A new report details how President Tinubu’s administration secured $6.45 billion in loans from the World Bank over 16 months, sparking debates on Nigeria’s growing debt and economic strategy.
In a span of only 16 months, President Bola Tinubu’s administration has obtained $6.45 billion in loans from the World Bank, eliciting both optimism and apprehension regarding Nigeria’s economic future.
The most recent figure comes after the approval of three new loans totaling $1.57 billion, with anticipated further increases in the upcoming months.
The recent loans are part of a broader trend, as the World Bank has approved 36 loan requests for the Nigerian Federal Government in the last five years.
As a result, the country’s total borrowing from the international lender has soared to an astonishing $24.088 billion during that time frame. Although these loans are allocated for essential development projects, there is growing concern about Nigeria’s debt sustainability and its long-term economic implications due to this increasing debt load.
Under President Tinubu’s leadership, several key projects that have received loan support include a $750 million investment in the power sector, $500 million allocated for women’s empowerment initiatives, $700 million dedicated to girls’ education programs, and another $750 million aimed at renewable energy development.
In addition, loans have been obtained for economic stabilization reforms amounting to $1.5 billion and resource mobilization reforms totaling $750 million.
Although these loans aim to tackle critical infrastructure shortages and foster sustainable growth, many Nigerians are deeply worried. Years of declining infrastructure quality, increasing unemployment, and economic instability have resulted in widespread dissatisfaction each time the government reveals new borrowing intentions.
For numerous individuals, concerns about a rising debt burden cloud the prospects of development. There are questions regarding how these loans will be handled and if their advantages will reach the typical Nigerian. As the nation progresses…
While some realistically acknowledge that resources are limited given the large population, they still believe past borrowings have not been justified.
According to an analysis of documents acquired from the international lender’s website on Tuesday, it has consistently approved annual credit for the nation since 2020.
A brief review revealed that in 2020, the lender approved 15 loans totaling $6.36 billion. Included among these projects are the Nigeria Rural Access and Agricultural Marketing Project with an allocated commitment of $510 million, The Nigeria Digital Identification for Development project worth $430 million, and additional financing of $750 million for the Nigeria SATAN COVID-19 response initiative, along with several others.
In 2021, loan requests were decreased to six projects totaling $3.2 billion. Meanwhile, under the administration of former President Mohammadu Buhari in 2022, the nation obtained loans amounting to $1.26 billion for another set of six projects.
For example, on March 18, 2022, a $500 million loan request was approved for a project aimed at enhancing livestock productivity and resilience. Within that same year, an additional $750 million loan received approval as part of the Nigeria: State Action on Business Enabling Reforms Program.
Additionally, $3.9 million was allocated to the Umbrella organization for supporting women’s initiatives in Nigeria.
In 2023, the loan request grew to $2.7 billion to fund four projects: $750 million for the Nigeria-AF Power Sector Recovery Performance-Based Operation, $500 million for scaling up the Nigeria For Women Program, and another $750 million aimed at expanding access in Nigeria through a Renewable Energy scale-up project.
In a similar manner, the bank has already authorized $3.82 billion in 2024 for five projects, which encompasses a grant of $70 million.
This indicates that the loan amount has reached $3.75 billion so far in 2024, with additional credit facilities anticipated before the year’s end.
The World Bank has sanctioned a series of loans to Nigeria, specifically aimed at crucial areas like economic reforms, resource mobilization, education for adolescent girls, and the expansion of renewable energy.
Remember that on June 13, the World Bank revealed its approval of two loan projects designed to enhance Nigeria’s economic stability and assist its vulnerable populations.
According to a statement from the bank, the $2.25 billion combined package includes two components: the $1.5 billion Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing Program and the $750 million Nigeria Accelerating Resource Mobilization Reforms Program-for-Results.
READ ALSO: SERAP Urges Tinubu to Investigate $1.5bn World Bank Loan to States and $3bn Chinese Loan
The international lender has already received $751.88 million out of the total $1.5 billion allocated for the Nigeria Reforms for Economic Stabilization to Enable Transformation initiative.
The World Bank is anticipated to approve a new loan request amounting to $500 million by December 16, 2024, for the Rural Access and Agricultural Marketing Project – Scale Up initiative.
In a statement released last week announcing the most recent approval, the international lender stated that the credit facilities will assist the government in enhancing human capital by improving health outcomes for women, children, and adolescents.
The approved projects will further contribute to building resilience against climate change impacts, such as floods and droughts, by enhancing dam safety and irrigation systems.
According to the statement, “The World Bank has approved three initiatives totaling $1.57 billion aimed at assisting Nigeria’s government in enhancing human capital by improving health for women, children, and adolescents. Additionally, these operations will help build resilience against climate change impacts like floods and droughts by advancing dam safety and irrigation.”
The international lender announced that the new financing package comprises $500 million to address governance challenges affecting education and health delivery, $570 million for the Primary Healthcare Provision Strengthening Program, and $500 million for the Sustainable Power and Irrigation Project in Nigeria.
The combined efforts of the HOPE-GOV and HOPE-PHC programs will aid the Nigerian Government in enhancing service delivery within basic education and primary healthcare sectors, which are essential for boosting Nigeria’s human capital outcomes.
The SPIN project aims to enhance dam safety and optimize water resource management for hydropower and irrigation in specific regions of Nigeria.
“The HOPE-GOV Programme aims to assist Nigeria in tackling fundamental governance issues within the governmental systems and procedures of two vital human development sectors,” it stated.
The approval on September 26, 2024, underscores the World Bank’s dedication to enhancing Nigeria’s human capital and bolstering resilience against climate threats.
According to the external debt stock report from the Debt Management Office, as of March 31, 2024, Nigeria’s total debt to the World Bank amounts to $15.59 billion.
Nigeria’s debt servicing expenses soared to N6.04 trillion in the first half of 2024, reflecting a significant increase of 68.8% compared to the N3.58 trillion recorded during the same period in 2023, according to recent data from the Central Bank of Nigeria.
The significant increase in debt service obligations, likely caused by the devaluation of the naira affecting foreign debt repayments, highlights the growing strain on government finances as a substantial portion is absorbed by debt repayment.
