Nigeria’s Debt to World Bank IDA Rises to $18.2 Billion – Report

Nigeria’s debt obligations to the International Development Association (IDA), a subsidiary of the World Bank Group that provides concessional loans and grants to the world’s poorest countries, have climbed to $18.2 billion, according to the latest financial report. The figure underscores the country’s growing reliance on external borrowing to finance its development agenda amid pressing fiscal challenges.

The IDA, often described as the World Bank’s concessional arm, supports developing nations with loans carrying low-interest rates and extended repayment periods, as well as grants for projects in critical sectors such as health, education, agriculture, and infrastructure. Nigeria, Africa’s largest economy, has increasingly turned to the IDA to bridge its widening financing gaps, which have been compounded by dwindling oil revenues, rising subsidy obligations, and weak non-oil revenue mobilisation.

Data from the report show that Nigeria is now the largest beneficiary of IDA resources on the continent, with its $18.2 billion debt making up a significant share of the country’s overall external debt stock. Analysts note that while the concessional nature of IDA loans provides some relief compared to commercial borrowing, the rapid accumulation of debt raises concerns about sustainability.

Nigeria’s external debt profile has grown steadily over the last decade. The Debt Management Office (DMO) has defended the borrowing strategy, arguing that concessional loans remain necessary to finance key infrastructure projects and social programmes in the absence of sufficient domestic revenue. The DMO also stresses that the terms of IDA loans—such as interest rates below 2% and repayment periods of up to 30 years—make them far more manageable than commercial debt instruments.

However, critics argue that even concessional borrowing, if not matched with productive investment and robust repayment capacity, could worsen Nigeria’s fiscal pressures. They point out that the country spends a disproportionately high percentage of its revenue on debt servicing, leaving limited resources for critical development programmes. According to recent budgetary data, Nigeria spends more than 70% of its revenue on debt service, a situation many economists consider unsustainable.

The reliance on borrowing also highlights Nigeria’s persistent challenges in domestic revenue generation. Despite being Africa’s biggest oil producer, the country has struggled to mobilise non-oil revenues effectively, with tax-to-GDP ratios among the lowest globally, averaging below 10%. This structural weakness has forced successive administrations to turn to external lenders to cover budget deficits and finance development plans.

The report also points to the potential risks of heavy dependence on IDA resources, noting that while concessional loans are softer than commercial credit, they still add to the overall debt burden. With rising global interest rates and exchange rate volatility, Nigeria’s capacity to manage external obligations remains a key concern for financial experts. The recent naira depreciation has further compounded repayment costs, particularly for dollar-denominated loans.

On the flip side, development experts argue that IDA funding has been instrumental in financing social and infrastructure projects in Nigeria. For instance, IDA-supported programmes have contributed to expanding access to education, improving healthcare delivery, strengthening agricultural productivity, and enhancing rural electrification. Without these concessional loans, progress in many of these sectors might have been slower.

The Federal Government has maintained that borrowing remains a necessary short-term strategy while ongoing reforms are expected to boost revenue generation in the medium to long term. Finance Minister and Coordinating Minister of the Economy, Wale Edun, has repeatedly assured Nigerians that the administration is committed to ensuring debt sustainability, with a renewed focus on expanding non-oil revenues, curbing wastage, and prioritising capital expenditure over recurrent spending.

Meanwhile, stakeholders are calling for stronger transparency and accountability mechanisms in the use of borrowed funds. Civil society organisations and economists insist that loans, particularly from concessional sources, must be tied directly to projects that have measurable impact on job creation, poverty reduction, and economic growth. They caution that unless loans are invested wisely, Nigeria risks accumulating debt without corresponding developmental gains.

Nigeria’s growing IDA debt has also sparked debate in the political space. Lawmakers have expressed concerns about the pace of borrowing and its implications for future generations. Some argue that while IDA loans are relatively cheaper, the cumulative effect of mounting obligations could limit Nigeria’s fiscal flexibility in years to come.

Experts suggest that Nigeria must strike a balance between borrowing for development and mobilising domestic resources more effectively. Expanding the tax base, improving tax compliance, curbing illicit financial flows, and promoting private sector participation in infrastructure development are among the strategies recommended to reduce over-reliance on concessional borrowing.

As Nigeria’s debt to the World Bank’s IDA reaches $18.2 billion, the development underscores the delicate balancing act facing policymakers. On one hand, concessional loans provide vital support for tackling urgent development challenges. On the other hand, unchecked debt accumulation poses long-term risks to fiscal sustainability.

Ultimately, the path forward lies in ensuring that every borrowed dollar is channelled into projects that yield tangible socio-economic returns. Without this discipline, Nigeria risks being caught in a debt trap where future growth is constrained by today’s obligations.