Nigeria has emerged as the third-largest debtor to the World Bank’s International Development Association (IDA), with its loan exposure rising to $16.5 billion as of June 30, 2024. This represents a significant increase of $2.2 billion compared to the $14.3 billion recorded at the end of 2023, according to a recently released financial statement from the World Bank.
The IDA, a crucial arm of the World Bank, provides concessional loans and grants to the world’s poorest countries. These loans, characterized by low-interest rates and extended repayment periods, are intended to foster economic growth, reduce inequalities, and improve living conditions in developing nations.
On the IDA debt list, Nigeria is surpassed only by Bangladesh, which holds $20.5 billion in exposure, and Pakistan, with $17.5 billion. Following Nigeria is India, with $15.9 billion in loans. Ethiopia, Kenya, and Vietnam also rank high on the list, each with an exposure of approximately $12 billion.
At the lower end of the top ten are Tanzania ($11.7 billion), Ghana ($6.7 billion), and Uganda ($4.8 billion). The World Bank noted that as of June 30, 2024, the ten countries with the highest exposures collectively accounted for 63% of IDA’s total exposure.
The financial statement emphasized the need for careful monitoring of these exposures, considering the repayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees.
This increase in Nigeria’s IDA debt comes as the country grapples with a broader rise in public debt. The Debt Management Office (DMO) reported on June 20, 2024, that Nigeria’s total public debt had surged to ₦121.67 trillion in the first quarter of 2024, up from ₦97 trillion in December 2023. The DMO attributed this rise primarily to new domestic borrowing by the federal government to partially fund the deficit in the 2024 budget, along with disbursements by multilateral and bilateral lenders.
Of the total debt, ₦65.65 trillion ($46.29 billion) is domestic debt, while ₦56.02 trillion ($42.12 billion) is external debt. This growing debt burden underscores the financial challenges facing Nigeria as it seeks to balance development needs with fiscal sustainability.
