The World Bank is likely to approve three loans totaling $1.13 billion for Nigeria by the end of March 2025, as part of its efforts to support the country’s economic resilience, health security, and education reforms.
The World Bank loan development comes at a time when Nigeria is facing significant economic challenges, including foreign exchange liquidity constraints, fiscal deficits, and mounting debt servicing obligations.
The three loans in the negotiation phase include:
- Accelerating Nutrition Results in Nigeria 2.0: valued at $80 million, aimed at improving nutrition outcomes, particularly among vulnerable groups.
Community Action for Resilience and Economic Stimulus Programme*: valued at $500 million, designed to provide economic stimulus for community-driven initiatives.
HOPE for Quality Basic Education for All programme*: valued at $552.2 million, aimed at improving the quality of basic education.
The potential approval of these loans highlights Nigeria’s increasing dependence on concessional financing to drive structural reforms and public sector investments. Nigeria has secured significant funding from the World Bank in recent years, with $2.7 billion approved in 2023 and $4.32 billion approved in 2024. This growing reliance on external funding has raised concerns about the country’s debt sustainability and its ability to meet its debt servicing obligations.
While the proposed World Bank loans could provide much-needed fiscal relief, concerns remain over Nigeria’s rising debt burden. The country has spent $5.47 billion on external debt servicing in the past 14 months, highlighting the strain on its foreign reserves. This has led to calls for the government to diversify its funding sources and implement measures to reduce its reliance on external borrowing.
The Minister of Finance, Wale Edun, has emphasized the government’s efforts to diversify funding sources, prioritizing revenue generation, concessional loans, and strategic investments over accumulating more debt. The government has also implemented measures to improve its debt management, including the establishment of a debt management office and the development of a debt management strategy.
The World Bank loans are expected to have a positive impact on Nigeria’s economy, particularly in the areas of education, healthcare, and economic resilience. The loans will support the government’s efforts to improve the quality of basic education, reduce malnutrition, and provide economic stimulus to communities affected by the COVID-19 pandemic.
The World Bank’s decision to approve $1.13 billion in loans for Nigeria is a welcome development, given the country’s growing economic challenges. However, it is essential that the government implements measures to reduce its reliance on external borrowing and diversify its funding sources. By doing so, Nigeria can ensure that it uses the World Bank loans effectively and efficiently, while also maintaining its debt sustainability.