Tinubu era sees Nigeria become third largest IDA debtor with $2.2bn loan

Business a.m.

Nigeria has emerged as the third most indebted nation among the borrowers of the World Bank’s International Development Association (IDA) as of June 30, 2024, a development that highlights the increasing reliance of Nigeria on external financing.

Under the leadership of President Bola Tinubu, Nigeria’s financial circumstance has witnessed a significant shift, with the country’s exposure to the World Bank’s International Development Association (IDA) experiencing a substantial increase.

According to the World Bank’s recent financial statements, Nigeria’s indebtedness to the IDA has climbed by 14.4 percent, from $14.3 billion in the fiscal year (FY) 2023 to $16.5 billion in FY2024.

As Nigeria entered the fiscal year 2024 (FY 2024), spanning from July 2023 to June 2024, the country’s reliance on external financing from the World Bank increased significantly, receiving at least $2.2 billion from the institution. This development, occurring during President Tinubu’s administration, underscores the growing dependence of the country on international financial support, particularly from the World Bank.

The World Bank pointed out that the $2.2 billion debt that Nigeria has accrued from the International Development Association is distinct from any other outstanding loans Nigeria may have with the IBRD, a different branch of the World Bank.

Meanwhile, Bangladesh remains the largest borrower from the World Bank’s IDA in both 2023 and 2024. This is as Bangladesh’s exposure to IDA increased from $19.3 billion in 2023 to $20.5 billion in 2024.

Following Bangladesh in the rankings of IDA debtors is Pakistan, which maintained a stable exposure of $17.9 billion to the World Bank’s International Development Association in both 2023 and 2024.

Meanwhile, India, previously the third-largest debtor with $17.9 billion in 2023, saw its IDA exposure decrease to $15.9 billion in 2024, allowing Nigeria to overtake it as the third-largest debtor with $16.5 billion in FY2024.

Kenya and Vietnam both carry IDA debts of $12 billion, placing them as the eighth and ninth largest IDA debtors, respectively. 

Joining Kenya and Vietnam among the top ten IDA borrowers are Tanzania, Ghana, and Uganda, who collectively owe $12.2 billion, $11.7 billion, and $9.2 billion to the World Bank’s International Development Association, respectively. 

These top ten debtors, accounting for 63 percent of IDA’s total exposure as of June 30, 2024.

The World Bank’s International Development Association (IDA) is a vital instrument for promoting sustainable development in the world’s poorest countries. By providing low-interest loans and grants to eligible member nations, the IDA assists in bridging the funding gap required to finance vital infrastructure, health, education, and other social projects that aim to improve living standards and reduce poverty.

Under President Tinubu’s administration, Nigeria has reportedly secured a total of $4.95 billion in loans from the World Bank, despite mounting concerns over the country’s rapidly escalating external debt servicing costs.

Although only about 16 percent of these new loans have been disbursed thus far, the World Bank is poised to potentially approve four additional loan projects worth approximately $2 billion, further escalating Nigeria’s debt to the institution.