Nigeria’s debt exposure to the World Bank has climbed sharply, reflecting the country’s growing reliance on concessional financing amid mounting fiscal pressures and constrained revenue performance.
Fresh data from the International Development Association (IDA) shows that Nigeria’s outstanding debt to the institution reached $18.7 billion as of December 31, 2025.
This represents a $1.9 billion increase from the $16.8 billion recorded at the end of 2024, an 11.3 percent year-on-year rise.
The increase highlights Nigeria’s continued use of low-interest, long-tenor loans to finance development priorities at a time of global economic uncertainty and domestic revenue challenges.
Analysts attribute the growth to ongoing project disbursements and new commitments in critical sectors such as infrastructure, healthcare, and education.
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With the latest figures, Nigeria has become the third-largest borrower within the IDA portfolio, trailing Bangladesh at $23.0 billion and Pakistan at $19.4 billion.
According to the World Bank, the ten largest borrowing countries accounted for about 60 percent of the IDA’s total exposure at the close of 2025.
The institution noted that it continues to assess country exposures carefully, taking into account repayment timelines, future loan commitments, and projected disbursements when evaluating risk levels.
Overall, the IDA’s global portfolio expanded significantly over the past year. Net loans outstanding rose to $226.4 billion as of December 2025, compared to $205.8 billion a year earlier, reflecting a broader scale-up of concessional financing under its hybrid funding model.
Data from Nigeria’s Debt Management Office shows the country’s total external debt stood at $46.98 billion as of June 30, 2025.
Of that amount, the World Bank Group accounted for $19.39 billion — comprising $18.04 billion from the IDA and $1.35 billion from the International Bank for Reconstruction and Development.
This means the multilateral lender now holds roughly 41.3 percent of Nigeria’s total external debt stock, underscoring its dominant role in funding the country’s development agenda.
Nigeria’s exposure also exceeds that of other major African IDA beneficiaries, including Ethiopia and Tanzania.
While IDA loans typically offer more favorable terms than commercial borrowing, economists caution that rising multilateral debt still contributes to the country’s growing external obligations.
The core concern, analysts say, is not the existence of borrowing itself but how effectively the funds are deployed.
Muda Yusuf, chief executive of the Centre for the Promotion of Private Enterprise, has previously noted that deficit financing is common across economies and can stimulate growth when prudently managed.
However, he warned that long-term sustainability hinges on revenue strength.
Without adequate fiscal inflows, countries risk falling into a cycle of borrowing to service existing debt.
Yusuf also calls for caution over foreign-currency borrowing, pointing to exchange-rate volatility and the potential pressure on external reserves and the naira if repayment risks are not carefully managed.
For policymakers, Nigeria’s rising exposure to IDA loans presents a familiar balancing act: concessional financing remains one of the most affordable options for bridging development gaps, yet its steady accumulation continues to intensify scrutiny of the country’s long-term debt sustainability.
