Nigeria’s Rising Debt to the World Bank’s IDA
Nigeria has maintained its position as the third-largest debtor to the World Bank’s International Development Association (IDA), with outstanding obligations reaching $18.2 billion as of June 30, 2025. This represents an increase from $16.5 billion in June 2024, reflecting a rise of $1.7 billion or approximately 10.3 percent within a year.
The IDA is a key part of the World Bank Group, offering low-interest or interest-free loans and grants to some of the world’s poorest countries. These loans are typically structured with long maturities and generous grace periods. However, the growing debt levels underscore the extent of Nigeria’s reliance on concessional financing to meet its development needs.
Nigeria first climbed to the third position in 2024, moving up from being the fourth-largest borrower in 2023. The country has continued to maintain this ranking into 2025. According to previous reports, Nigeria received at least $2.2 billion in new loans from the IDA during the fiscal year from July 2023 to June 2024. This means that a total of $3.9 billion in IDA loans have been disbursed to Nigeria over two years, between June 2023 and June 2025.
It is important to note that this borrowing does not include any outstanding loans from the World Bank’s International Bank for Reconstruction and Development (IBRD), which operates separately from the IDA.
Global Borrowing Trends
Bangladesh remains the largest IDA borrower globally, with its debt stock increasing from $20.5 billion in June 2024 to $22.6 billion in June 2025. South Asia continues to dominate the IDA’s loan portfolio, with Bangladesh accounting for the largest share.
Pakistan follows as the second-largest borrower, with its debt rising from $17.9 billion to $19.3 billion over the same period. India, which previously ranked ahead of Nigeria, has seen a decline in its exposure, with its outstanding debt falling sharply from $15.9 billion in June 2024 to $14.2 billion in June 2025. This drop was largely due to repayments outpacing new disbursements.
Ethiopia rounds out the top five, with its debt stock rising from $12.2 billion to $14.0 billion in the past year. Other notable changes in the top ten include Tanzania’s debt surging from $11.7 billion to $13.7 billion, surpassing Kenya, which also saw a significant increase from $12.0 billion to $13.0 billion. Vietnam’s exposure fell slightly from $12.0 billion to $11.6 billion, causing it to drop in rankings, while Ghana’s debt climbed from $6.7 billion to $7.2 billion.
Côte d’Ivoire entered the top ten in 2025 with $6.2 billion in debt, displacing Uganda, whose debt stood at $4.8 billion in 2024. Overall, the IDA’s top ten borrowers accounted for 61 percent of its total exposure in 2025, down slightly from 63 percent in 2024.
Debt Sustainability Concerns
The Single Borrower Limit (SBL), which caps lending to any single country at 25 percent of the IDA’s equity, was set at $51.0 billion for the 2026 fiscal year—up from $47.5 billion in FY25. This limit is currently well above the exposure levels of the largest borrowers, meaning it is not a binding constraint at present.
Nigeria’s continued presence near the top of the IDA debtor table reflects its persistent financing gap for development spending, particularly in infrastructure, energy access, and poverty reduction programs. While IDA loans offer more favorable terms than market borrowing, the steady accumulation of such debt adds to Nigeria’s overall public debt burden, raising concerns about debt sustainability.
According to data from the World Bank, the institution approved a total of $8.40 billion in fresh loans to Nigeria over the past two years, covering 15 projects in energy, education, healthcare, rural infrastructure, and governance. The amount includes $1.95 billion from the IBRD and $6.50 billion from the IDA.
As of March 31, 2025, Nigeria’s total debt to the World Bank reached $18.23 billion, marking a $420 million increase in just three months. The DMO data showed that borrowings from the IDA rose from $16.56 billion in December 2024 to $16.99 billion in March 2025. Meanwhile, loans from the IBRD remained unchanged at $1.24 billion.
Economic Implications
The World Bank Group now accounts for $18.23 billion, or about 39.7 percent of Nigeria’s total external debt stock, which stood at $45.98 billion as of March 2025. This reflects a marginal increase in the World Bank’s share of the debt portfolio, up from 38.9 percent recorded in December 2024 and 36.4 percent at the end of 2023.
Further analysis indicates that the World Bank constitutes 81.2 percent of Nigeria’s total multilateral debt, which reached $22.43 billion in Q1 2025. This represents a rise from the 79.8 percent share recorded at the end of 2024 and highlights the central role the institution continues to play in Nigeria’s financing framework.
Economist and CEO of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, emphasized the importance of examining the rising World Bank commitments within the context of Nigeria’s Medium-Term Expenditure Framework and annual budgets. He noted that deficit financing is common globally and not inherently wrong, as it allows governments to make critical investments without waiting for full revenue generation.
However, he stressed that borrowing should be backed by sound economic reasoning and clear development priorities. Yusuf highlighted the need for debt sustainability, which depends primarily on the country’s revenue capacity to service its obligations. Without a strong cash flow, Nigeria risks falling into a cycle of borrowing to service existing loans, leading to fiscal vulnerability.
He advised caution with foreign loans due to exchange rate risks and emphasized the importance of a disciplined approach to debt management to avoid long-term fiscal distress.
