The Federal Government of Nigeria is set to commence the repayment of a $500 million low-interest Loan obtained from the World Bank’s lending division, the International Development Association (IDA), which will start in 2029. The loan is part of the Nigeria Primary Healthcare Provision Strengthening Programme (HOPE-PHC) to revitalise the country’s primary healthcare system. The repayment schedule will extend for 25 years, which will conclude in 2054, with the funds dedicated to improving maternal and child healthcare, emergency medical response, and pandemic preparedness.
Furthermore, the loan agreement outlines a structured repayment plan, with Nigeria expected to make biannual payments on April 15 and October 15 each year. From 2029 to 2049, the country will repay the principal at an annual rate of 1.65 percent, increasing to 3.40 percent from 2049 until fully repaid in 2054. Additionally, the loan carries a commitment charge of 0.5 percent on unwithdrawn funds and a service charge of 0.75 percent on withdrawn balances. However, the total repayment cost may vary due to fluctuations in currency exchange rates, particularly given the Volatility of the naira.
Multiple healthcare agencies will oversee the fund management.
Meanwhile, the $500 million loan is designed to address critical gaps in Nigeria’s primary healthcare system. The Federal Ministry of Health and Social Welfare will manage the funds in collaboration with key agencies such as the National Primary Healthcare Development Agency, the National Health Insurance Authority, and the Nigeria Centre for Disease Control and Prevention. At the state level, implementation will involve respective Ministries of Health, Primary Healthcare Development Boards, and other relevant agencies to ensure effective execution.
Unlike traditional loans, the disbursement of funds under this arrangement is tied to specific healthcare performance indicators. These include increasing access to primary healthcare services, expanding emergency obstetric and neonatal care, ensuring the availability of essential medicines, and strengthening pandemic preparedness. This performance-based model ensures that funds are used efficiently and only for intended improvements in healthcare services. A significant portion of the funds is also allocated to investments in digital health infrastructure, Climate Resilience within the health sector, and expanding health insurance coverage for vulnerable populations.
Concerns over the country’s growing debt burden.
While the concessional terms of the loan are favourable, concerns remain about Nigeria’s increasing External Debt burden. The country has been struggling with rising debt servicing obligations, exacerbated by the depreciation of the naira, which could increase the actual repayment cost over 25 years. Reports indicate that Nigeria spent $5.47 billion on servicing its external debt between January 2024 and February 2025, highlighting the strain on the country’s fiscal resources. As a result, continued borrowing may pose long-term risks to Nigeria’s fiscal stability, even in concessional terms.
However, the loan was approved on September 26, 2024, and is expected to become operational in the 2025 fiscal year. In addition to the healthcare loan, the World Bank is in discussions to approve additional financial support for Nigeria. Before the end of March 2025, the country could secure up to $1.13 billion in funding for various projects to strengthen economic resilience, healthcare, and Education reforms. One of these initiatives is the Accelerating Nutrition Results in Nigeria 2.0 programme, valued at $80 million, which seeks to improve nutrition outcomes for Vulnerable Populations by enhancing access to dietary support and reducing Malnutrition rates.
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Another proposed initiative is the Community Action for Resilience and Economic Stimulus Programme, with a commitment value of $500 million. This programme, expected to be approved by March 24, 2025, aims to provide economic stimulus for community-driven projects that foster economic resilience and growth. Additionally, the HOPE for Quality Basic Education for All programme, with a proposed funding of $552.2 million, is undergoing negotiations and is anticipated to secure approval by March 31, 2025.