Nigeria has secured a total of $4.95 billion in loans from the World Bank under the administration of President Bola Tinubu amid concerns over the country’s rising external debt servicing costs.
Not less than six loan projects have been approved and they include loans for power ($750 million), women empowerment ($500 million), girl’s education ($700 million), renewable energy ($750 million), economic stabilization reforms ($1.5 billion) and resource mobilization reforms ($750 million), according to findings by Nairametrics.
Loan Summary
- $750 million loan for power sector: The first was approved on June 9, 2023, with a loan of $750m to boost Nigeria’s power sector. The World Bank said the loan would serve as additional financing for the power sector recovery performance-based operation.
- $500 million for women’s empowerment: On June 27, 2023, the World Bank Group announced the approval of a loan of $500 million to help Nigeria drive women’s empowerment. This was the second loan approved by the bank under Tinubu’s administration. It provided a scale-up financing for the Nigeria for Women Program.
- $700 million for educating adolescent girls: In September 2023, the World Bank approved a loan of $700 million to bolster educational opportunities and empowerment for adolescent girls in Nigeria. The loan was to support the ongoing ‘Adolescent Girls Initiative for Learning and Empowerment’ (AGILE) project. It aimed to encourage secondary education accessibility for girls residing in specific target states within Nigeria.
- $750 million for renewable energy: On December 14, 2023, the World Bank approved the $750 million Distributed Access through Renewable Energy Scale-up (DARES) project in Nigeria. The project aims to provide over 17.5 million Nigerians with better access to electricity via distributed renewable energy solutions and tackle the electricity access deficit.
- $1.5 billion for economic stabilization reforms: On June 13, 2024, the World Bank announced the approval of two significant financial operations aimed at bolstering Nigeria’s economic stability and supporting its vulnerable populations. The combined package, totalling $2.25 billion, comprises $1.5 billion Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing Program (DPF). This project is structured around four key results distributed across two pillars: increasing fiscal oil revenues from 1.8% of Gross Domestic Product (GDP) in 2022 to 2.7% by 2025, boosting non-oil fiscal revenues from 5.3% to 7.3% over the same period, expanding social safety nets to assist 67 million vulnerable Nigerians, and raising the import value of previously banned products from $11.3 million to $54.6 million by 2025.
- $750 million for resource mobilization reforms: The second loan package approved on June 13 was $750 million for the Nigeria Accelerating Resource Mobilization Reforms (ARMOR) Program-for-Results (PforR). The principal Program Development Objective (PDO) of the PforR program is to enhance non-oil revenues and protect oil and gas revenues from 2024 to 2028 at the federal level, focusing on significant tax, excise, and administrative reforms.
More 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.
- According to its International Debt Report for 2023, Nigeria was followed by Tanzania, which got $2.7 billion in the same year.
- Data from the external debt stock report of the Debt Management Office (DMO) shows that Nigeria owes the World Bank a total of $15.45 billion as of December 31, 2023.
- The rise in debt stock has triggered concerns over the country’s rising debt service costs.
- Nigeria recorded a significant surge in its foreign debt servicing costs, with an increase of 96% as the country’s external debt services payments reached $2.19 billion in the first five months of 2024, a sharp rise from $1.12 billion recorded in the same period in 2023.
- The soaring costs of servicing foreign debt have significant implications for Nigeria’s economy. The increased debt burden could potentially divert resources away from critical sectors such as healthcare, education, and infrastructure, exacerbating socio-economic challenges.
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