The World Bank has approved a $1.25 billion Development Policy Financing (DPF) loan for Nigeria despite growing public concerns over the country’s rising debt profile, while unveiling a new six-year partnership framework aimed at accelerating private sector-led economic growth and job creation.

The approval was announced on Wednesday following a meeting of the World Bank Board, which endorsed both the Nigeria Actions for Investment and Jobs Acceleration (NAIJA) Development Policy Financing operation and a new Country Partnership Framework (CPF) covering 2026 to 2032.

The latest facility comes amid widespread criticism from many Nigerians over the government’s increasing reliance on external borrowing and calls for greater accountability in the utilisation of previous World Bank loans.

According to the World Bank, the $1.25 billion loan will support reforms designed to strengthen Nigeria’s economic competitiveness, improve the investment climate, and stimulate private sector-led growth.

The institution said the financing would help deepen Nigeria’s capital markets, modernise regulations governing the digital economy and e-governance, advance power sector reforms, reduce trade barriers under the ECOWAS and African Continental Free Trade Area (AfCFTA) frameworks, improve access to quality agricultural inputs, and strengthen domestic revenue mobilisation.

The bank noted that the financing forms part of a broader package of support combining policy-based lending with investments in energy, digital infrastructure, agriculture, social protection, and private sector development.

Alongside the loan approval, the World Bank launched its new Country Partnership Framework for Nigeria, which will guide its engagement with the country between 2026 and 2032.

Under the strategy, the bank aims to support programmes expected to provide electricity access to 32 million Nigerians, broadband connectivity to 58 million people, improved health and nutrition services for 40 million citizens, and increased agricultural productivity for 9.5 million farmers through better access to quality inputs.

The framework also seeks to strengthen human capital development while expanding investments in digital infrastructure and energy to stimulate economic growth.

World Bank Country Director for Nigeria, Mathew Verghis, said the new partnership framework would focus on creating sustainable employment by enabling private sector investment.

According to him, recent macroeconomic reforms have helped stabilise Nigeria’s economy, but sustained improvements in living standards would require addressing structural constraints limiting business growth and investment.

The World Bank also disclosed that its private sector financing arm, the International Finance Corporation, and its political risk insurance agency, Multilateral Investment Guarantee Agency, would play key roles in mobilising private investment under the new framework.

IFC Divisional Director for Nigeria, Dahlia Khalifa, said Nigeria’s long-term economic prospects depend on its ability to attract investment, improve productivity and unlock private sector job creation.

Similarly, MIGA Vice President and Chief Financial Officer, Ed Mountfield, said the agency would expand the use of guarantees and political risk insurance to encourage investments in critical sectors, including infrastructure and financial services.

The newly approved facility is the second-largest World Bank loan granted to Nigeria under the administration of Bola Ahmed Tinubu, following the $1.5 billion Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing approved in June 2024.

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The International Monetary Fund has warned that Nigerians may face more difficult economic conditions in the coming months as rising food and transport costs continue to strain household incomes.

The warning was issued by the IMF’s African Department Director, Abebe Selassie, during a briefing at the ongoing Spring Meetings of the World Bank and IMF in Washington, D.C.

Selassie said global shocks, including geopolitical tensions and supply chain disruptions, are already driving up the cost of living across Sub-Saharan Africa, with Nigeria among the hardest hit.

According to him, transportation costs have surged significantly, affecting both urban and rural populations and pushing food prices even higher.

“The immediate effect will be pressure on food security and transportation, which will ultimately raise the cost of food,” he said, noting that many households are already feeling the impact.

He added that the rising cost of living is making daily survival increasingly difficult for Nigerians, as inflation continues to erode purchasing power.

Despite these challenges, the IMF noted that Nigeria could benefit from rising crude oil prices, with key grades such as Brass River and Qua Iboe trading above $113 per barrel—well above the $60 benchmark in the 2026 budget.

Analysts say the surge in oil prices, driven by tensions in the Middle East and uncertainties around U.S.-Iran relations, could boost government revenue in the short term.

However, the IMF cautioned that the potential windfall may not translate into broad economic relief, as structural challenges and debt obligations remain significant.

The Fund projected that Nigeria’s debt-to-GDP ratio will rise to 33.1 percent by 2027, highlighting concerns about fiscal sustainability despite a slight downward revision from earlier estimates.

Data from the Debt Management Office shows that the country’s total public debt rose to ₦159.27 trillion as of the fourth quarter of 2025.

On policy direction, the IMF advised the government to maintain ongoing economic reforms, improve revenue generation, and prioritise critical spending.

Selassie stressed that abandoning reforms could worsen the situation, warning that inconsistent policies may derail long-term economic stability.

He also emphasised the need for stronger domestic revenue mobilisation, improved tax efficiency, and better public spending management.

In addition, the IMF warned against broad-based subsidies, describing them as costly and difficult to sustain, while urging policymakers to adopt targeted interventions that protect vulnerable populations.

Experts have also raised concerns about Nigeria’s fiscal outlook, noting that while the debt-to-GDP ratio appears moderate, the country’s limited revenue base poses a bigger risk.

They argue that a large informal economy and weak tax collection reduce the government’s capacity to service debt effectively.

Economic analysts further warned that higher oil prices could lead to increased fuel costs domestically, especially as the government maintains its stance against fuel subsidies.

This, they say, could worsen inflation and deepen economic hardship for millions of Nigerians already grappling with rising living costs.

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The Federal Government has ruled out plans to seek financial support from the International Monetary Fund, despite the institution’s proposed $50 billion support package for struggling African economies.

Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made this position clear during a press briefing at the ongoing World Bank/IMF Spring Meetings in Washington, D.C.

Edun stated that Nigeria has no intention, for now, to approach the IMF for additional borrowing, stressing the government’s commitment to managing its economic challenges independently.

“Nigeria has no plan at the moment to approach the IMF for any such burden,” he said.

His comments come shortly after IMF Managing Director, Kristalina Georgieva, disclosed that the global lender is preparing between $20 billion and $50 billion in financial support for countries facing economic strain, particularly in Sub-Saharan Africa.

Georgieva had advised nations under economic pressure to act swiftly when seeking financial assistance, warning that delays could worsen macroeconomic conditions.

While Nigeria is not seeking direct funding, Edun acknowledged that African economies are currently facing heightened vulnerabilities, especially due to global disruptions linked to the Middle East crisis.

According to him, many African countries—particularly oil-importing nations—are disproportionately affected by rising global tensions, which threaten macroeconomic stability, job creation, and poverty reduction efforts.

He noted that these countries require additional support, even though they are not directly responsible for the external shocks impacting their economies.

The IMF chief also highlighted the broader global implications of the crisis, warning that ongoing conflicts and supply chain disruptions could weaken global economic growth.

She projected that global growth could decline from 3.4 percent last year to 2.1 percent in 2026, with a worst-case scenario of 2 percent if current pressures persist.

Georgieva further explained that higher oil prices and disrupted trade routes are already driving inflation and slowing economic expansion worldwide.

Despite these concerns, she revealed that African finance ministers and central bank governors have so far prioritised policy guidance over immediate financial assistance during discussions with the IMF.

Experts say Nigeria’s decision to avoid additional IMF borrowing may reflect concerns over rising debt levels and the conditions often attached to such loans.

The Federal Government has instead continued to focus on fiscal reforms, revenue generation, and economic policies aimed at stabilising the economy without increasing external debt exposure.

The development underscores Nigeria’s cautious approach to borrowing, even as global economic uncertainties continue to mount.

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