The Federal Government is in discussions with the World Bank over three proposed loans worth a combined $1.5bn, as Nigeria’s total public debt reached a record N166.79tn at the end of June 2026.
Documents from the World Bank show that the proposed financing consists of three separate $500m facilities targeting climate resilience, social protection and early childhood development.
The first facility is an additional $500m for the Agro-Climatic Resilience in Semi-Arid Landscapes project, popularly known as ACReSAL. The World Bank is expected to consider the proposal on October 29, 2026, while the Federal Ministry of Environment is listed as the implementing agency and the Federal Republic of Nigeria as the borrower.
If approved, the additional funding would increase ACReSAL’s total financing from $700m to $1.2bn, with the entire amount coming through the International Development Association (IDA), the World Bank’s concessional financing arm.
The World Bank said the additional funding would be used to expand successful interventions and strengthen the institutions and financing systems required to sustain integrated landscape management.
The programme would cover areas including land restoration, watershed rehabilitation, erosion and flood control, irrigation, drainage, water harvesting and storage, reforestation and other climate adaptation measures.
Of the proposed $500m additional financing, $310m would go towards dryland management, $165m to community climate resilience and $25m to institutional strengthening and project management.
ACReSAL currently operates in 19 northern states and the Federal Capital Territory, focusing on challenges such as land degradation, water insecurity, climate vulnerability and declining agricultural output.
The World Bank estimates that desertification and land degradation affect about 43 per cent of Nigeria’s land area. It also warned that inadequate action on climate change could reduce Nigeria’s GDP by approximately 2.6 per cent annually by 2030 and as much as 6.7 per cent by 2050.
Second $500m loan targets social protection
The second proposed facility is another $500m IDA credit for the Household Prosperity and Empowerment-Social Protection Project, known as HOPE-SP.
The project is still at an earlier preparation stage, with its technical design review scheduled for October 30, 2026. The World Bank has provisionally set March 16, 2027, for consideration of the project.
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 $500m financing would consist of a $420m results-based programme and an $80m investment project financing component, both expected to be funded through IDA.
The programme is designed to create a more regular social assistance system for poor and vulnerable households, while gradually increasing the contribution of federal and state governments to its financing.
It would support targeted unconditional and conditional cash transfers, upgrade Nigeria’s social registry, link the National Identification Number to the social protection information system and strengthen implementation at federal, state and local government levels.
The World Bank noted that 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 estimated 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.
It attributed the worsening conditions to factors including the COVID-19 pandemic, inflation, natural disasters and conflict. The bank also noted that the removal of fuel subsidies and exchange-rate reforms increased living costs in the short term.
Third loan targets early childhood development
The third proposed $500m facility would finance the Nigeria Early Childhood Development programme.
Its technical design review is also scheduled for October 30, 2026, with the World Bank currently targeting March 15, 2027, for approval.
The Federal Ministry of Finance would serve as the borrower, while the Federal Ministry of Budget and Economic Planning is expected to oversee implementation.
The programme would operate across all 36 states and the FCT, focusing on improving access to healthcare, nutrition, early learning, childcare, water and sanitation and other essential services for children aged zero to five.
The proposed financing would comprise a $400m programme-for-results component and $100m investment project financing component, both funded through IDA.
The World Bank said the programme was necessary because 40 per cent of children under five are stunted, fewer than half are developmentally on track and only 36 per cent of children aged 36 to 59 months attend organised early learning programmes.
Nigeria’s public debt rises to N166.79tn
The proposed new borrowing comes against the backdrop of a significant increase in Nigeria’s public debt.
Figures from the Debt Management Office show that total public debt increased by N14.39tn, from N152.40tn in June 2025 to N166.79tn in June 2026. This represents a year-on-year increase of 9.44 per cent.
In dollar terms, public debt increased by $21.27bn, or 21.35 per cent, from $99.66bn to $120.93bn during the same period.
