In just 16 months under President Bola Tinubu’s administration, Nigeria has secured $6.45 billion in loans from the World Bank. This figure, which continues to rise with each new loan approval, increased following the recent approval of three additional loans worth $1.57 billion aimed at various projects in the country. With the World Bank expected to approve even more loans in the coming months, concerns are mounting over Nigeria’s escalating debt profile.
The new loans are part of a broader borrowing trend by Nigeria from the World Bank. Over the past five years, the international lender has approved 36 loan requests, totaling a staggering $24.09 billion. These funds have been channeled into various development projects across the country, including infrastructure, energy, and social services. However, with Nigeria’s external debt increasing, questions about the sustainability of this debt and its long-term effects on the economy are becoming more pressing.
Key Projects Under the Tinubu Administration
The Tinubu administration has secured significant loans for critical sectors. These include $750 million for power sector reforms, $500 million for women’s empowerment, $700 million for girls’ education, and $750 million for renewable energy. Additionally, $1.5 billion has been earmarked for economic stabilization reforms, and $750 million for resource mobilization reforms. Despite the focus on essential sectors, many Nigerians remain skeptical about the government’s borrowing strategy.
Years of infrastructure decay, rising unemployment, and a struggling economy have left many citizens feeling disillusioned with the government’s reliance on loans. While some acknowledge the need for external funding due to Nigeria’s large population and limited resources, there is widespread frustration over the perceived lack of tangible results from previous borrowings.
Steady Increase in Loan Approvals Since 2020
An analysis of World Bank data reveals a steady increase in loan approvals for Nigeria over the years. In 2020, the World Bank approved 15 loan requests for Nigeria, totaling $6.36 billion. Key projects that year included the Nigeria Rural Access and Agricultural Marketing Project ($510 million), Nigeria Digital Identification for Development project ($430 million), and $750 million in additional financing for COVID-19 response.
The following year, loan approvals dropped to six projects worth $3.2 billion. In 2022, the former administration of President Muhammadu Buhari secured $1.26 billion for six projects, including $500 million for a livestock productivity and resilience support project and $750 million for the State Action on Business Enabling Reforms Program.
By 2023, loan requests increased again, with $2.7 billion approved for four projects, including $750 million for power sector recovery and $750 million for renewable energy scale-up. In 2024, the trend has continued, with $3.82 billion already approved for five projects, including a grant of $70 million.
Debt Burden and Rising Debt Servicing Costs
Nigeria’s total debt to the World Bank now stands at $15.59 billion as of March 31, 2024. Meanwhile, the country’s debt servicing expenses have surged, reaching N6.04 trillion in the first half of 2024, a sharp 68.8% increase compared to the N3.58 trillion recorded in the same period in 2023. This spike in debt servicing costs is largely attributed to the devaluation of the naira, which has increased the burden of repaying foreign loans.
Despite the growing debt burden, the World Bank continues to provide financial support to Nigeria. The latest loans are designed to bolster human capital development and enhance resilience to climate change. The loans include $500 million for governance reforms, $570 million for the Primary Healthcare Provision Strengthening Programme, and $500 million for the Sustainable Power and Irrigation for Nigeria Project.
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