Under President Bola Tinubu’s administration, Nigeria has secured a total of $4.95 billion in loans from the World Bank, raising concerns about the country’s increasing external debt servicing costs.
At least six loan projects have been approved, including funding for power ($750 million), women’s empowerment ($500 million), girls’ education ($700 million), renewable energy ($750 million), economic stabilization reforms ($1.5 billion), and resource mobilization reforms ($750 million), as reported by Nairametrics.
Loan Breakdown
$750 Million for the Power Sector: Approved on June 9, 2023, this loan aims to enhance Nigeria’s power sector, providing additional financing for the power sector recovery performance-based operation.
$500 Million for Women’s Empowerment: On June 27, 2023, the World Bank approved this loan to support Nigeria’s efforts in women’s empowerment, scaling up financing for the Nigeria for Women Program.
$700 Million for Educating Adolescent Girls: In September 2023, a $700 million loan was approved to improve educational opportunities and empowerment for adolescent girls in Nigeria, supporting the ongoing ‘Adolescent Girls Initiative for Learning and Empowerment’ (AGILE) project.
$750 Million for Renewable Energy: Approved on December 14, 2023, the $750 million Distributed Access through Renewable Energy Scale-up (DARES) project aims to provide over 17.5 million Nigerians with better access to electricity through distributed renewable energy solutions.
$1.5 Billion for Economic Stabilization Reforms: On June 13, 2024, the World Bank approved a $2.25 billion financial package, including $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing Program. This project focuses on increasing fiscal oil revenues, boosting non-oil fiscal revenues, expanding social safety nets, and raising the import value of previously banned products.
$750 Million for Resource Mobilization Reforms: Also approved on June 13, 2024, this loan supports the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) Program-for-Results. The program aims to enhance non-oil revenues and protect oil and gas revenues from 2024 to 2028 through significant tax, excise, and administrative reforms.
Additional Insights
The World Bank disclosed that Nigeria was the top recipient of its fresh loans in 2022, with about $2.9 billion released to the country, followed by Tanzania with $2.7 billion.
According to the external debt stock report from the Debt Management Office (DMO), Nigeria owed the World Bank a total of $15.45 billion as of December 31, 2023.
The increase in debt stock has sparked concerns over rising debt service costs. Nigeria’s foreign debt servicing costs surged by 96%, reaching $2.19 billion in the first five months of 2024, compared to $1.12 billion in the same period in 2023.
The escalating costs of servicing foreign debt pose significant challenges for Nigeria’s economy, potentially diverting resources from critical sectors such as healthcare, education, and infrastructure, thus exacerbating socio-economic issues.