W’Bank grants Nigeria $2.7bn in loans for development projects under Tinubu’s leadership
In a significant move to bolster Nigeria’s infrastructure and social programs, the World Bank has approved a series of loans totaling $2.7 billion for the West African nation.
The administration of President Bola Tinubu has secured this financial package amid rising concerns about the country’s increasing costs of servicing external debt.
The loans are earmarked for critical sectors, with a substantial focus on sustainable development and empowerment initiatives.
A $750 million loan is set to revitalise Nigeria’s power sector, with the World Bank confirming that the funds will provide additional financing for the power sector recovery performance-based operation.
This first tranche was approved on June 9, 2023, and is expected to significantly enhance the efficiency and reliability of electricity supply across the country.
Further investments include a $500 million loan dedicated to women’s empowerment programs, aiming to close gender gaps in the economy and support women’s access to economic resources.
Additionally, the education of girls has received a substantial boost with a $700 million loan, which will be directed towards improving educational opportunities and outcomes for girls in Nigeria. The package also included a $750 million loan for renewable energy projects, underscoring Nigeria’s commitment to transitioning towards sustainable energy sources and reducing its carbon footprint.
The World Bank’s support comes at a crucial time as Nigeria navigates the complexities of economic growth and development while managing its debt obligations. These loans are expected to play a pivotal role in driving the country’s agenda for a more inclusive and sustainable economic future.
On June 27, the World Bank Group announced the approval of a loan of $500 million to help Nigeria drive women’s empowerment. This was the second loan approved by the bank under Tinubu’s administration. It provided a scale-up financing for the Nigeria for Women Programme.
$700 million for educating adolescent girls: In September 2023, the World Bank approved a loan of $700 million to bolster educational opportunities and empowerment for adolescent girls in Nigeria.
The loan was to support the ongoing ‘Adolescent Girls Initiative for Learning and Empowerment’ (AGILE) project. It aimed to encourage secondary education accessibility for girls residing in specific target states within Nigeria.
On December 14, the World Bank approved the $750 million Distributed Access through/ Renewable Energy Scale-up (DARES) project in Nigeria. The project aims to provide over 17.5 million Nigerians with better access to electricity via distributed renewable energy solutions and tackle the electricity access deficit.
The World Bank recently disclosed that Nigeria was the top recipient of its fresh loans in 2022, with about $2.9 billion released to the country. According to its International Debt Report for 2023, Nigeria was followed by Tanzania, which got $2.7 billion in the same year.
The report read, “Nigeria and Tanzania were the top recipients of new financing from the World Bank in 2022, at US$2.9 billion and US$2.7 billion, respectively.”
So far, the World Bank has approved to Nigeria in 2023 the total loan received by Tanzania in 2022.
Data from the external debt stock report of the Debt Management Office (DMO) shows that Nigeria owes the World Bank a total of $14.58 billion as of September 30, 2023.
There have been concerns over the country’s rising debt costs amid rising debt over the years.
Nigeria spent about 277.64 percent more servicing its external debt in the third quarter of 2023.
The DMO in a statement said that external debt decreased due to the redemption of a $500 million Eurobond and payment of $413.859 million as the first principal repayment of the $3.4 billion loan obtained from the International Monetary Fund (IMF) in 2020 during COVID-19.
However, it appears that there is no record of the debt service to the IMF in the external debt servicing report of Q3, 2023.
In a recent statement by the World Bank, it stressed the impact of high debt service costs on developing countries, with its Chief Economist and Senior Vice President, Indermit Gill, saying: “Record debt levels and high-interest rates have set many countries on a path to crisis. Every quarter that interest rates stay high results in more developing countries becoming distressed and facing the difficult choice of servicing their public debts or investing in public health, education, and infrastructure.
“The situation warrants quick and coordinated action by debtor governments, private and official creditors, and multilateral financial institutions, more transparency, better debt sustainability tools, and swifter restructuring arrangements. The alternative is another lost decade.”
