President Bola Ahmed Tinubu has borrowed $6.45 billion (approximately ₦10.461 trillion at ₦1621/$ exchange rate) from the World Bank in 16 months.
This total has surged following the recent approval of three new loans worth $1.57 billion for various development projects nationwide.
The latest loans are part of a broader trend, as the World Bank has approved no fewer than 36 loan requests to Nigeria, amounting to an eye-watering $24.088 billion over the last five years.
These approvals, aimed at financing various development projects nationwide, arrive alongside increasing concerns about the country’s escalating debt profile, prompting questions about the sustainability of these financial commitments and their potential long-term effects on the economy.
Some of the projects under Tinubu include loans for power ($750 million), women empowerment ($500 million), girl’s education ($700 million), renewable energy ($750 million), economic stabilization reforms ($1.5 billion) and resource mobilization reforms ($750 million),
For many Nigerians, long years of infrastructure decay and increased unemployment have triggered an increased feeling of bitterness whenever they hear the government’s intention to borrow.
Although some of them realistically agree that resources are thin, considering an outsized population; however, they believe the past borrowings have not been justified.
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However, according to an analysis of documents obtained from the international lender website on Tuesday, the international lender has maintained an annual credit approval to the nation since 2020.
A cursory look showed that the lender approved 15 loan requests worth $6.36bn in 2020. Some of these projects include the Nigeria Rural Access and Agricultural Marketing Project with an approved project commitment of $510m, The Nigeria Digital Identification for Development project ($430m), and $750m for the Nigeria SATAN additional financing for COVID-19 response, amongst others.
In 2021, the loan requests were reduced to six projects worth $3.2bn while the nation, under the administration of former president Mohammadu Buhari, secured loans worth $1.26bn in 2022 for six projects.
For instance, a $500m loan request was approved for a livestock productivity and resilience support project on March 18, 2022. Another loan of $750m was approved under the Nigeria: State Action on Business Enabling Reforms Program in the same year.
Also, $3.9m was secured for the Umbrella organisation to support Nigeria for women’s projects.
However, in 2023, the loan request increased to $2.7bn to implement four projects, namely $750m for Nigeria- AF power sector recovery performance-based operation, $500m for Nigeria for Women Program Scale-up projects and $750m for the Nigeria Distributed Access through Renewable Energy scale-up project.
Similarly, the bank has approved $3.82bn already in 2024 for five projects, which include a grant of $70 million.
This means that the loan amount was $3.75bn so far in 2024, with more credit facilities expected before the end of the current year.
The ongoing debt crisis is becoming increasingly alarming. Data from the Debt Management Office indicates that Nigeria’s total debt owed to the World Bank stands at $15.59 billion as of March 31, 2024.
Furthermore, the country’s debt servicing costs skyrocketed to N6.04 trillion in the first half of 2024, marking a staggering increase of 68.8% from N3.58 trillion during the same period last year.
This surge is largely attributed to the depreciation of the naira, which has heightened the burden of foreign debt repayments.
Critics argue that the government’s focus on borrowing may not solve Nigeria’s chronic financial issues.
“We need to see real changes and benefits from these loans; otherwise, we are simply digging ourselves deeper into debt,” remarked an economist.
With debt repayment consuming a significant portion of national resources, the Tinubu administration faces a precarious balancing act between financing development and ensuring economic stability.
As the World Bank continues to approve substantial loans for Nigeria, the implications for the country’s economic future remain to be seen.
The need for transparency and accountability in the utilization of these funds is more crucial than ever, as citizens and analysts alike await the tangible benefits that these investments promise to deliver.
