Nigeria Ranks as World Bank’s Third-Largest Debtor Amidst Mounting Economic Strain
Nigeria has solidified its position as the third-largest debtor to the World Bank’s International Development Association (IDA), with total debt exposure rising to $17.1 billion as of September 30, 2024. The latest financial report from the World Bank indicates that Nigeria’s debt to the IDA increased by $600 million in just three months, up from $16.5 billion in June 2024.
The nation has seen a substantial increase in IDA borrowing in recent years. Between June 2023 and June 2024 alone, Nigeria’s debt climbed by 14.4%, rising from $14.3 billion to $16.5 billion. This fiscal year, Nigeria accessed an additional $2.2 billion in IDA loans, maintaining its position as a major beneficiary of the World Bank’s concessional lending.
Nigeria first broke into the IDA’s top three borrowers in June 2024, climbing from fourth place in 2023. Since then, the country has held firm to its position, receiving a total of $2.8 billion from the IDA during President Bola Tinubu’s administration as part of efforts to stabilise the economy and manage inherited debts.
Bangladesh and Pakistan continue to top the IDA’s list, with debt exposures of $21 billion and $18.5 billion, respectively. Following Nigeria, India ranks fourth with a debt of $15.9 billion, while Ethiopia stands at $13.1 billion. The other leading borrowers include Kenya, Tanzania, and Vietnam, each owing between $12.2 billion and $12.4 billion, while Ghana and Uganda are at the lower end with debts of $7 billion and $5 billion, respectively.
These ten countries account for 63% of IDA’s total debt exposure, underscoring their dependence on concessional financing. The IDA’s Single Borrower Limit (SBL) for fiscal year 2025 is set at $47.5 billion, or 25% of its total equity base of $190.3 billion. Currently, Nigeria’s debt remains within this threshold, which the World Bank regards as sustainable under present conditions.
The IDA loans provide Nigeria with low-interest rates and lengthy repayment terms, contrasting with the country’s costlier obligations to the World Bank’s International Bank for Reconstruction and Development, which offers loans at market rates. These concessional loans form a cornerstone of Nigeria’s fiscal strategy, especially as the government grapples with rising debt-service obligations. The Tinubu administration, facing a challenging fiscal environment, has leaned heavily on these loans as it pursues reforms aimed at stabilising the economy.
Data from the Central Bank of Nigeria reveal that foreign debt servicing costs rose sharply in the first nine months of 2024, reaching $3.58 billion—a 39.77% increase from the $2.56 billion spent during the same period in 2023. This rise in debt service payments highlights the mounting pressure on Nigeria’s finances amidst ongoing economic hurdles.
