NEWS
Nigeria Seeks Fresh $1.5bn World Bank Loans as Public Debt Hits Record ₦166.79tn
The Federal Government has opened discussions with the World Bank over three proposed financing facilities worth a combined $1.5 billion, even as Nigeria’s total public debt climbed to a record ₦166.79 trillion at the end of June 2026.
The proposed facilities, each valued at $500 million, are aimed at financing climate resilience, social protection and early childhood development programmes. The proposals are at different stages of preparation and approval, and none of the three facilities has yet been approved or disbursed. All three proposed facilities are expected to be financed through the International Development Association, the World Bank’s concessional financing arm. The first and most advanced proposal is an additional $500 million for the Agro-Climatic Resilience in Semi-Arid Landscapes project, popularly known as ACReSAL.
The World Bank has scheduled October 29, 2026, as the estimated date for consideration of the additional financing by its board. The Federal Republic of Nigeria is listed as the borrower, while the Federal Ministry of Environment is expected to implement the project. If approved, the additional financing would increase the total size of ACReSAL from its previously approved $700 million to $1.2 billion.
The World Bank document said, “The Government of Nigeria has requested AF of $500m to scale up demonstrated project results and strengthen the institutional, operational and financing arrangements needed to sustain integrated landscape management.”
The additional funding is expected to support a broad range of climate-resilience interventions, including landscape restoration, watershed rehabilitation, erosion and flood management, irrigation and drainage, water harvesting and storage, reforestation and other measures designed to strengthen communities facing environmental and climate pressures. Of the proposed $500 million additional financing, $310 million is earmarked for dryland management, $165 million for community climate resilience and $25 million for institutional strengthening and project management.
ACReSAL currently operates across 19 northern states and the Federal Capital Territory, with its interventions focused on land degradation, water insecurity, climate vulnerability and declining agricultural productivity.
The World Bank has estimated that desertification and land degradation affect about 43 per cent of Nigeria’s land area. It has also warned that failure to adequately address climate change could reduce Nigeria’s gross domestic product by about 2.6 per cent annually by 2030 and as much as 6.7 per cent by 2050.
Second $500m Facility Targets Social Protection:
The second proposed facility is a $500 million IDA credit for the Household Prosperity and Empowerment-Social Protection Project, known as HOPE-SP.
Unlike the ACReSAL financing, the HOPE-SP proposal is at an earlier stage of preparation. Its technical design review is expected on October 30, 2026, while March 16, 2027, has been tentatively set as the date for consideration by the World Bank’s board.
The Federal Ministry of Finance is listed as the borrower, while the Federal Ministry of Humanitarian Affairs and Poverty Reduction is expected to implement the programme. The project has an estimated cost of $500 million, comprising a $420 million results-based programme and an $80 million investment project financing component. The proposed intervention is designed to establish regular social assistance for poor and vulnerable households while gradually increasing the role of federal and state governments in financing and delivering social protection.
The World Bank document said the programme would establish “a sustainable social assistance to poor and vulnerable households, financed increasingly from federal and state budgets and delivered through strengthened state and local government systems.”
The programme would support targeted unconditional and conditional cash transfers, modernise Nigeria’s social registry, integrate the National Identification Number into the social protection information system and strengthen implementation structures across federal, state and local government levels.
The World Bank said Nigeria spent only 0.14 per cent of GDP on social safety-net programmes in 2021, compared with a global average of 1.5 per cent and 1.2 per cent among lower-middle-income countries. The lender also highlighted the deterioration in household welfare, estimating that the proportion of Nigerians living in poverty increased from 40 per cent in 2019 to 56 per cent in 2023 and could reach 62.5 per cent in 2026.
The World Bank attributed the deterioration to a combination of factors, including the COVID-19 pandemic, inflation, natural disasters and conflict, while also noting the short-term effect of petrol subsidy removal and exchange-rate reforms on living costs.
Third $500m Loan Focuses on Early Childhood Development:
The third proposed $500 million facility is for the Nigeria Early Childhood Development programme. The project is expected to go before the World Bank board on March 15, 2027, with its technical design review also scheduled for October 30, 2026.