The difference between the naira and dollar growth rates was partly linked to exchange-rate changes. The DMO used an official exchange rate of N1,379.1842/$ in June 2026, compared with N1,529.2105/$ a year earlier.
Between March and June 2026, total public debt also increased by N7.44tn, or 4.67 per cent, from N159.35tn to N166.79tn.
Domestic debt remained the larger portion of the portfolio at N91.59tn, representing 54.91 per cent of total public debt. External debt stood at N75.20tn, or 45.09 per cent.
Treasury bills drive domestic borrowing
Federal Government domestic debt rose from N76.59tn in June 2025 to N87tn in June 2026, an increase of N10.41tn, or 13.60 per cent.
FGN bonds remained the largest instrument, accounting for N64.84tn, or 74.53 per cent, of Federal Government domestic debt.
However, Nigerian Treasury Bills recorded the strongest growth, increasing from N12.76tn in June 2025 to N19.48tn in June 2026. That represents an increase of N6.72tn, or 52.64 per cent.
Their share of Federal Government domestic debt consequently rose from 16.67 per cent to 22.39 per cent.
Between March and June 2026, Treasury Bills increased by N2.92tn, or 17.60 per cent, from N16.57tn to N19.48tn.
Meanwhile, the securitised Ways and Means balance fell from N22.72tn in March to N22.11tn in June, while promissory notes declined by 29.81 per cent, from N1.73tn to N1.22tn over the year.
FGN Savings Bonds increased by 33.78 per cent, rising from N91.53bn to N122.45bn, although they accounted for only 0.14 per cent of Federal Government domestic debt.
Nigeria’s World Bank debt reaches $20.73bn
The DMO figures also show that Nigeria’s outstanding obligations to the World Bank Group stood at $20.73bn at the end of June 2026.
This consisted of $19.12bn owed to IDA and $1.61bn to the International Bank for Reconstruction and Development (IBRD).
The total World Bank exposure increased by $1.34bn, or 6.93 per cent, from $19.39bn in June 2025.
By the end of June, World Bank Group obligations represented about 38 per cent of Nigeria’s $54.52bn external debt.
Nigeria’s total multilateral debt stood at $24.76bn, with World Bank obligations accounting for approximately 84 per cent of that amount.
Commercial borrowing stood at $23.16bn, representing 42.47 per cent of Nigeria’s external debt, while bilateral debt was $6.61bn, or 12.12 per cent.
Eurobonds accounted for $18.55bn of the commercial debt portfolio.
China remained Nigeria’s largest bilateral creditor, with $4.91bn owed to the Export-Import Bank of China and another $573.53m to the China Development Bank. Nigeria also owed $906.23m to France.
Atiku calls for debt reconciliation
The PUNCH had earlier reported that former Vice-President Atiku Abubakar called for a comprehensive reconciliation of Nigeria’s public debt, including new borrowing, Treasury Bills and charges contained in recent external debt-service records.
Atiku also criticised the Tinubu administration over the economic hardship experienced by Nigerians following the removal of the petrol subsidy and other reforms introduced in 2023.
His position was contained in a statement issued on Saturday by Phrank Shaibu, Director of Strategic Communications of the African Democratic Congress Presidential Campaign Council.
Atiku questioned why the government continued to borrow despite claims of increased revenue and called for details of old debt, exchange-rate-related changes and new loans obtained since the administration took office.
He also raised concerns about the cost of servicing the country’s growing debt.
Economist explains role of concessionary loans
Economist Adewale Abimbola said loans from institutions such as the World Bank are generally concessionary, with lower interest rates and longer repayment periods than many market-based loans.
He said the key issue was how such financing is structured and used, rather than borrowing itself.
“If it’s concessionary and tied to viable projects with medium-term revenue prospects, I don’t think it’s a bad idea,” Abimbola said, adding that the effectiveness of borrowing depends on how the funds are utilised.
He said properly targeted investments could support economic growth, strengthen government revenue and improve public services over time.
Source: PUNCH
