World Bank Approves $8.4bn Loans to Nigeria in Two Years, Sparking Debt Sustainability Concerns
The World Bank has approved a total of $8.40 billion (N12.89 trillion) in fresh loans to Nigeria between June 2023 and August 2025, covering 15 projects in energy, education, healthcare, rural infrastructure, and governance. According to the Bank’s official data, the loans include $1.95 billion from the International Bank for Reconstruction and Development (IBRD) and $6.50 billion from the International Development Association (IDA). Nigeria also secured $122.19 million in grants for two projects, with the most recent being a $300 million loan approved on August 7, 2025, for supporting Internally Displaced Persons (IDPs) and host communities in Northern Nigeria.
Major facilities during the period include two $750 million loans in June 2024 for economic stabilization and revenue mobilization reforms, $750 million in December 2023 for renewable energy expansion, and $700 million in September 2023 to improve education for adolescent girls. Other significant approvals include $500 million for women’s economic empowerment, $500 million each for primary healthcare and governance reforms, and various allocations to nutrition, rural infrastructure, and agricultural resilience. These projects aim to address development priorities while promoting sustainable growth and social welfare.
The World Bank’s funding share in Nigeria’s debt portfolio has risen, with data from the Debt Management Office showing total debt to the Bank reaching $18.23 billion as of March 31, 2025 — accounting for 39.7% of Nigeria’s external debt and 81.2% of multilateral debt. The concessional loans carry lower interest rates and longer repayment terms, but economists warn that the growing dependence on external financing raises questions about debt sustainability, especially given Nigeria’s sluggish revenue growth and foreign exchange vulnerabilities.
Experts are divided on the borrowing strategy. Economist Adewale Abimbola noted that concessional loans are not inherently problematic if tied to viable, revenue-generating projects. However, development economist Dr. Aliyu Ilias criticised the rising debt profile, pointing out that government revenue surpluses post-fuel subsidy removal should reduce the need for large-scale borrowing. He warned that high debt servicing costs are crowding out capital expenditure, limiting job creation, and worsening inflation and exchange rate pressures.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, stressed that while deficit financing is common globally, Nigeria must ensure that borrowed funds directly enhance the economy’s capacity to repay. He cautioned against excessive foreign borrowing due to exchange rate risks and urged a disciplined approach to debt management. With an additional $1.25 billion in loans and $10.5 million in grants expected before the end of 2025, Nigeria’s exposure to the World Bank could reach $9.65 billion since mid-2023, making prudent utilisation and revenue growth essential to avoid long-term fiscal distress.
Source: Punch