The World Bank is set to approve fresh loans totaling $632 million for Nigeria today (Monday), despite growing concerns over the country's rising debt profile.
According to information obtained from the World Bank's website, the two loans expected to receive final approval include $80 million for the Accelerating Nutrition Results in Nigeria 2.0 project and $552 million for the HOPE for Quality Basic Education for All programme.
These funds are aimed at improving nutrition and enhancing access to quality education.
This follows the approval of a separate $500 million loan last Friday for Nigeria's Community Action for Resilience and Economic Stimulus Programme.
The initiative is designed to provide grants and support to vulnerable households and small businesses, helping to mitigate economic challenges such as inflation and high living costs.
Concerns Over Rising Debt and Delayed Disbursements
Despite these new approvals, concerns persist over Nigeria's growing reliance on loans. Further investigations revealed that only $315 million out of the $800 million previously approved for the National Social Safety-Net Program Scale-Up has been disbursed, with additional funds delayed due to allegations of fraud.
The Federal Government had to suspend its cash transfer programme, originally meant to distribute N25,000 to 15 million households, following reports of misappropriations within the Ministry of Humanitarian Affairs. Former minister Betta Edu was suspended over a N585 million fraud allegation, while her predecessor, Sadiya Umar-Farouq, is under investigation for an alleged N37.1 billion money laundering case.
Nigeria's Increasing Debt Load
Recent data indicate that Nigeria's reliance on World Bank loans has surged under President Bola Tinubu's administration. Since 2023, the country has secured approximately $7.45 billion in loans, raising concerns about sustainability.
Figures from the Debt Management Office show that the World Bank holds $17.32 billion of Nigeria's external debt, with the International Development Association accounting for $16.84 billion of this total. Nigeria has also spent $5.47 billion on external debt servicing in the past 14 months, adding pressure on foreign reserves.
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While the Minister of Finance, Wale Edun, has emphasized that the government is shifting focus from borrowing to revenue generation and strategic investments, the continued accumulation of concessional loans suggests a reliance on external financing for key developmental projects.
Experts Call for Strategic Borrowing
Economists have raised concerns about Nigeria's increasing debt obligations. Development economist Dr. Aliyu Ilias noted that while borrowing can be beneficial, Nigeria's current economic situation makes it risky.
"During the previous administration, borrowing was widely criticized, and many expected the Tinubu government to take a different approach. Despite an increase in revenue from tax reforms, subsidy removals, and tariff hikes, the government continues to borrow," Ilias said.
Similarly, the CEO of the Nigerian Economic Summit Group, Dr. Tayo Aduloju, called for a strategic borrowing approach, balancing domestic and external debt while prioritizing infrastructure projects that have a clear economic return.
As Nigeria continues to navigate economic challenges, experts stress the importance of efficient fund utilization and transparent project execution to ensure that borrowed funds drive meaningful economic and social impact.
