The Nigerian government is planning to acquire six World Bank loans totaling $2.23 billion, increasing total approved loans to $9.25 billion over three years. Key projects funded include renewable energy and women’s empowerment. However, debt servicing costs have risen dramatically, overshadowing critical investments in healthcare and infrastructure, raising concerns over financial sustainability and future service funding.
The Nigerian government under President Bola Tinubu is set to secure six loans totaling $2.23 billion from the World Bank, further increasing its reliance on external financing.
This move is part of a broader strategy that will raise Nigeria’s total approved World Bank loans to approximately $9.25 billion within three years, indicating a sustained increase in foreign aid.
Since 2023, Nigeria has experienced a rise in loan commitments from the World Bank, with $2.7 billion approved that year. Key projects funded include renewable energy initiatives, women’s empowerment programs, education, and improvements to the power sector.
Notably, projects like the Nigeria Distributed Access through Renewable Energy Scale-up Project received $750 million aimed at enhancing electricity access, while the Financing for Adolescent Girls Initiative for Learning and Empowerment was allocated $700 million to improve secondary education for girls in select locations.
Additionally, the Nigeria for Women Programme secured $500 million to boost economic opportunities for unbanked women, and $750 million was designated for the Nigeria – AF Power Sector Recovery Performance-Based Operation, targeting enhancements in reliable electricity supply and fiscal sustainability.
By 2024, borrowing from the World Bank surged again, culminating in $4.32 billion approved for various development projects.
However, the financial burden of servicing these loans remains a significant issue for Nigeria. In 2024, the government reported a staggering expenditure of N8.1 trillion just for debt servicing, which overshadowed allocations for essential services.
Specifically, N5.299 trillion was spent on internal public debt servicing, while N2.747 trillion covered external debts, leading to pressures on the budget and critical sector investments like healthcare and infrastructure, which received minimal funding compared to debt obligations.
The increasing reliance on these loans raises concerns about the long-term sustainability of Nigeria’s finances, especially with debt servicing consuming substantial government revenue. Experts caution that this trend could severely impact future budgets and funding for vital public services.
The Nigerian government’s strategy to secure new loans from the World Bank, totaling $2.23 billion, exemplifies its ongoing dependence on external financing amid rising debt. Despite significant funding for critical projects, the burden of debt servicing poses a substantial threat to financial stability, crippling investments in essential sectors. As the country moves deeper into debt, it must critically evaluate the effective use of these funds to stimulate real economic growth and safeguard future budgets.
Original Source: saharareporters.com
