Nigeria, facing concerns over its rising debt profile, has secured a total of $1.95 billion in loans from the World Bank within the first four months of President Bola Tinubu’s administration. These loans are designated for critical areas such as education, power, and women’s empowerment, according to BusinessDay’s investigations.
The breakdown of the loans reveals a commitment of $700 million for education, $750 million for power projects, and $500 million for women’s empowerment initiatives. These financial arrangements have sparked both interest and concern among Nigerians who have long grappled with infrastructure challenges and increasing unemployment.
While recognizing the country’s limited resources due to its large population, many Nigerians remain skeptical about the impact of these loans, given past experiences with borrowing. Emeka Nwani, a Nigerian in his 30s, expressed his skepticism, saying, “I can’t really fathom what the government uses the money it borrows to do. If it was judiciously utilized, 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, shared similar concerns and questioned why a 2022 UNESCO report highlighted 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 consulted by BusinessDay emphasized that borrowing is not inherently wrong, provided the loans are channeled into specific infrastructure projects that ultimately improve the citizens’ quality of life. However, they noted that this has not always been the case in Nigeria.
Data from the Debt Management Office indicated that as of June 2023, the federal government had an outstanding external debt of $38.8 billion. BusinessDay’s investigation revealed that Nigeria secured three significant loans from the World Bank since President Tinubu’s assumption of office on May 29, 2023, totaling $1.95 billion.
The largest of these loans, amounting to $750 million, was designated for power projects. On June 19, the federal government successfully secured this loan, which was approved on June 9, making it the first World Bank loan under President Tinubu’s administration. The loan is intended to facilitate power projects across the nation and provide additional financing for the power sector recovery performance-based operation, initially approved on June 23, 2020.
As Nigeria embarks on these borrowing endeavors, the critical question remains whether these loans will result in tangible improvements in the nation’s infrastructure and quality of life for its citizens, or if they will further contribute to the country’s growing debt burden.