Nigeria’s debt to the World Bank’s concessional lending arm, the International Development Association (IDA), surged by US$1.9 billion in 2025 to reach US$18.7 billion, reflecting growing reliance on multilateral financing amid tightening fiscal space, according to IDA’s latest financial data.
The increase represents an 11.3 percent year-on-year rise from US$16.8 billion at the end of 2024, positioning Nigeria as the third-largest borrower in the IDA portfolio behind Bangladesh (US$23.0 billion) and Pakistan (US$19.4 billion). Together, the top ten borrowers accounted for 60 percent of IDA’s total exposure of US$226.4 billion as of December 31, 2025, up from US$205.8 billion a year earlier.
The uptick in Nigeria’s IDA debt largely reflects ongoing project disbursements under the Country Partnership Frameworks, with funds directed toward critical sectors including health, education, and infrastructure. While IDA loans are highly concessional, offering long maturities and grace periods, the growing stock of loans adds to Nigeria’s overall external debt obligations.
“Monitoring these exposures relative to sustainable borrowing levels requires consideration of repayment profiles, as well as disbursement patterns and projected new loans,” the IDA report noted.
As of June 30, 2025, Nigeria’s total external debt stood at US$46.98 billion, with World Bank commitments — including US$18.04 billion from IDA and US$1.35 billion from the International Bank for Reconstruction and Development (IBRD) accounting for 41.3 percent of the total. The IBRD provides sovereign loans and guarantees for middle-income countries, while IDA focuses on concessional financing for low-income nations.
Economists warn that while borrowing from multilateral lenders supports critical development projects, it must be aligned with debt sustainability and economic capacity to repay. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, said that deficit financing can be useful for funding investments but stressed the importance of disciplined borrowing.
“Loans should support projects that enhance the economy’s capacity to generate revenue and meet repayment obligations,” Yusuf said. He cautioned that excessive foreign borrowing carries exchange-rate risks and could pressure Nigeria’s foreign reserves, underscoring the need for careful fiscal management.
The surge in IDA debt highlights the World Bank’s prominent role in financing Nigeria’s development agenda, particularly in low-cost, concessional lending, which allows the country to fund strategic projects without immediate revenue generation. Analysts note, however, that continued accumulation of external debt must be monitored closely to avoid long-term fiscal vulnerabilities.
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Nigeria’s reliance on IDA loans reflects broader global trends of low-income countries turning to multilateral institutions for concessional funding, balancing development needs with fiscal sustainability concerns in an environment of market volatility.
The International Development Association (IDA) is the concessional lending arm of the World Bank, providing low-interest or zero-interest loans, grants, and guarantees to the world’s poorest countries to support development projects and reduce poverty. Unlike the International Bank for Reconstruction and Development (IBRD), which lends to middle-income and creditworthy lower-income countries, IDA financing is highly concessional, with long repayment periods and grace periods designed to ease debt-service pressures.
Nigeria, Africa’s largest economy, has increasingly relied on IDA funding to supplement its fiscal resources, particularly in sectors such as health, education, infrastructure, and social development. IDA support is often disbursed through Country Partnership Frameworks, which outline priority investment areas and development outcomes over multi-year periods.
As of December 31, 2025, Nigeria’s outstanding IDA debt reached US$18.7 billion, making it the third-largest borrower in IDA’s portfolio after Bangladesh and Pakistan. The country’s exposure reflects both ongoing project disbursements and expanded commitments to meet growing development needs. Combined with IBRD loans, the World Bank accounts for over 40% of Nigeria’s external debt, highlighting the institution’s central role in financing the country’s development programs.
While IDA loans are more favorable than market borrowing, the accumulation of external debt contributes to Nigeria’s overall public debt burden. Economists emphasize that debt sustainability depends on the country’s revenue-generating capacity, the effectiveness of funded projects, and prudent fiscal management. Excessive reliance on foreign concessional loans can expose Nigeria to exchange-rate risks and pressure on reserves, particularly if disbursements outpace economic growth.
Nigeria’s external debt management is overseen by the Debt Management Office (DMO), which tracks obligations, ensures adherence to repayment schedules, and coordinates borrowing strategies to balance development financing needs with fiscal sustainability. In this context, IDA financing remains an important tool to support critical infrastructure and social programs while mitigating the immediate fiscal strain on the government.
Overall, Nigeria’s engagement with IDA illustrates the role of concessional multilateral finance in bridging resource gaps, enabling large-scale development projects, and fostering long-term growth, while underscoring the importance of disciplined borrowing and sound economic planning.
