Nigeria Rises to Third-Largest World Bank Borrower as IDA Debt Hits $18.7bn
- Nigeria's IDA debt surged to $18.7 billion, marking an 11.3% increase within one year
- World Bank loans now account for 41.3% of Nigeria's total external debt, raising sustainability concerns
- Experts warn that rising debt could deepen Nigeria's fiscal vulnerability without improved revenue management
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria has emerged as the third-largest borrower from the concessional arm of the World Bank, with its debt to the International Development Association (IDA) surging to $18.7 billion as of December 31, 2025.
Fresh financial data released by the institution and confirmed by the DMO shows that Nigeria’s exposure rose by $1.9 billion within one year, up from $16.8 billion at the end of 2024.
Source: Twitter
That represents an 11.3% year-on-year increase, underlining the country’s growing reliance on multilateral concessional financing at a time of fiscal strain and global economic uncertainty.
The latest figures place Nigeria behind Bangladesh, which tops the list with $23.0 billion, and Pakistan at $19.4 billion. Together, the 10 largest borrowers account for 60% of IDA’s total exposure as of December 2025, slightly down from 61% a year earlier.
Why Nigeria’s debt is rising
The increase reflects continued project disbursements under Nigeria’s development frameworks with the World Bank and expanded commitments across critical sectors such as health, education, and infrastructure.
IDA financing is designed for low-income and vulnerable countries, offering long maturities and grace periods at highly concessional rates.
While these terms are far more favourable than commercial borrowing, the rising stock of loans still adds to Nigeria’s external debt obligations.
In its report, IDA stressed the importance of monitoring exposures in line with repayment and disbursement profiles.
It noted that assessing loan sustainability requires careful consideration of existing repayment schedules, ongoing disbursements, and projected new loans and guarantees.
The broader context is also significant. IDA’s total net loans outstanding rose to $226.4 billion as of December 31, 2025, up from $205.8 billion a year earlier, reflecting expanded concessional support under its hybrid financing model, which blends donor contributions with market borrowings.
World Bank’s growing share of Nigeria’s debt
Nigeria’s exposure to the World Bank now accounts for a substantial share of its external debt profile.
According to the Debt Management Office, Nigeria’s total external debt stood at $46.98 billion as of June 30, 2025.
Of this amount, the World Bank Group accounted for $19.39 billion, comprising $18.04 billion from IDA and $1.35 billion from the International Bank for Reconstruction and Development (IBRD).
This means the World Bank holds about 41.3% of Nigeria’s external debt, reinforcing its outsized role in financing the country’s development programmes.
While IDA loans are concessional, IBRD loans are extended to middle-income and creditworthy lower-income countries, funded largely through global capital markets under the bank’s AAA rating.
Sustainability concerns and expert warnings
Economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, has cautioned that rising World Bank commitments should be viewed within the framework of Nigeria’s Medium-Term Expenditure Framework and annual budgets, which already factor in both domestic and foreign borrowing.
He explained that deficit financing is not inherently problematic, as governments worldwide rely on borrowing to fund critical investments. However, the key issue remains sustainability.
According to him, borrowing must be guided by sound economic reasoning and aligned with projects that directly enhance the economy’s repayment capacity.
According to a Punch report, without sufficient revenue to service obligations, Nigeria risks falling into a cycle of borrowing to repay existing debts, deepening fiscal vulnerability.
Experts reveal risks of foreign debt
Yusuf also warned about the risks associated with foreign-currency loans. Exchange-rate volatility can significantly inflate repayment costs, putting pressure on foreign reserves and weakening the naira. In comparison, domestic debt is often easier to manage.
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As Nigeria’s IDA exposure climbs to $18.7 billion, the spotlight is now on fiscal discipline and revenue growth.
Concessional loans may offer breathing room, but without stronger revenue performance and prudent debt management, the country could face mounting long-term fiscal pressures.
10 Nigerian states with highest foreign debt repayments in 2025
Legit.ng earlier reported that Nigeria’s 36 states paid a combined N455.38bn in foreign debt service deductions in 2025, according to Federation Accounts Allocation Committee figures released by the National Bureau of Statistics.
The amount marks a sharp rise from the N362.08bn deducted in 2024, representing an increase of N93.30bn or 25.77 per cent year on year.
In practical terms, a bigger share of states’ FAAC allocations was automatically deducted to service loans owed to external creditors, including the World Bank, IMF, China and other multilateral and bilateral lenders.
Proofreading by Kola Muhammed, copy editor at Legit.ng.
Source: Legit.ng
