The Federal Government under President Bola Ahmed Tinubu has opened discussions with the World Bank over a proposed $1.25 billion loan, a move that comes at a time when Nigeria’s public debt has reached a historic high. According to the most recent data released by the Debt Management Office, the country’s total debt stock now stands at approximately ₦159.28 trillion, equivalent to about $110.97 billion, reflecting a steady rise in borrowing over recent years.
If the new loan is approved, it will become one of the largest single financing facilities obtained from the World Bank under the current administration. It also reinforces the government’s continued reliance on external financing as a key component of its broader economic reform agenda, which has focused on stabilising the economy, attracting investment, and addressing long standing structural challenges.
The proposed facility is formally known as the Nigeria Actions for Investment and Jobs Acceleration programme. It is structured as a development policy operation aimed at supporting economic reforms that encourage private sector expansion, improve macroeconomic stability, and strengthen Nigeria’s competitiveness in the global economy. The programme is expected to focus on several key sectors, including access to credit for businesses, digital infrastructure development, electricity supply reforms, agricultural productivity, trade facilitation, and tax system improvements.
According to planning documents, the loan is expected to be presented for consideration by the World Bank board on June 26, 2026. Once approved, the funds would be disbursed to support ongoing reforms and policy implementation efforts across various sectors of the economy. At current exchange rates, the $1.25 billion facility translates to roughly ₦1.70 trillion, which would further expand Nigeria’s already substantial debt portfolio.
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This proposed borrowing adds to a growing list of World Bank financed projects approved for Nigeria in recent years. Since June 2023, estimates suggest that the Tinubu administration has secured approximately $10.6 billion in approvals from the World Bank, covering a range of projects focused on economic stabilisation, social protection, infrastructure development, and governance reforms. These inflows have been positioned by the government as critical support for navigating difficult macroeconomic adjustments.
However, the timing of the latest loan request has drawn attention due to the country’s rapidly increasing debt levels. Data from the Debt Management Office shows that Nigeria’s debt has grown significantly over the past decade, rising from about ₦33 trillion in 2020 to more than ₦159 trillion by the end of 2025. This sharp increase has been driven by a combination of new borrowing, exchange rate depreciation which inflates external debt in naira terms, and rising fiscal deficits.
A closer look at the debt structure reveals that domestic debt accounts for approximately ₦84.85 trillion, representing just over half of the total public debt. External debt stands at about ₦74.43 trillion, reflecting Nigeria’s exposure to international creditors and multilateral institutions. Within the domestic segment, the Federal Government remains the largest borrower, holding an estimated ₦80.49 trillion in obligations, largely through treasury bills, bonds, and other instruments used to finance budget deficits.
Despite efforts to manage borrowing, Nigeria’s debt servicing obligations continue to place significant pressure on government finances. For 2026, debt service costs are projected at around ₦15.81 trillion, a figure that consumes a large share of expected government revenue. This has raised concerns among analysts about the sustainability of current fiscal trends, especially as revenue generation continues to lag behind expenditure needs.
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The debt to GDP ratio, which is often used as an indicator of debt sustainability, is projected at around 32.3 percent for 2026. While this level is still within what some international benchmarks consider manageable, economists caution that the ratio does not fully reflect Nigeria’s revenue challenges, limited fiscal space, and heavy dependence on borrowing to fund recurrent and capital expenditures.
Government officials, however, maintain that borrowing remains an essential part of Nigeria’s economic strategy, particularly as the country implements major structural reforms. Key policy changes such as the removal of fuel subsidies and the liberalisation of the foreign exchange market have been described as necessary steps to correct long standing distortions in the economy. However, these reforms have also led to short term inflationary pressures and currency depreciation, which have affected household incomes and business costs.
In response, the administration has argued that external financing from institutions like the World Bank plays a stabilising role by providing concessional funding for targeted programmes aimed at cushioning the impact of reforms. The proposed $1.25 billion loan, in particular, is expected to support initiatives that promote job creation, improve access to essential services, and enhance private sector development during a period of economic adjustment.
Supporters of the borrowing strategy argue that such loans are not merely for consumption but are tied to reform implementation and development outcomes. They point to investments in infrastructure, digital economy expansion, and agricultural transformation as areas where external funding can help unlock long term growth potential and reduce poverty.
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Despite these justifications, concerns about Nigeria’s rising debt profile continue to generate public debate. Critics argue that the pace of borrowing may outstrip the country’s capacity to generate sufficient revenue for repayment, especially if economic growth does not accelerate significantly in the coming years. There are also questions about the efficiency of project implementation and whether borrowed funds are delivering adequate returns in terms of employment, productivity, and economic diversification.
Civil society groups and policy analysts have repeatedly called for greater transparency in the use of borrowed funds, as well as stronger accountability mechanisms to ensure that loans translate into measurable development outcomes. They also stress the importance of improving domestic revenue generation through tax reforms, diversification of exports, and reduction of wasteful expenditure.
As Nigeria’s total debt approaches the ₦160 trillion mark, the outcome of the ongoing World Bank negotiations is likely to attract close scrutiny from both domestic and international observers. The decision will not only influence Nigeria’s short term financing position but also shape broader discussions about debt sustainability, fiscal discipline, and economic strategy.
For now, the country remains at a critical fiscal crossroads, balancing the need for external financing to support reforms with growing concerns about long term debt exposure. The approval or rejection of the $1.25 billion loan will therefore serve as another key indicator of Nigeria’s evolving economic direction under the current administration.
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