The Federal Ministry of Finance is listed as the borrower, while the Federal Ministry of Budget and Economic Planning is expected to serve as the implementing agency. The programme would cover all 36 states and the Federal Capital Territory and seek to improve access to an integrated package of health, nutrition, early learning, childcare, water and sanitation and other essential services for children aged zero to five. The financing would consist of a $400 million programme-for-results component and $100 million in investment project financing, all expected to come through IDA.
The World Bank said the intervention had become necessary because “40 percent of children under five are stunted, fewer than half are developmentally on track, 36 percent of children aged 36 to 59 months attend organised early learning,” with children from poor rural households bearing a significant share of the burden.
Together, the three proposals would create a new $1.5 billion World Bank financing pipeline for Nigeria, although the facilities remain subject to the lender’s approval process.
Nigeria’s Public Debt Rises by ₦14.39tn in One Year:
The proposed borrowing comes against the backdrop of a sharp increase in Nigeria’s public debt. Fresh figures released by the Debt Management Office show that Nigeria’s total public debt rose from ₦152.40 trillion at the end of June 2025 to ₦166.79 trillion by June 30, 2026. That represents an increase of ₦14.39 trillion, or 9.44 per cent, within one year. The DMO has officially published the June 2026 debt figures.
On a quarterly basis, the debt stock increased by ₦7.44 trillion, or 4.67 per cent, from ₦159.35 trillion in March 2026 to ₦166.79 trillion in June. In dollar terms, total public debt rose from $99.66 billion in June 2025 to $120.93 billion in June 2026, representing a $21.27 billion, or 21.35 per cent, increase. The difference between the naira and dollar growth rates was influenced by the exchange rate used in converting the debt figures.
The DMO applied an official exchange rate of ₦1,379.1842 to the dollar in June 2026, compared with ₦1,529.2105 a year earlier. At the end of June, domestic debt stood at ₦91.59 trillion, representing 54.91 per cent of the total public debt, while external debt stood at ₦75.20 trillion, or 45.09 per cent. Domestic debt increased by ₦11.04 trillion, or 13.70 per cent, from ₦80.55 trillion in June 2025. Between March and June 2026 alone, it increased by ₦4.19 trillion.
External debt, meanwhile, rose from $46.98 billion in June 2025 to $54.52 billion in June 2026, an increase of $7.54 billion, or 16.05 per cent. Its naira equivalent increased from ₦71.85 trillion to ₦75.20 trillion.
The Federal Government accounted for the overwhelming majority of the debt portfolio, with ₦87 trillion in domestic debt, compared with ₦4.59 trillion owed domestically by states and the FCT.
Federal Government external liabilities stood at ₦65.77 trillion, while states and the FCT accounted for ₦9.42 trillion.
Treasury Bills Drive Part of Domestic Debt Growth:
A closer look at the Federal Government’s domestic debt shows that Treasury bills and conventional naira bonds accounted for much of the increase.
Federal Government domestic debt rose from ₦76.59 trillion in June 2025 to ₦87 trillion in June 2026, representing an increase of ₦10.41 trillion, or 13.60 per cent.
FGN bonds remained the dominant instrument at ₦64.84 trillion, representing 74.53 per cent of Federal Government domestic debt. The figure included ₦41.47 trillion in conventional naira bonds, ₦22.11 trillion in securitised Ways and Means advances and ₦1.27 trillion in domestic dollar bonds.
Treasury bills, however, recorded the sharpest increase in absolute terms. Outstanding Nigerian Treasury Bills rose from ₦12.76 trillion in June 2025 to ₦19.48 trillion in June 2026, an increase of ₦6.72 trillion, or 52.64 per cent. Their share of Federal Government domestic debt consequently increased from 16.67 per cent to 22.39 per cent.
Treasury bills also rose by ₦2.92 trillion during the second quarter, moving from ₦16.57 trillion in March to ₦19.48 trillion in June.
