Nigeria’s Debt to World Bank’s IDA Rises $18.7bn

Nigeria’s debt to the World Bank’s concessional lending arm, the International Development Association, surged by $1.9bn in just one year to reach $18.7bn as of December 31, 2025, new financial data released by the institution show.

According to the IDA Management’s Discussion and Analysis for the period ended December 31, 2025, Nigeria’s exposure to the bank’s loan portfolio rose significantly from $16.8bn at end-2024, marking an 11.3 per cent year-on-year increase.

The sharp rise shows growing reliance on multilateral concessional financing as the Federal Government navigates tightening fiscal space amid global market volatility.

The latest figures place Nigeria as the third-largest borrower in the IDA portfolio, behind Bangladesh ($23.0bn) and Pakistan ($19.4bn), among the top ten countries with the highest exposures.

Together, these 10 countries accounted for 60 per cent of IDA’s total exposure as of December 31, 2025, the report said. A year earlier, the same cohort accounted for 61 per cent of total exposure.

According to reports, the $1.9bn uptick largely reflects continued project disbursements under Nigeria’s Country Partnership Frameworks and expanded commitments in key sectors such as health, education, and infrastructure.

While IDA financing is highly concessional, with long maturities and grace periods, the growing stock adds to Nigeria’s external debt obligations.

In the report, IDA emphasised the importance of monitoring such exposures in the context of repayment and future disbursement profiles, noting, “Monitoring these exposures relative to the SBL requires consideration of the repayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees.”

The surge comes as IDA’s overall portfolio expanded. Net loans outstanding rose to $226.4bn as of December 31, 2025, from $205.8bn a year earlier, reflecting the broader scaling up of concessional resources under the institution’s hybrid financing model that blends member contributions with market borrowings.

IDA describes its mission as providing “loans, grants and guarantees to the poorest and most vulnerable countries to help meet their development needs.”

With Nigeria’s exposure now at $18.7bn, higher than other major African IDA clients such as Ethiopia and Tanzania, the country’s role in the World Bank’s concessional portfolio remains prominent.

Aside from the IDA, there is also the International Bank for Reconstruction and Development, which is another lending arm of the World Bank for middle-income and creditworthy lower-income countries, raising funds on global capital markets through its AAA rating and providing sovereign loans, guarantees, and advisory support aimed at reducing poverty and promoting sustainable development.

While IDA loans offer more favourable terms than market borrowing, the steady accumulation of such debt adds to Nigeria’s overall public debt burden, raising questions about debt sustainability.

As of June 30, 2025, Nigeria’s external debt stood at $46.98bn, according to the Debt Management Office. Of this amount, the World Bank Group accounted for $19.39bn—comprising $18.04bn from the International Development Association and $1.35bn from the International Bank for Reconstruction and Development.

This means the World Bank holds 41.3 per cent of the total, reinforcing its outsized role in funding Nigeria’s development programmes.

Economist and CEO of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, earlier 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 strong cash flow to meet repayment schedules, he warned, Nigeria risks falling into a vicious cycle of borrowing to service existing loans, thereby perpetuating 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 about 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.