…despite an outstanding debt of $38.8 billion as of June 2023
A total of $1.95 billion loan have been secured by Nigeria from the World Bank in the first four months of President Bola Tinubu’s administration amid concerns over the country’s rising debt profile.
The loans are for education ($700 million), power ($750 million), and women empowerment ($500 million), according to findings.
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.
“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.
Findings showed 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 secured a $750 million loan from the World Bank to facilitate power projects across the nation.
The loan, with project ID P174622, was approved on June 9, making it the first World Bank loan approved under the administration of President Tinubu.
The global lender said the fresh loan would serve as additional financing for the power sector recovery performance-based operation, which was first approved on June 23, 2020. The World Bank, in a document, also disclosed that out of the $750 million initially approved in 2020, only 72 percent financing of $535.09 million was disbursed, with the balance expected by June 30, for the parent project.
For the newly approved additional financing, the International Bank for Reconstruction and Development (IBRD) will provide $449 million, and the International Development Association (IDA) will provide $301 million. The IDA and the IBRD, which make up the World Bank, have over the years advanced loans to Nigeria.
The World Bank document further disclosed that the new financing would run from 2023 to June 30, 2027.
While justifying the reason for the loan, the Washington-based multilateral institution noted that Nigeria has the largest electricity access deficit 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.
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.
In September 2023, the World Bank approved a substantial loan of $700 million in a move aimed at bolstering educational opportunities and empowerment for adolescent girls in Nigeria.
The context of this loan is set against the backdrop of Nigeria’s staggering figures of 12 million to 15 million out-of-school children in the school-age group, with a substantial concentration in Northern Nigeria. The heightened insecurity around schools during 2020-2021 further exacerbated this educational crisis, affecting approximately one million children.
The allocated funds are intended to support the ongoing ‘Adolescent Girls Initiative for Learning and Empowerment’ project. The primary objective of this initiative is to improve secondary education accessibility for girls residing in specific target states within 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.
