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President Bola Tinubu's administration has borrowed a staggering $6.45 billion from the World Bank within just 16 months.
This figure has surged following the recent approval of three new loans totalling $1.57 billion for various development projects nationwide.
As the government continues to seek financial assistance, the total amount of loans approved by the World Bank over the past five years has reached an alarming $24.088 billion, raising questions about the sustainability of Nigeria's mounting debt profile.
The newly approved loans target critical sectors, including power, women's empowerment, girls' education, and renewable energy. Notably, the projects include $750 million for the power sector, $500 million for women's empowerment, and $700 million for enhancing girls' education.
According to Punch, the administration's borrowing strategy is primarily driven by long-standing issues such as deteriorating infrastructure and soaring unemployment rates, leading to growing public discontent.
Citizens question Tinubu's borrowing policies
Many citizens have expressed scepticism regarding the government's borrowing policies, reflecting a pervasive distrust fueled by the perceived inefficacy of past loans.
"While we understand that resources are thin in a country with a burgeoning population, the previous borrowings have not brought tangible improvements," lamented a concerned citizen.
The World Bank's data reveals a consistent pattern of loan approvals to Nigeria since 2020, a trend that has become a point of contention among financial analysts and the general public alike.
In 2020, the bank approved 15 loan requests worth $6.36 billion for various projects, including the Nigeria Rural Access and Agricultural Marketing Project and the Nigeria Digital Identification for Development project.
The pattern of borrowing has evolved over the years. In 2021, Nigeria secured six loans worth $3.2 billion, while the following year, the government obtained $1.26 billion for six additional projects.
The year 2023 marked a shift, with loan requests increasing to $2.7 billion to finance four key projects, underscoring a growing reliance on external borrowing.
As of 2024, the World Bank has already approved loans totalling $3.82 billion, reflecting the ongoing financial relationship between Nigeria and the international lender. The latest approvals were highlighted in a statement from the bank, which noted that the funds would enhance Nigeria's economic stability and support vulnerable populations across the country.
The statement read, "The World Bank has today approved three operations for a total of $1.57 billion to support the Government of Nigeria in strengthening human capital through better health for women, children, and adolescents while also building resilience against climate change impacts like floods and droughts."
Among the latest approved loans is $570 million dedicated to strengthening primary healthcare and $500 million for addressing governance issues that hinder effective education and health service delivery.
Nigeria's debt profile
However, the country's escalating debt service obligations present a significant challenge. According to the Debt Management Office, as of March 31, 2024, Nigeria owed the World Bank a total of $15.59 billion.
The financial burden is compounded by soaring debt servicing costs, which reached an alarming ₦6.04 trillion in the first half of 2024—a staggering 68.8% increase from the previous year's figure of N3.58 trillion. This sharp rise is mainly attributed to the devaluation of the naira, further straining the government's financial resources.
Economic analysts warn that Nigeria's current borrowing trajectory, coupled with rising debt servicing costs, could jeopardise its economic stability.
"If the government does not find a sustainable way to manage its debt, the repercussions could be dire for the economy and its citizens," cautioned a financial expert.
As the Tinubu administration continues to pursue financial assistance from the World Bank, the public remains divided. While some acknowledge the necessity of borrowing to address urgent infrastructure needs, many others express concerns about the long-term implications of such financial commitments.
The coming months will be crucial as Nigeria navigates its financial landscape, balancing the need for development funding with the imperative of fiscal responsibility.
With further approvals expected, the question looms: will these loans pave the way for much-needed economic recovery, or will they lead Nigeria down a perilous path of unsustainable debt?