Nigeria has retained its position as the third-largest debtor to the International Development Association, the concessional financing arm of the World Bank.
As of September 30, 2024, Nigeria’s debt exposure to the IDA rose to $17.1 billion, reflecting a $600 million increase from the $16.5 billion recorded three months earlier in June 2024.
The World Bank’s latest financial statements for the fiscal year ending September 2024 provide detailed insights into this trend.
Between July 2023 and June 2024, Nigeria secured an additional $2.2 billion in loans from the IDA. This marked a notable increase from the $14.3 billion exposure recorded in June 2023, representing a 14.4% year-on-year rise by June 2024.
In June 2024, for the first time in its history, Nigeria moved into the top three IDA borrowers globally, ascending from its previous fourth position in 2023.
Since then, the country has remained steady in third place, reflecting the growing reliance on concessional financing under President Bola Tinubu’s administration.
During his tenure, Nigeria has received $2.8 billion in loans from the IDA, underscoring the government’s efforts to address economic challenges while managing inherited debt obligations.
Bangladesh remains the largest IDA borrower, with $21 billion in debt, followed by Pakistan at $18.5 billion.
India, previously ahead of Nigeria, now ranks fourth with a debt of $15.9 billion. Ethiopia follows with $13.1 billion, while Kenya, Tanzania, and Vietnam each owe between $12.2 billion and $12.4 billion.
At the lower end of the top ten, Ghana and Uganda have debts of $7 billion and $5 billion, respectively.
Collectively, these ten countries account for 63% of IDA’s total exposure. This highlights the significant reliance of developing nations on concessional financing to support infrastructure, social programs, and economic reforms.
The IDA has established a Single Borrower Limit of $47.5 billion for the 2025 fiscal year, representing 25% of its $190.3 billion equity as of June 30, 2024.
Nigeria’s debt, while significant, remains within this threshold. According to the financial statements, “As of September 30, 2024, the ten countries with the highest exposures accounted for 63 per cent of IDA’s total exposure. Monitoring these exposures relative to the SBL requires consideration of the repayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees.”
Despite the concessional nature of IDA loans, Nigeria’s external debt servicing obligations are mounting.
In the first nine months of 2024, the Federal Government spent $3.58 billion on foreign debt servicing—a significant 39.77% increase compared to the $2.56 billion spent during the same period in 2023.
These figures, sourced from the Central Bank of Nigeria’s international payment statistics, underscore the growing fiscal pressures facing the country.
Nigeria’s loans from the IDA, characterized by low-interest rates and extended repayment terms, contrast with its obligations to the International Bank for Reconstruction and Development, which provides financing at market rates.
This distinction has made IDA loans a vital component of Nigeria’s financing strategy, particularly in the face of economic reforms and efforts to stabilize the nation’s fiscal outlook.
The sharp rise in Nigeria’s debt exposure underscores the challenges of balancing developmental needs with fiscal sustainability, a task that remains central to President Tinubu’s economic agenda.
