Nigeria Pursues $1.25 Billion World Bank Loan for Economic Growth

The Federal Government is engaging the World Bank for a fresh $1.25 billion loan under a proposed programme aimed at expanding access to finance, digital services, electricity, and supporting reforms in tax, trade and agriculture. The facility, titled Nigeria Actions for Investment and Jobs Acceleration, is listed as a Development Policy Financing operation, with the Federal Republic of Nigeria as borrower and the Federal Ministry of Finance as implementing agency. According to a World Bank Programme Information Document obtained by Nairametrics, the proposed approval date for the facility is June 26, 2026, while the review has already authorised the team to proceed with appraisal and negotiation after incorporating guidance and receiving legal evidence for prior actions met. MoreStories NESG: Nigeria remains in high-risk debt zone despite fiscal stabilisation Europe’s demographic crisis and what it means for Africa’s future What the document says The World Bank document states that the proposed development objective is to support the government’s efforts to expand access to finance, digital and electricity services, while strengthening competitiveness through tax, trade and agriculture reforms. The financing is structured as a standalone Development Policy Financing operation and is expected to support Nigeria’s shift from macroeconomic stabilisation to inclusive growth and job creation. • The document read, “The proposed Development Policy Financing (DPF) supports reforms initiated by the Government aimed at pivoting from stabilization to inclusive growth and job creation. The $1.25 billion standalone operation builds on recent progress in restoring stability and underpins the Government’s shift toward an inclusive growth model.” The Bank said the programme builds on recent stabilisation gains and supports Nigeria’s long-term growth model, targeting 7% growth, anchored on a private sector-led and public sector-facilitated strategy. The first pillar will focus on access to finance, digital services and electricity. It will support the Investment and Securities Act 2025, operationalisation of credit enhancement facilities, adoption of the National Digital Economy and E-Governance Bill, a national metering framework and private participation in interconnected mini-grids. The second pillar will focus on competitiveness through trade, tax and agriculture reforms, including reducing trade barriers, improving seed supply, VAT e-invoicing and a minimum effective corporate tax rate. Why the World Bank says Nigeria needs the loan The World Bank said Nigeria had implemented major reforms since 2023, including the removal of the petrol subsidy, unification of the exchange rate, halting of central bank deficit financing and strengthening of revenue administration. It said these steps helped restore stability, improve revenues, narrow the deficit, ease debt pressure, grow reserves, reduce foreign exchange volatility and improve investor confidence. • However, the Bank warned that Nigeria has not yet moved decisively into a higher and inclusive growth path, noting that growth remains modest, per capita income is rising by less than 2%, and 63% of Nigerians, over 139 million people, remained in poverty in 2025. • The document also cited shallow financial intermediation, weak competition, high trade barriers, low-productivity agriculture, infrastructure gaps in power, transport and digital connectivity, and weak governance as constraints to faster growth. However, the World Bank assessed the overall risk of the new operation as high, citing political and governance risks ahead of the 2027 elections, macroeconomic risks from oil price vulnerability, inflationary pressure from a prolonged Middle East conflict, possible setbacks in revenue reforms, election-related spending, weak coordination among ministries and agencies, fiduciary risks, and social risks around trade reforms. What you should know Nairametrics observed that the proposed $1.25 billion deal comes after about $9.35 billion in World Bank loan approvals for Nigeria under President Bola Tinubu between June 2023 and May 2026. If approved in June, the new facility would raise total World Bank approvals under the current administration to about $10.6 billion. The loan would also become the second-largest single World Bank loan approved for Nigeria under President Tinubu, after the $1.5 billion Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing approved in June 2024. The Accountant-General of the Federation, Dr Shamseldeen Babatunde Ogunjimi, earlier warned that Nigeria may decline or withdraw from World Bank loan arrangements if approval and disbursement processes continue to suffer prolonged delays. The AGF stressed that funds being sought from the World Bank were loans, not grants, and said Nigeria, as a responsible borrower, deserved timely consideration and processing of its funding requests. According to the statement, Ogunjimi urged the World Bank to speed up approval processes and ensure prompt release of project funds meant to support Nigeria’s development priorities.