Nigeria is set to receive a fresh $632 million loan from the World Bank, aimed at supporting economic reforms and development projects, despite growing concerns over its rising debt profile and fiscal challenges. The loan, expected to be approved soon, includes $80 million for the Accelerating Nutrition Results in Nigeria 2.0 project and $552 million for the HOPE for Quality Basic Education for All program.

This loan is part of a broader $2.2 billion financing package that Nigeria is set to secure from the World Bank in 2025, allocated across six major projects aimed at strengthening digital infrastructure, healthcare, education, nutrition, and community resilience. However, Nigeria's growing reliance on external loans raises concerns about debt sustainability and transparency.

The Nigerian government argues that the funds will help drive economic recovery and social programs, but critics warn that additional borrowing could worsen the country's debt sustainability issues. Nigeria has been ranked as the largest debtor in Africa and the third-largest globally to the World Bank's International Development Association (IDA), with a debt profile that has continued to surge in 2025.

As of the third quarter of 2024, the World Bank's share of Nigeria's external debt stood at $17.32 billion, according to data from the Debt Management Office. The country's total public debt has continued to grow, fueled by a mix of external borrowing, budget deficits, and currency depreciation. As of September 30, 2024, Nigeria's public debt profile surged to N142 trillion, representing an increase of N8.02 trillion driven primarily by the naira's depreciation.

The Debt Management Office (DMO) reported a 5.97% increase from N134.3 trillion in the second quarter of 2024. The debt comprised both external and domestic obligations, with the exchange rate depreciation substantially affecting external borrowings when converted to naira terms. With Nigeria's foreign reserves under pressure and the naira weakening, the cost of servicing external debt has increased significantly.

The growing debt burden could slow economic growth by reducing government spending on development projects. Private sector activity may also be affected, leading to higher unemployment and business closures. If the government continues relying on borrowing without increasing revenue generation, the economy risks stagnation.

This move highlights the ongoing debate over Nigeria's fiscal strategy and its ability to balance economic growth with financial stability. Since President Bola Tinubu's administration came on board, the World Bank has approved around 11 loan projects for Nigeria, totaling $7.45 billion in less than two years.

The implications of Nigeria's growing debt profile are far-reaching, with potential consequences for the country's economic growth, social programs, and overall financial stability. As the government continues to rely on external loans to fund its development projects, it remains to be seen whether Nigeria can strike a balance between economic growth and debt sustainability.