World Bank is poised to authorize new loans amounting to $632 million for Nigeria today (Monday) aimed at bolstering essential sectors such as nutrition enhancement and quality basic education. This decision arises amidst increasing worries regarding the nation's escalating debt situation.
New Loan Approvals for Education and Nutrition
According to information from the World Bank’s website, the two loans expected to receive approval today include:
- $80 million for the Accelerating Nutrition Results in Nigeria 2.0 project
- $552 million for the HOPE for Quality Basic Education for All program
Both projects are currently in the negotiation stage and are part of the World Bank’s broader strategy to support Nigeria’s development agenda, focusing on healthcare, education, and community resilience.
The loans are expected to boost the government’s efforts to improve nutrition outcomes and enhance access to quality education for Nigerian children.
Additional $500 Million Loan Approved for Economic Stimulus
Meanwhile, on Friday, March 28, 2025, the World Bank approved a $500 million loan for Nigeria to support the Community Action for Resilience and Economic Stimulus Program. This initiative aims to provide expanded access to livelihood support, food security services, and grants for poor and vulnerable households and businesses.
The program, officially titled the Nigeria: Community Action (for) Resilience and Economic Stimulus Program, seeks to mitigate economic hardships faced by vulnerable populations by offering financial aid and strengthening community resilience.
Challenges in Disbursing Previous Loans
The latest loan approvals come amid delays in releasing funds for a previous $800 million World Bank loan meant for Nigeria’s National Social Safety-Net Program Scale-Up. So far, only $315 million of the funds have been disbursed, with the remainder stalled due to alleged fraud within the program.
President Bola Tinubu had launched a social safety net program to distribute N25,000 to 15 million homes for three months in observance of the 2023 International Day for the Eradication of Poverty. However, the program was suspended due to allegations of misappropriation, leading to investigations into the Federal Ministry of Humanitarian Affairs and Poverty Alleviation.
Former humanitarian minister Betta Edu was suspended over the alleged mismanagement of N585 million allocated for palliative distribution. Her predecessor, Sadiya Umar-Farouq, is also under investigation for alleged laundering of N37.1 billion during her tenure.
The World Bank has issued sanctions on individuals and businesses found to have committed fraud under these programs.
Nigeria’s Growing Reliance on World Bank Loans
Reports indicate that Nigeria is set to secure six additional loans totaling $2.23 billion from the World Bank in 2025. These loans will bring Nigeria’s total World Bank-approved loans to $9.25 billion over three years, reflecting an increasing dependence on multilateral funding to support infrastructure, healthcare, education, and economic resilience.
Since 2023, under President Bola Tinubu’s administration, the World Bank has approved approximately $7.45 billion in loans for Nigeria. Key approvals include:
- 2023: $2.7 billion, targeting renewable energy, women’s empowerment, education, and power sector projects
- 2024: $4.32 billion, significantly surpassing previous years, driven by economic stabilization efforts
- 2025 (Projected): $2.23 billion across digital infrastructure, healthcare, education, nutrition, and community resilience
Rising Debt and Concerns Over Sustainability
Data from the Debt Management Office (DMO) shows that as of Q3 2024, Nigeria’s external debt to the World Bank stood at $17.32 billion. The International Development Association (IDA) accounts for the bulk of this debt, with $16.84 billion, representing 39.14% of Nigeria’s total external debt. The International Bank for Reconstruction and Development (IBRD) is owed $485.08 million (1.13%).
While these loans provide critical fiscal relief, concerns remain about Nigeria’s rising debt burden. According to the Central Bank of Nigeria (CBN), the country has spent $5.47 billion on external debt servicing in the past 14 months, raising questions about debt sustainability and its impact on foreign reserves.
Government’s Shift in Debt Strategy
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has stated that the government is prioritizing alternative funding sources such as revenue generation, concessional loans, and strategic investments over commercial borrowing.
“We are at that optimization stage, where there is less focus on borrowing, particularly from the commercial markets, which is quite high. We are focusing more on optimizing assets and attracting private sector investment, whether domestic or foreign,” Edun said.
However, with World Bank funding commitments rising from $2.7 billion in 2023 to $4.32 billion in 2024 and an anticipated $2.23 billion in 2025, concerns persist about Nigeria’s growing reliance on concessional loans for structural reforms and public sector investments.
Experts Weigh In on Borrowing Strategy
Development economist Dr. Aliyu Ilias has raised concerns over Nigeria’s borrowing approach, noting that while borrowing is not inherently bad, it has become problematic given the current economic situation.
“I think borrowing itself is not bad, but at the point Nigeria is now, borrowing is becoming a bad thing,” Ilias said.
He noted that under former President Muhammadu Buhari, borrowing was widely criticized, and many had hoped the current administration would reduce new debt accumulation.
Despite revenue-generating efforts such as fuel subsidy removal, increased electricity tariffs, and tax reforms, Ilias questioned the rationale for continued borrowing. He also warned that using the debt-to-GDP ratio as a justification for more loans could lead to further unsustainable borrowing.
“I was expecting that in the first four years of President Bola Tinubu’s administration, the government would not embark on borrowing,” he added.
Meanwhile, Dr. Tayo Aduloju, CEO of the Nigerian Economic Summit Group, has called for a more strategic borrowing approach, balancing domestic and external loans with disciplined financing.
“We need to be creative about the borrowing plan. How much domestic borrowing we need to do. How much external borrowing we need to do, and at what price,” Aduloju said.
He emphasized prioritizing critical infrastructure and shifting towards an economy driven by foreign direct investment (FDI) rather than excessive borrowing.
Conclusion
As Nigeria navigates its debt challenges, experts stress the need for efficient fund utilization and transparent project execution. While the World Bank’s financial support is crucial for key sectors, ensuring that loans translate into tangible economic and social benefits remains a top priority.