Tinubu Govt Plans $4.4bn Borrowing as Debt Soars to N101trn.
The government of President Bola Ahmed Tinubu is seeking approval for fresh loans totaling $4.4bn from international lenders and the African Development Bank (AfDB) over the next year, raising concerns about the increasing costs of servicing external debt.
In the past 12 months, the government borrowed $4.95bn from the World Bank, pushing Nigeria’s total public debt to N101trn. As of December 2023, the nation’s public debt stood at approximately N97tn, according to the Debt Management Office.
An analysis by The PUNCH revealed that the World Bank approved funding for six projects, including $750m for power sector financing, $500m for women empowerment, $700m for girl child education, $750m for renewable energy solutions, $750m for resource mobilization reforms, and $1.5bn for economic stabilization reforms.
The findings showed that on June 9, 2023, the World Bank board approved a $750m loan to boost Nigeria’s power sector. On June 27, 2023, the bank approved a $500m loan to drive women’s empowerment under the Nigeria for Women Programme. In September 2023, the World Bank approved a $700m loan to support the Adolescent Girls Initiative for Learning and Empowerment project, which aims to improve educational opportunities for girls in specific target states. On December 14, 2023, the bank authorized $750m for the Distributed Access through Renewable Energy Scale-up project in Nigeria, aiming to provide better electricity access via renewable solutions.
The latest funding included a $2.25bn package, comprising $1.5bn for economic stabilization reforms and $750m to enhance non-oil revenues and protect oil and gas revenue.
Currently, the government is seeking an additional $4.4bn in new loans from the World Bank and the AfDB. This includes $500m for rural road infrastructure and agricultural marketing, $750m if the government reintroduces a previously suspended telecom tax, $500m to address challenges faced by Internally Displaced Persons, and about $2.7bn in economic and budget support from the AfDB. In March, AfDB President Akinwumi Adesina announced the approval of $134m for Nigeria’s emergency food production plan, with ongoing discussions for a $1.7bn economic and budget support loan and a $1bn agro-industrial project across 28 states.
The World Bank is a key international financial institution providing loans and grants to developing countries for a variety of projects, including infrastructure, education, healthcare, and environmental sustainability. Despite this, many Nigerians are concerned about the government’s continued borrowing, given the country’s long-standing infrastructure decay and high unemployment rates.
Nigeria has been a significant recipient of fresh loans from multilateral lenders, borrowing $2.7bn in 2023 and $2.9bn in 2022. The Bretton Woods Institution recently stated that its technical advisory and financing support for Nigeria’s economic growth currently stands at over $15bn. Data from the Debt Management Office indicates that as of December 31, 2023, Nigeria owes the World Bank a total of $15.45bn.
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