FG Seeks Fresh $1.5bn World Bank Loans As Public Debt Hits N166.79trn

By Victor Idajili

The Federal Government has opened talks with the World Bank for three new loans totaling $1.5 billion at a time Nigeria's total public debt has risen to N166.79 trillion as of June 2026.

Details obtained from the World Bank show the proposed facilities are three separate $500 million credits for climate resilience, social protection and early childhood development.

The first is a $500 million additional financing for the Agro-Climatic Resilience in Semi-Arid Landscapes (ACReSAL) project. The World Bank board is expected to consider it on October 29, 2026. The Federal Republic of Nigeria is the borrower while the Federal Ministry of Environment will implement it.

The new funding would increase ACReSAL from $700 million to $1.2 billion, fully financed by the International Development Association (IDA), the World Bank's concessional lending arm.

According to the Bank's document, "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 money will go into landscape restoration, watershed rehabilitation, erosion and flood control, irrigation and drainage, water harvesting, reforestation and other climate resilient projects. Of the amount, $310 million is for dryland management, $165 million for community climate resilience and $25 million for institutional strengthening.

ACReSAL currently covers 19 northern states and the FCT and targets land degradation, water insecurity and declining agricultural productivity. The Bank noted that desertification affects about 43 per cent of Nigeria's land and failure to address climate change could cut GDP by 2.6 per cent annually by 2030 and 6.7 per cent by 2050.

The second loan is another $500 million IDA credit for the Household Prosperity and Empowerment - Social Protection Project (HOPE-SP). It is still at preparation stage, with technical review slated for October 30, 2026 and board approval tentatively fixed for March 16, 2027. The Federal Ministry of Finance is the borrower while the Ministry of Humanitarian Affairs and Poverty Reduction will implement it.

The $500 million will comprise $420 million results-based programme and $80 million investment financing. The Bank said it will help government "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."

It will fund unconditional and conditional cash transfers, upgrade the social registry, integrate NIN into the social protection system and strengthen delivery at federal, state and local levels. The Bank said Nigeria spent only 0.14 per cent of GDP on safety nets in 2021 against a global average of 1.5 per cent, while poverty rose from 40 per cent in 2019 to 56 per cent in 2023 and could hit 62.5 per cent in 2026.

The third facility is $500 million for the Nigeria Early Childhood Development programme, with approval expected March 15, 2027. The Ministry of Finance is the borrower and the Ministry of Budget and Economic Planning is the implementing agency.

The project will cover all 36 states and the FCT and aims to improve health, nutrition, early learning, childcare, water and sanitation for children aged zero to five. It will have a $400 million programme-for-results component and $100 million investment financing. The Bank said 40 per cent of under-five children in Nigeria are stunted and less than half are developmentally on track.

The new borrowing push comes as data from the Debt Management Office (DMO) shows Nigeria's public debt rose by N14.39 trillion in one year, from N152.40 trillion in June 2025 to N166.79 trillion in June 2026, a 9.44 per cent increase.

In dollar terms, debt rose by $21.27 billion or 21.35 per cent from $99.66 billion to $120.93 billion, due to exchange rate differences. The DMO used N1,379.18/$ in June 2026 against N1,529.21/$ in June 2025.

Quarter-on-quarter, debt grew by N7.44 trillion or 4.67 per cent from N159.35 trillion in March 2026.

Domestic debt stood at N91.59 trillion, 54.91 per cent of total, while external debt was N75.20 trillion. Federal Government domestic debt rose to N87 trillion, driven largely by Treasury Bills which jumped from N12.76 trillion in June 2025 to N19.48 trillion in June 2026, a 52.6 per cent rise. FGN bonds remained dominant at N64.84 trillion.

On the external side, Nigeria's debt to the World Bank Group reached $20.73 billion as of June 2026, comprising $19.12 billion to IDA and $1.61 billion to IBRD, up from $19.39 billion a year earlier. At $20.73 billion, World Bank exposure accounts for about 38 per cent of Nigeria's $54.52 billion external debt and about 84 per cent of its $24.76 billion multilateral debt.

Commercial debt stood at $23.16 billion, 42.47 per cent of external debt, with Eurobonds alone at $18.55 billion. Bilateral debt was $6.61 billion, with China accounting for over $5.48 billion.

Economists say while multilateral loans are concessionary with low interest and long tenure, what matters is effective utilisation in projects that can generate growth and revenue.