Conventional FGN naira bonds increased by ₦4.94 trillion year-on-year to ₦41.47 trillion and by ₦2 trillion between March and June. The securitised Ways and Means balance, however, declined from ₦22.72 trillion in March to ₦22.11 trillion in June.
Promissory notes also fell from ₦1.73 trillion in June 2025 to ₦1.22 trillion in June 2026, while FGN Savings Bonds increased from ₦91.53 billion to ₦122.45 billion.
World Bank Exposure Rises to $20.73bn:
The latest debt figures also highlight the scale of Nigeria’s existing financial relationship with the World Bank.
Nigeria’s outstanding debt to the World Bank Group stood at $20.73 billion at the end of June 2026, comprising $19.12 billion owed to the International Development Association and $1.61 billion owed to the International Bank for Reconstruction and Development. The combined exposure increased by $1.34 billion, or 6.93 per cent, from $19.39 billion in June 2025. During the second quarter of 2026, World Bank exposure increased by $907.09 million, or 4.58 per cent, from $19.82 billion in March to $20.73 billion in June.
At $20.73 billion, World Bank Group obligations represented about 38 per cent of Nigeria’s $54.52 billion external debt stock at the end of June. IDA alone accounted for roughly 35 per cent of the country’s external debt. Nigeria’s total multilateral external debt stood at $24.76 billion, representing 45.42 per cent of its external debt portfolio. Other multilateral creditors included the African Development Bank, African Development Fund, Islamic Development Bank and International Fund for Agricultural Development. Commercial debt stood at $23.16 billion, or 42.47 per cent of external debt, with Eurobonds accounting for $18.55 billion. Bilateral debt was considerably smaller at $6.61 billion, representing 12.12 per cent of external obligations. China remained Nigeria’s largest bilateral creditor, with obligations to the Export-Import Bank of China and China Development Bank.
Atiku Demands Accountability Before Fresh Borrowing:
The proposed World Bank facilities have also triggered political scrutiny.
Former Vice-President and African Democratic Congress presidential candidate Atiku Abubakar called on the Federal Government to account for Nigeria’s existing debt before proceeding with the proposed $1.5 billion financing.
His position was contained in a statement issued by Phrank Shaibu, Director of Strategic Communications of the ADC Presidential Campaign Council.
Atiku questioned the continued accumulation of debt and demanded details of previous borrowing and its utilisation.
“A government that says more money is coming in must explain why it keeps borrowing and why the people paying for its policies cannot see the promised gains,” Atiku said.
He urged the government to “identify the old debt newly recorded, the foreign debt whose naira value rose with the exchange rate, and every new loan contracted since he assumed office.”
Atiku also questioned the cost of servicing the country’s growing obligations, arguing that debt-service requirements could constrain resources available for public services and development. His intervention adds another layer to the debate over the proposed facilities, with the central issue being whether additional borrowing can translate into measurable improvements in infrastructure, social protection, environmental resilience and human capital while remaining consistent with Nigeria’s debt-management objectives.
Economist Highlights Importance of Loan Utilisation:
Reacting to the proposed borrowing, Lagos-based economist Adewale Abimbola noted that loans from multilateral institutions such as the World Bank are generally concessional, with longer repayment periods and financing conditions that can be more favourable than commercial borrowing. He said the critical issue was how such financing would ultimately be structured, deployed and monitored.
“If it’s concessionary and tied to viable projects with medium-term revenue prospects, I don’t think it’s a bad idea. Borrowing isn’t bad; what matters is utilisation,“ Abimbola explained.
He stressed that the economic impact of the proposed loans would ultimately depend on whether the funds are channelled into programmes capable of supporting sustainable economic growth, strengthening revenue, improving public services and delivering measurable benefits to Nigerians.
For now, the $1.5 billion remains a proposal rather than a completed borrowing transaction. The ACReSAL additional financing is scheduled for consideration in October 2026, while the HOPE-SP and Early Childhood Development facilities are currently projected for consideration in March 2027.