President Bola Ahmed Tinubu, Nigeria
The Nigerian Federal Government is planning to secure $4.4 billion in new loans from the World Bank and the African Development Bank (AfDB) over the next year. This move comes as Nigeria’s total public debt reaches N101 trillion, with rising concerns about the costs of servicing this debt.
Over the past 12 months, Nigeria has already borrowed $4.95 billion from the World Bank, contributing to the nation’s growing debt. As of December 2023, the public debt stood at approximately N97 trillion, according to the Debt Management Office.
The new loans are intended to fund various projects aimed at improving critical sectors. The government anticipates approvals for loans such as $500 million to enhance rural road infrastructure and agricultural marketing, $750 million for reintroducing telecom taxes and other fiscal measures, and $500 million to support Internally Displaced Persons. Additionally, the AfDB is expected to provide a $2.7 billion economic and budget support loan.
In the past year, the World Bank approved six significant loans for Nigeria:
1. Power Sector: In June 2023, the World Bank approved a $750 million loan to boost Nigeria’s power sector. This loan aims to support the Power Sector Recovery Performance-Based Operation.
2. Women Empowerment: Later in June 2023, a $500 million loan was approved to drive women’s empowerment, scaling up the Nigeria for Women Programme.
3. Education for Girls: In September 2023, the World Bank granted $700 million to support the Adolescent Girls Initiative for Learning and Empowerment project. This loan is aimed at increasing secondary education accessibility for girls in target states.
4. Renewable Energy: In December 2023, a $750 million loan was approved for the Distributed Access through Renewable Energy Scale-up project. This project seeks to provide over 17.5 million Nigerians with better access to electricity via distributed renewable energy solutions.
5. Economic Stabilization: The largest loan, totaling $2.25 billion, includes $1.5 billion for economic stabilization reforms and $750 million for enhancing non-oil revenues and protecting oil and gas revenue.
The AfDB has also been active in supporting Nigeria’s development. In March, AfDB President Akinwumi Adesina announced the approval of $134 million for an emergency food production plan. Discussions are ongoing for an additional $1.7 billion economic and budget support loan and the launch of a $1 billion agro-industrial project in 28 states.
Despite these loans, there is growing public concern about Nigeria’s reliance on borrowing and the implications of rising debt servicing costs. Critics argue that long-standing infrastructure decay and increased unemployment have made many Nigerians wary of the government’s borrowing practices. President Bola Tinubu has stated his commitment to reducing dependency on borrowing, but actions to curb new loans are yet to be seen.
The World Bank reports that Nigeria owes $15.45 billion as of December 2023, and their support for Nigeria’s economic growth currently stands at over $15 billion. The costs of servicing this debt could divert funds away from essential sectors like healthcare, education, and infrastructure, potentially worsening socio-economic challenges.