Before the end of March 2025, the World Bank is considering awarding loans for Nigeria totalling $1.13 billion. These monies are meant to help with health security, Education reforms, and economic resiliency. Three important projects are presently being negotiated: HOPE for Quality Basic Education for All ($552.2 million), which aims to improve basic education by addressing Infrastructure deficits, improving Teacher training, and increasing accessibility; Community Action for Resilience and Economic Stimulus Programme ($500 million), which focusses on community-driven economic initiatives to enhance economic resilience and growth; and Accelerating Nutrition Results in Nigeria 2.0 ($80 million), which aims to improve nutrition outcomes, particularly for vulnerable groups, by improving dietary support and reducing malnutrition.
These loans coincide with Nigeria’s economic difficulties, which include growing debt payment costs, budgetary deficits, and restrictions on foreign exchange liquidity. The Nigerian government is anticipated to obtain six further World Bank loans in 2025, totalling $2.23 billion, in addition to these projects. The World Bank has been providing Nigeria with more financial assistance over the last three years; Loan approvals have increased from $2.7 billion in 2023 to $4.32 billion in 2024 and an expected $2.23 billion in 2025.
Country is still the third-largest debtor to the World Bank’s IDA.
There are still worries about Nigeria’s growing debt in spite of the financial assistance. Over a 14-month period, the nation spent $5.47 billion servicing its external debt, placing strain on its foreign reserves. To lessen dependency on debt, Wale Edun, the minister of finance, stressed a move towards Revenue creation and private-sector investment. With a total debt exposure of $16.8 billion as of December 2024, Nigeria is still the third-largest debtor to the World Bank’s International Development Association (IDA), a minor decrease from prior quarters.
Nigeria has a long history of working with the World Bank, and the country has obtained large loans to help with a number of developmental issues. Nigeria’s World Bank debt increased 121.46% between 2015 and 2022, from $6.29 billion to $13.93 billion. These money have been used for a variety of programs, including as healthcare, education, and infrastructure development. The actual impact on the typical Nigerian’s standard of living is still up for question, despite the substantial influx of capital. Over $36 billion in loans for 197 projects have had little impact on lowering Poverty levels, according to the Socio-Economic Rights and Accountability Project (SERAP).
Concerns have been raised regarding Nigeria’s growing debt profile.
This disparity calls into question the effectiveness of project execution and credit utilisation. Positive changes have occurred, though. Nigeria’s GDP expanded by 3.84% in the fourth quarter of 2024, the quickest in three years, primarily due to the services sector. This expansion implies that certain programs, perhaps aided by foreign finance, are starting to show effects. Concerns have been raised by experts regarding Nigeria’s growing debt profile. Olufemi Aduwo, the chairman of the World Bank Civil Society Policy Forum’s CSO-African Countries Group, pointed out that rising levels of poverty have been correlated with growing government debt, which he attributes to inadequate fiscal management.
Furthermore, the Fiscal Responsibility Act, which requires borrowing largely for capital Investment and human development, must be followed, he underlined, as must fiscal restraint. Nigeria is not alone in its financial predicament. 40 percent of the world’s population lives in Extreme Poverty in 26 of the world’s poorest nations, and as of October 2024, the World Bank said that these nations’ debt levels are at their highest levels since 2006. This pattern points to a larger issue facing developing countries: how to manage debt while pursuing economic expansion.
Related Article: Nigeria’s debt repayments hit $5.47bn mark
Debt buildup presents a number of problems, such as diminished funding for necessary public services, heightened susceptibility to outside shocks, and possible debt distress. Nigeria may want to take into account the following tactics in order to reduce these dangers. Reliance on borrowing from outside sources can be decreased by enacting comprehensive Tax reforms to increase the revenue base and enhance collection efficiency. Emphasising high-impact initiatives that promote Economic Development and growth guarantees the best possible use of borrowed money. Improving accountability and openness in public financial management can increase how well loans are used. Development projects can receive long-term support through concessional financing and public-private partnerships without increasing debt levels.