuf emphasised that the key issue is debt sustainability, which depends primarily on the country’s revenue capacity to service its obligations.

Without a strong cash flow to meet repayment schedules, he warned, Nigeria risks falling into a vicious cycle of borrowing to service existing loans, which would perpetuate fiscal vulnerability. He said it is essential that projects funded by loans directly support the economy’s capacity to repay.

According to him, Nigeria should be cautious with foreign loans due to the exchange rate risks they pose, noting that domestic debt is generally easier to manage. Excessive foreign borrowing, he warned, could put pressure on the country’s reserves and further weaken the exchange rate.

He stressed that a disciplined approach to debt sustainability will be crucial for Nigeria to avoid long-term fiscal distress.

Meanwhile, data from the Debt Management Office showed that Nigeria’s total debt to the World Bank rose to $18.23bn as of March 31, 2025. This marks a $420m increase in just three months since December 2024, when Nigeria’s total exposure to the World Bank stood at $17.81bn.

The DMO data showed that borrowings from the International Development Association, the concessional financing arm of the World Bank, rose from $16.56bn in December 2024 to $16.99bn in March 2025.

At the same time, loans from the International Bank for Reconstruction and Development — the non-concessional lending window of the World Bank — remained unchanged at $1.24bn. In total, the World Bank Group now accounts for $18.23bn, or about 39.7 per cent of Nigeria’s total external debt stock, which stood at $45.98bn as of March 2025.

This reflects a marginal increase in the World Bank’s share of the debt portfolio, up from 38.9 per cent recorded in December 2024 and 36.4 per cent at the end of 2023. Further analysis indicates that the World Bank now constitutes 81.2 per cent of Nigeria’s total multilateral debt, which reached $22.43bn in Q1 2025.

This represents a rise from the 79.8 per cent share recorded at the end of 2024 and underlines the central role the institution continues to play in Nigeria’s financing framework.

SOURCE: The PUNCH