World Bank sets conditions as Nigeria signs $500 million development loan agreement

The World Bank has set conditions for Nigeria to access a $500 million loan under the Nigeria Actions for Investment and Jobs Acceleration (NAIJA) Development Policy Financing programme.

The loan is tied to Nigeria achieving a satisfactory progress on agreed economic reforms, including measures to strengthen the business environment, improve public revenue and reduce trade barriers.

According to the World Bank document seen by Nairametrics, the loan agreement was signed on behalf of Nigeria by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, on October 6, 2026.

Under the agreement, the $500 million loan to be disbursed by International Bank for Reconstruction and Development (IBRD) is divided into two withdrawal tranches of $249.375 million each, with $1.25 million allocated to the front-end fee.

The $500 million facility is part of the broader $1.25 billion development policy financing package approved by the World Bank in June 2026.

World Bank’s conditions for withdrawals

The first tranche is subject to the World Bank’s satisfaction with the implementation of the programme and the adequacy of Nigeria’s macroeconomic policy framework.

The second tranche carries additional requirements, including evidence that the government has completed specified policy actions intended to advance the programme’s objectives.

• “No withdrawal shall be made of the First Withdrawal Tranche unless the Bank is satisfied with the Program being carried out by the Borrower; and with the adequacy of the Borrower’s macroeconomic policy framework.
• “No withdrawal shall be made of the Second Withdrawal Tranche unless the Bank is satisfied, after an exchange of views as described in paragraphs (a) and (b) of – 7 – Section 3.01 of Article III of this Agreement based on evidence satisfactory to the Bank: (a) with the progress achieved by the Borrower in carrying out the Program; (b) that the macroeconomic policy framework of the Borrower is adequate; and (c) that the actions described in Part B of Section I of this Schedule have been taken,” Bank stated in the agreement.

The lender added that it may cancel all or part of the undisbursed loan balance if the government fails to take corrective steps satisfactory to the bank within 90 days of receiving a notice that the conditions have not been met.

Other conditions for the loan

The agreement also requires Nigeria to maintain a dedicated foreign currency account for the loan proceeds and account for an equivalent amount in its budget management system.

Within 30 days of withdrawing each tranche, the Federal Ministry of Finance must report to the World Bank the amount received, the account into which the naira equivalent was credited, evidence that the funds were recorded in the government’s budget management system and a statement of receipts and disbursements from the dedicated account.

The dedicated account must also be audited by auditors of the Central Bank of Nigeria acceptable to the World Bank within one month of the withdrawal.

A certified copy of the audit report must be submitted within four months and made publicly available in a timely manner.

The agreement sets December 31, 2027, as the loan’s closing date.

Nigeria goes for more loans amid public concerns

Nairametrics earlier reported that the World Bank in June approved a $1.25 billion Development Policy Financing loan for Nigeria despite widespread public criticism over the country’s rising debt profile.

• The lender at the time announced that its Board had approved the Nigeria Actions for Investment and Jobs Acceleration Development Policy Financing operation as part of a broader Country Partnership Framework covering 2026 to 2032.
• The approval came days after a number of Nigerians criticised the proposed facility on social media, questioning the country’s growing reliance on external borrowing and demanding greater accountability over previous World Bank loans.

According to the World Bank, the $1.25 billion facility would support reforms designed to strengthen the foundations for economic growth, improve competitiveness and stimulate private sector investment.

Word Bank, FG disagree over loan interest to revenue ratio

Meanwhile, the World Bank recently flagged Nigeria’s growing interest payment saying the country’s interest payments rose to N7.7 trillion in the first half of 2026, from N5.6 trillion in the corresponding period of 2025.

According to the bank, the interest payment gulped 124.19 percent of the federal government revenue. The bank said interest payments increased to 3.1 percent of gross domestic product (GDP) from 2.5 percent a year earlier.

However, the Nigerian government pushed back arguing that the figure presents an incomplete picture of its fiscal position because it excludes some government revenue and combines debt obligations across different tiers of government.

According to the Ministry of Finance, the ratio cited in recent analysis based on the World Bank’s October 2026 Nigeria Development Update was misleading because it compared federal interest payments with an incomplete revenue base.