During the first four months of President Bola Tinubu’s administration, Nigeria obtained a total of $1.95 billion in loans from the World Bank. This development has raised concerns about the country’s growing debt burden.
These loans are designated for specific purposes: $700 million for education, $750 million for power projects, and $500 million for women’s empowerment.
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Many Nigerians are growing increasingly bitter when they hear about the government’s plans to borrow money. This bitterness stems from years of deteriorating infrastructure and rising unemployment. While some acknowledge the country’s limited resources, particularly considering its large population, they believe that previous borrowing has not been justified.
“I can’t really fathom what the government uses the money it borrows to do,” said Emeka Nwani, a young Nigerian in his 30s. “If it was judiciously utilised, why does the economy groan under epileptic electricity supply, with most Nigerians struggling to access constant power supply while industries run on generators, paying hugely for alternative energy supply?”
Femi Adelana, a business analyst with Sofidam Capital, can’t fathom why a 2022 UNESCO report noted that about 20 million Nigerians were not enrolled in school despite budget allocations and loans from foreign financial institutions.
“There are lots of frightening tales in the minds of Nigerians whenever the government announces its intention to borrow more,” Adelana said.
Economists said it is not wrong for countries to borrow, as long as the loans would be targeted at specific infrastructure that would, in turn, make life better for the people.
“Increased borrowings can only make lives better when such borrowings are channelled into things that yield economic returns,” said a senior analyst in one of Big Four consulting firms. “But that has never been the case for Nigeria.”
Data from the Debt Management Office showed the federal government had an outstanding external debt of $38.8 billion as of June 2023.
This shows Nigeria has secured three major loans from the World Bank since President Tinubu assumed office on May 29, 2023, totalling $1.95 billion.
$750 million loan for power projects
On June 19, the federal government of Nigeria secured a $750 million loan from the World Bank to support power projects across the country.
This loan, identified with project ID P174622, was officially approved on June 9. Importantly, it marks the first World Bank loan approved during the administration of President Tinubu.
The World Bank explained that this new loan is intended to provide additional financing for the power sector recovery performance-based operation, which was initially approved on June 23, 2020.
According to the World Bank’s documentation, of the $750 million that was initially approved in 2020, only 72 percent of the financing, equivalent to $535.09 million, has been disbursed so far. The remaining balance is anticipated to be provided by June 30 for the main project.
The newly approved additional financing for these projects will come from two arms of the World Bank: the International Bank for Reconstruction and Development (IBRD) will provide $449 million, and the International Development Association (IDA) will contribute $301 million.
These two entities together constitute the World Bank, and they have a history of providing loans to Nigeria.
According to the World Bank document, this fresh financing will be in effect from 2023 until June 30, 2027.
The World Bank’s justification for granting this loan is based on the fact that Nigeria currently faces the largest deficit in electricity access in the world.
“Lack of access to the electricity grid affects 45 percent of the population (90 million people), making Nigeria the country with the largest number of people not connected to electricity. As such, Nigeria accounts for 12 percent of the global access deficit,” it said.
$500 million for women empowerment
On June 27, the World Bank Group announced the approval of a loan of $500 million to help Nigeria drive women empowerment.
This became the second loan approved by the World Bank under the President Tinubu administration.
It is a scale-up financing for Nigeria for Women Programme, which was initially approved on June 27, 2018, with $100 million financing.
“The World Bank has approved $500m for Nigeria for Women Program Scale Up. The scale-up financing will further support the government of Nigeria to invest in improving the livelihoods of women in Nigeria,” the World Bank said in a statement.
$700 million for educating adolescent girls
In September 2023, the World Bank approved a significant loan of $700 million with the aim of enhancing educational opportunities and empowerment for adolescent girls in Nigeria.
This loan comes in response to a critical context where Nigeria faces a daunting challenge of 12 million to 15 million out-of-school children within the school-age group, with a significant concentration of these children in Northern Nigeria. The situation was exacerbated by increased insecurity around schools during 2020-2021, impacting around one million children.
The allocated funds are earmarked to support the ongoing ‘Adolescent Girls Initiative for Learning and Empowerment’ project. The primary goal of this initiative is to enhance access to secondary education for girls in specific target states in Nigeria.
“The World Bank approved additional financing of $700 million for Nigeria to scale up the Adolescent Girls Initiative for Learning and Empowerment program whose goal is to improve secondary education opportunities among girls in targeted states,” the bank said.
