The uptick highlights Abuja’s increasing use of concessional funding to support development spending amid tightening revenue conditions and global economic uncertainty. Analysts say the trend reflects both continued project disbursements and expanded commitments in priority sectors such as healthcare, education, and infrastructure.
With the latest increase, Nigeria now ranks as the third-largest borrower in the IDA portfolio, behind Bangladesh at $23.0bn and Pakistan at $19.4bn. The World Bank noted that the top ten borrowing countries together accounted for 60 per cent of the IDA’s total exposure at the end of 2025.
The lending arm said it continues to closely monitor country exposures, noting that assessing risk requires attention to both repayment schedules and future loan commitments.
“Monitoring these exposures relative to the SBL requires consideration of the repayment profiles of existing loans, as well as disbursement profiles and projected new loans and guarantees,” the institution stated.
Overall, the IDA’s portfolio expanded significantly during the period. Net loans outstanding rose to $226.4bn as of December 2025, up from $205.8bn a year earlier, reflecting the broader scaling up of concessional resources under its hybrid financing model.
Although IDA loans typically have long maturities and lower interest rates than commercial borrowing, Nigeria’s rising stock of IDA loans still contributes to its growing external debt burden.
World Bank exposure dominates Nigeria’s external debt profile
According to the Debt Management Office, the country’s external debt stood at $46.98bn as of June 30, 2025. Of that amount, the World Bank Group accounted for $19.39bn, including $18.04bn from the IDA and $1.35bn from the International Bank for Reconstruction and Development.
This means the multilateral lender holds about 41.3 per cent of Nigeria’s total external obligations, reinforcing its dominant role in financing the country’s development programmes. Nigeria’s exposure is also higher than that of other major African IDA clients such as Ethiopia and Tanzania.
Economists say the key question is not whether borrowing exists, but whether the loans are used productively. Speaking previously, Muda Yusuf, chief executive of the Centre for the Promotion of Private Enterprise, noted that deficit financing is common globally and can support growth when properly managed.
However, he warned that sustainability ultimately depends on revenue strength. Without sufficient cash flow to meet repayment obligations, he said, countries risk “a vicious cycle of borrowing to service existing loans”.
Yusuf added that Nigeria should remain cautious about foreign-currency borrowing due to exchange-rate risks, noting that externally denominated debt can strain reserves and weaken the naira if not carefully managed.
For policymakers, the rising IDA exposure reinforces a familiar dilemma. Concessional loans remain one of the cheapest ways to fund development gaps, yet their steady accumulation is intensifying scrutiny of Nigeria’s long-term debt trajectory.
