The World Bank is set to approve a total of $632 million in new loans to Nigeria today, Monday, March 31, 2024. These loans aim to support crucial sectors in the country, focusing on nutrition improvement and quality basic education, as Nigeria continues to address its developmental challenges amid concerns about rising debt levels.

According to the World Bank’s website, the loans 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 program. Both projects, which are currently in the negotiation phase, are expected to receive final approval later today. These loans are part of a broader strategy by the World Bank to support Nigeria’s development goals, with a particular emphasis on healthcare, education, and community resilience.

The funding is expected to bolster the Nigerian government’s ongoing efforts to improve nutrition outcomes and increase access to quality education for children across the country. These initiatives are designed to address long-standing issues in Nigeria’s public health and education systems, which have faced significant challenges over the years.

Additional Loan Approval for Community Resilience and Economic Stimulus

In a related development, the World Bank had previously approved a $500 million loan to Nigeria on March 28, 2025, to support the country’s Community Action for Resilience and Economic Stimulus Programme. This loan is focused on improving the resilience of communities and providing essential support to households affected by economic downturns, inflation, and food insecurity.

The program aims to enhance access to livelihood support, food security services, and grants for vulnerable households and small businesses. The initiative will particularly target marginalized groups, offering grants and resources to help mitigate the hardships caused by Nigeria’s current economic conditions.

The loan approval is seen as a significant step towards addressing Nigeria’s economic challenges, including inflation and rising living costs. It is expected to help stimulate grassroots economic activity and provide much-needed support to local businesses and communities that have been severely impacted by the country’s economic downturn.

Concerns Over Delayed Loan Disbursements

However, Nigeria’s ongoing financial issues have led to delays in the disbursement of previous World Bank loans. For instance, the World Bank had approved an $800 million loan for Nigeria’s National Social Safety-Net Program Scale Up in December 2021. But over a year later, only $315 million of the approved amount has been disbursed, with the remaining funds still pending.

The delay is believed to be linked to issues of fraud within the program, with investigations into mismanagement and misappropriation of funds. Former Minister of Humanitarian Affairs, Betta Edu, was suspended over the alleged misappropriation of N585 million earmarked for palliative distribution. Additionally, Edu’s predecessor, Sadiya Umar-Farouq, is under investigation by the Economic and Financial Crimes Commission (EFCC) for allegedly laundering N37.1 billion during her tenure. The delays in fund disbursement are causing further strain on the effectiveness of social programs meant to support vulnerable populations.

A Growing Reliance on World Bank Loans

The approval of new loans comes amid a growing reliance on multilateral financing to support Nigeria’s development agenda. Since President Bola Tinubu took office, Nigeria has secured an increasing number of loans from the World Bank. In 2023, the World Bank approved $2.7 billion in loans for Nigeria, focusing on projects related to renewable energy, women’s empowerment, education, and the power sector. In 2024, this figure surged to $4.32 billion, marking a significant increase in funding for the country’s development projects.

For 2025, Nigeria is expected to secure an additional $2.23 billion from the World Bank, bringing the total approved loans to $9.25 billion over three years. These loans cover key sectors such as digital infrastructure, healthcare, education, and community resilience, demonstrating Nigeria’s increasing dependence on concessional financing to address pressing development challenges.

The Growing Debt Burden

While the influx of loans may provide short-term relief, there are growing concerns about Nigeria’s increasing debt burden. As of the third quarter of 2024, Nigeria’s external debt stood at $17.32 billion, with $16.84 billion of this amount owed to the International Development Association (IDA), the concessional lending arm of the World Bank. The remaining $485.08 million is owed to the International Bank for Reconstruction and Development (IBRD).

Nigeria’s rising external debt is a cause for concern, particularly as the country has been spending significant amounts on debt servicing. Data from the Central Bank of Nigeria shows that the country has spent $5.47 billion on external debt servicing in the past 14 months, placing further strain on the country’s foreign reserves. Experts warn that while loans may provide needed financial support, the growing debt load could become unsustainable in the long run.

Government’s Approach to Debt and Financing

In response to these concerns, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, emphasized that the government is prioritizing alternative funding sources, including revenue generation, concessional loans, and private sector investments. “We are at that optimisation stage, where there is less focus on borrowing, particularly from the commercial markets, which is quite high,” Edun stated. “We are focusing more on optimising assets and attracting private sector investment, whether domestic or foreign.”

Edun’s comments suggest that the government is seeking to balance its borrowing strategy by focusing on improving revenue generation and attracting private investment, rather than relying solely on debt.

Experts’ Concerns About Borrowing Practices

Despite these efforts, some experts have expressed concerns about Nigeria’s borrowing approach. Dr. Aliyu Ilias, a development economist, pointed out that while borrowing itself is not inherently bad, it has become problematic in Nigeria’s current economic climate. “I think borrowing itself is not bad, but at the point Nigeria is now, borrowing is becoming a bad thing,” Ilias said. He stressed the importance of using borrowed funds efficiently to ensure that they contribute to long-term economic growth and development.

The ongoing debate about Nigeria’s borrowing strategy highlights the need for transparency and accountability in managing the funds received from multilateral lenders. While concessional loans from institutions like the World Bank can provide vital financial support, it is crucial that the government uses these resources effectively to avoid exacerbating the country’s debt crisis.

Conclusion: A Fine Balance Between Borrowing and Economic Growth

As Nigeria continues to navigate its economic challenges, the government faces the difficult task of balancing the need for loans with the growing pressure of servicing its debt. While the recent World Bank loans offer vital support for key sectors like education, healthcare, and community resilience, the country’s increasing reliance on debt financing raises concerns about long-term sustainability. Going forward, Nigeria will need to prioritize effective fund utilization, improve revenue generation, and attract private sector investment to reduce its dependency on external borrowing and ensure that its economic recovery is both sustainable and inclusive.