FG Seeks Fresh $1.5bn World Bank Loan Amid Rising Debt

The Federal Government is seeking three new World Bank loans worth a combined $1.5bn to finance climate resilience, social protection and early childhood development programmes, even as Nigeria’s total public debt reached N166.79tn by the end of June 2026.

Documents from the World Bank show that the proposed facilities consist of three separate $500m loans. The first is additional funding for the Agro-Climatic Resilience in Semi-Arid Landscapes project, known as ACReSAL, while the other two are for the Household Prosperity and Empowerment-Social Protection Project and the Nigeria Early Childhood Development programme.

The proposed additional $500m for ACReSAL is the most advanced of the three facilities, with the World Bank’s board expected to consider it on October 29, 2026. The Federal Republic of Nigeria would be the borrower, while the Federal Ministry of Environment would oversee implementation.

If approved, the additional financing would increase ACReSAL’s total funding from $700m to $1.2bn. The entire facility is expected to come from the International Development Association, the World Bank’s concessional lending arm.

The additional funding is intended to expand activities aimed at restoring degraded land, improving watersheds, managing erosion and flooding, supporting irrigation and drainage systems, increasing water storage and harvesting, promoting reforestation and strengthening other climate-related interventions.

Of the proposed $500m, about $310m would go towards dryland management, $165m towards community climate resilience and $25m towards institutional strengthening and project management.

ACReSAL currently covers 19 northern states and the Federal Capital Territory. The programme focuses on problems including land degradation, water shortages, climate risks and declining agricultural output.

The World Bank has said desertification and land degradation affect about 43 per cent of Nigeria’s land area. It also estimates that inadequate action on climate change could reduce Nigeria’s gross domestic product by about 2.6 per cent each year by 2030 and up to 6.7 per cent by 2050.

The second proposed facility is a $500m IDA credit for the Household Prosperity and Empowerment-Social Protection Project, known as HOPE-SP.

The project is still at an earlier preparation stage, with its technical design review expected on October 30, 2026. The World Bank has tentatively set March 16, 2027, for consideration of the facility by its board.

The Federal Ministry of Finance is listed as the borrower, while the Federal Ministry of Humanitarian Affairs and Poverty Reduction is expected to implement the programme.

The proposed $500m package would consist of $420m in results-based financing and $80m in investment project financing, with the full amount expected from IDA.

The programme is designed to provide more regular assistance to poor and vulnerable households while gradually increasing the role of federal and state governments in funding social protection programmes.

The proposed intervention would include targeted cash transfers, both conditional and unconditional, as well as improvements to Nigeria’s social registry. It would also link the National Identification Number to the country’s social protection information system and strengthen implementation at federal, state and local government levels.

The World Bank said Nigeria’s spending on social safety-net programmes was 0.14 per cent of GDP in 2021, below the global average of 1.5 per cent and the 1.2 per cent average for lower-middle-income countries.

The bank also estimated that the share of Nigerians living in poverty rose from 40 per cent in 2019 to 56 per cent in 2023 and could reach 62.5 per cent in 2026. It linked the worsening situation to factors including the COVID-19 pandemic, inflation, natural disasters and conflict, while noting that the removal of petrol subsidy and exchange-rate reforms increased living costs in the short term.

The third proposed loan is another $500m facility for the Nigeria Early Childhood Development programme. Its technical design review is scheduled for October 30, 2026, while board consideration is tentatively planned for March 15, 2027.

The Federal Ministry of Finance would borrow the funds, while the Federal Ministry of Budget and Economic Planning would implement the programme.

The project is expected to cover all 36 states and the FCT and provide young children with better access to health, nutrition, early learning, childcare, water, sanitation and related services.

The facility would comprise $400m in programme-for-results financing and $100m in investment project financing, both through IDA.

The World Bank said the programme was being proposed against a backdrop of poor child-development outcomes, including high levels of stunting among children under five and limited access to organised early learning.

The fresh borrowing plans come as Nigeria’s public debt continues to rise. Figures released by the Debt Management Office show that total public debt increased from N152.40tn in June 2025 to N166.79tn by June 2026. The DMO has published the June 30, 2026 debt position alongside separate domestic and external debt reports.

The increase represented a year-on-year rise of N14.39tn, or 9.44 per cent. In dollar terms, public debt increased from $99.66bn to $120.93bn, representing a rise of $21.27bn, or 21.35 per cent.

The difference between the naira and dollar increases was partly linked to the exchange rate used to convert Nigeria’s external debt. The DMO used an official rate of N1,379.1842 to the dollar for June 2026, compared with N1,529.2105 per dollar in June 2025.

On a quarterly basis, Nigeria’s debt stock rose by N7.44tn, or 4.67 per cent, from N159.35tn in March 2026 to N166.79tn in June.

Domestic obligations remained the larger part of the portfolio, standing at N91.59tn, or 54.91 per cent of total public debt. External debt accounted for N75.20tn, representing 45.09 per cent.

Domestic debt rose by N11.04tn, or 13.70 per cent, from N80.55tn in June 2025. External debt increased by N3.35tn in naira terms over the same period.

The Federal Government accounted for most of the debt. Its domestic obligations stood at N87tn, while states and the FCT had N4.59tn in domestic debt. Federal Government external liabilities were N65.77tn, compared with N9.42tn owed externally by states and the FCT.

Treasury bills were among the major drivers of the increase in Federal Government domestic borrowing.

Federal Government domestic debt increased from N76.59tn in June 2025 to N87tn in June 2026, representing a rise of N10.41tn, or 13.60 per cent.

FGN bonds remained the largest component at N64.84tn. This included conventional naira bonds worth N41.47tn, securitised Ways and Means advances of N22.11tn and domestic dollar bonds valued at N1.27tn.

Outstanding Nigerian Treasury Bills, however, recorded a sharper increase, rising from N12.76tn in June 2025 to N19.48tn in June 2026. This represented an increase of N6.72tn, or 52.64 per cent.

Their share of Federal Government domestic debt consequently increased from 16.67 per cent to 22.39 per cent during the period.

Between March and June 2026, Treasury Bills increased from N16.57tn to N19.48tn. Conventional FGN naira bonds also rose during the quarter, while securitised Ways and Means advances declined from N22.72tn to N22.11tn.

Promissory notes also declined year-on-year, falling from N1.73tn in June 2025 to N1.22tn in June 2026. FGN Savings Bonds, meanwhile, increased from N91.53bn to N122.45bn, although they remained a small part of the overall domestic debt portfolio.

The new World Bank financing plans also come as the institution remains one of Nigeria’s biggest external creditors. World Bank data show that as of June 30, 2026, Nigeria had about $19.14bn in IDA exposure and about $1.84bn in IBRD exposure, including loans and guarantees.

The World Bank’s IDA exposure alone accounted for a large portion of Nigeria’s obligations to multilateral lenders.

Nigeria’s wider external debt portfolio also includes obligations to institutions such as the African Development Bank, African Development Fund, Islamic Development Bank and International Fund for Agricultural Development, alongside commercial and bilateral creditors.

Commercial borrowing remains another major part of the external debt portfolio, with Eurobonds making up a large share of Nigeria’s commercial obligations.

The proposed $1.5bn World Bank facilities would therefore add to Nigeria’s existing borrowing obligations if approved, although the loans are intended to finance specific development programmes in climate resilience, social protection and early childhood development.

The latest debt figures and proposed borrowing have also renewed debate over Nigeria’s debt management, particularly concerning how new loans are used and whether the projects they finance can produce lasting economic and social benefits.