World Bank Approves $1.25bn Nigeria Loan Despite Debt Concerns

The World Bank has approved a new $1.25 billion loan for Nigeria, even as concerns continue to grow over the country’s rising debt burden and its repeated dependence on foreign borrowing.

The loan was approved under the Nigeria Actions for Investment and Jobs Acceleration Development Policy Financing programme, also known as NAIJA DPF. It is expected to support reforms aimed at creating jobs, attracting private investment and strengthening economic growth.

New Six-Year Partnership Framework

The approval was announced on Wednesday alongside the launch of a new Country Partnership Framework for Nigeria, which will run from 2026 to 2032.

According to the World Bank, the framework will guide its support for Nigeria over the next six years, with a focus on creating “more and better jobs” through private sector-led growth.

The bank said Nigeria’s recent economic reforms have helped stabilise the economy, improve government revenue, increase external reserves and restore investor confidence.

Public Concerns Over Borrowing

The approval comes at a time when many Nigerians are questioning the Federal Government’s borrowing strategy.

Critics argue that Nigeria’s growing external debt has not brought enough visible improvement in living standards, jobs, infrastructure or public services.

The new facility follows earlier reports that the Federal Government was seeking fresh World Bank support to fund reforms around economic competitiveness, job creation and investment. Those reports drew public criticism from Nigerians worried about the country’s debt level.

What the Loan Is Expected to Support

Under the new Country Partnership Framework, the World Bank said its support would help expand electricity access to 32 million Nigerians and provide broadband connectivity to 58 million people.

It also aims to improve health and nutrition services for 40 million citizens and support 9.5 million farmers.

The framework will also focus on agriculture, energy, digital infrastructure and human capital development.

World Bank Says Reforms Must Reach Citizens

World Bank Country Director for Nigeria, Mathew Verghis, said the bank’s new strategy would focus on helping Nigeria turn recent economic reforms into better living conditions for citizens.

He said Nigeria’s recent macroeconomic gains had helped stabilise the economy, but added that the country must still address structural problems that limit private investment and job creation.

According to him, the World Bank’s support over the next six years will focus strongly on private sector growth, job creation and reforms that can make the Nigerian economy more competitive.

Key Reform Areas

The World Bank said the $1.25 billion loan will support reforms in several areas, including capital markets, digital regulation, e-governance, power sector reform, trade, agriculture and revenue mobilisation.

The programme is expected to help deepen Nigeria’s capital markets, improve the regulatory framework for the digital economy and support reforms aimed at increasing electricity access.

It will also support efforts to reduce trade barriers in line with Nigeria’s commitments under ECOWAS and the African Continental Free Trade Area.

Other areas covered by the financing include improving access to quality agricultural seeds and strengthening domestic revenue collection.

Private Investment Still Central

The International Finance Corporation’s Divisional Director for Nigeria, Dahlia Khalifa, said Nigeria’s long-term growth would depend on its ability to attract investment, raise productivity and create private sector jobs.

She said Nigeria’s large and fast-growing population could become an advantage if the right investment environment is created.

Also speaking, Ed Mountfield, Vice-President and Chief Financial Officer of the Multilateral Investment Guarantee Agency, said Nigeria’s reforms had created opportunities for investors, but risks still remained.

He said MIGA would help manage those risks through guarantees and political risk insurance, allowing investors to participate with more confidence.

Second-Largest World Bank Loan Under Tinubu

The latest loan is now the second-largest single World Bank facility approved for Nigeria under President Bola Tinubu.

The largest remains the $1.5 billion Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing, which was approved in June 2024.

Nigeria’s Debt to World Bank Rises

The approval is expected to renew public debate over Nigeria’s debt sustainability.

According to figures from the Debt Management Office, Nigeria’s debt to the World Bank rose from $17.81 billion at the end of 2024 to $19.89 billion by December 31, 2025.

This means Nigeria’s World Bank debt increased by $2.08 billion, or 11.7 percent, within one year.

The data also showed that loans from the International Development Association increased from $16.56 billion to $18.51 billion, while debt owed to the International Bank for Reconstruction and Development rose from $1.24 billion to $1.38 billion.

By the end of 2025, the World Bank accounted for 38.36 percent of Nigeria’s total external debt stock of $51.86 billion.