Nigeria’s IDA Debt Climbs to $18.7 Billion: Africa’s Biggest World Bank Borrower Faces Mounting Fiscal Pressure

Nigeria has cemented its position as the largest borrower from the World Bank’s concessional lending arm on the African continent, and the third largest in the world, after fresh data confirmed that the country’s outstanding obligations to the International Development Association (IDA) surged to $18.7 billion as of December 31, 2025. The figure represents a year-on-year increase of $1.9 billion — or 11.3 percent — from the $16.8 billion recorded at the close of 2024, underscoring a deepening reliance on multilateral concessional financing at a time when the Nigerian government is confronting tightening fiscal space, a weakened naira, and widening budget deficits.

The data, drawn from IDA’s Management Discussion and Analysis report for the period ending December 31, 2025, places Nigeria behind only Bangladesh, which tops the global IDA borrowers list with $23.0 billion in exposure, and Pakistan, at $19.4 billion. Among Africa’s major economies, Nigeria stands far above its regional peers — Ethiopia and Tanzania, which are tied at fourth place with $14.1 billion each, Kenya at $13.2 billion, and Ghana at $7.5 billion — reflecting the scale of its partnership with the World Bank and the magnitude of its development financing needs.

The milestone arrives not in isolation, but against a backdrop of a rapidly expanding national debt, rising debt-service costs, exchange-rate volatility, and public discourse about whether the government’s borrowing trajectory is sustainable. For policymakers, development economists, and ordinary Nigerians who will ultimately bear the cost of these obligations, the question is no longer just how much Nigeria owes — but whether the borrowed funds are generating the economic returns needed to service them.

Build the future you deserve. Get started with our top-tier Online courses: ACCA, HESI A2, ATI TEAS 7, HESI EXIT, NCLEX-RN, NCLEX-PN, and Financial Literacy. Let Serrari Ed guide your path to success. Enroll today.

What the IDA Data Actually Shows

According to IDA’s latest portfolio report, net loans outstanding across the institution’s entire global portfolio rose to $226.4 billion as of December 31, 2025, up from $205.8 billion a year earlier. The growth reflects a broad scaling-up of concessional support under IDA’s hybrid financing model, which blends traditional donor contributions from member governments with market-based borrowings — a structure the institution has increasingly relied on to expand its lending firepower in the wake of the COVID-19 pandemic and global development setbacks.

Nigeria and the nine other largest borrowers collectively accounted for 60 percent of IDA’s total exposure as of December 2025, a marginal decline from the 61 percent recorded a year earlier, suggesting a modest broadening of IDA’s lending base even as the top debtors continue to grow in absolute terms. The full top-ten list, ranked by IDA exposure, is: Bangladesh ($23.0bn), Pakistan ($19.4bn), Nigeria ($18.7bn), Ethiopia ($14.1bn), Tanzania ($14.1bn), Kenya ($13.2bn), India ($13.0bn), Vietnam ($11.0bn), Ghana ($7.5bn), and Ukraine ($6.7bn).

IDA also disclosed that the single borrower limit (SBL) — the maximum exposure cap — was set at $51 billion for fiscal year 2026, equivalent to 25 percent of the institution’s $204.2 billion equity base. The institution confirmed, however, that the SBL is not currently a constraining factor for borrowing countries, meaning Nigeria still has considerable headroom to draw additional financing.

Nigeria’s Total External Debt: The Bigger Picture

The IDA figure cannot be read in isolation from Nigeria’s broader debt profile. According to data from the Debt Management Office (DMO), Nigeria’s total public debt reached N153.29 trillion ($103.94 billion) as of September 30, 2025, an increase of N893.87 billion from the N152.40 trillion recorded in June of the same year. External debt alone stood at $48.46 billion (N71.48 trillion), representing 46.63 percent of the total public debt stack.

Of this external debt, the World Bank Group held the largest share — $19.39 billion in total, comprising $18.04 billion from IDA and $1.35 billion from the International Bank for Reconstruction and Development (IBRD). This means the World Bank Group alone accounts for approximately 41.3 percent of Nigeria’s total external debt, giving the Washington-based institution an outsized role in shaping the country’s development financing landscape and debt sustainability dynamics.

Multilateral creditors as a group — including the African Development Bank Group and other institutions such as the Islamic Development Bank and the International Fund for Agricultural Development — collectively held $23.41 billion, or 48.31 percent of Nigeria’s external debt as of September 2025. This heavy multilateral weighting is a double-edged sword: it signals access to concessional financing with softer repayment terms, but it also creates structural dependence on institutions whose disbursement timelines and conditionalities can influence domestic policy.

Domestic debt, meanwhile, stood at N81.82 trillion ($55.47 billion), with FGN Bonds accounting for N61.9 trillion, or roughly 80 percent of the domestic portfolio. Nigerian Treasury Bills added another N12.68 trillion. The federal government continues to account for the bulk of debt exposure at all tiers, with states and the FCT contributing $2.71 billion, or about 2.61 percent of the total.

What Nigeria Has Been Borrowing For

A critical part of any debt sustainability assessment is whether the borrowed funds are being deployed productively. In Nigeria’s case, IDA financing has supported a wide range of projects spanning health, education, social protection, digital infrastructure, agriculture, and governance over the past several years.

Between June 2023 and August 2025 alone, the World Bank approved $8.4 billion in new loans for Nigeria across 15 projects. These include major commitments in girls’ secondary education, women’s economic empowerment, renewable energy expansion, primary healthcare, nutrition, community resilience, and rural development.

In March 2025, the World Bank approved $1.08 billion in concessional financing for three Nigerian operations — $500 million for the NG-CARES community resilience programme, $80 million for the Accelerating Nutrition Results in Nigeria (ANRiN 2.0) initiative, and $500 million for the Hope for Quality Basic Education for All (HOPE-EDU) project. These are targeted at improving educational outcomes and supporting vulnerable households.

In October 2025, the World Bank approved an additional $500 million for the Building Resilient Digital Infrastructure for Growth (BRIDGE) project and $250 million for a health security programme. The BRIDGE initiative aims to close Nigeria’s digital divide by expanding high-speed broadband to underserved communities through a nationwide fibre network, with the federal government holding a minority equity stake in the Special Purpose Vehicle that will manage it.

On gender and human capital, the World Bank’s portfolio has also financed programmes through which over 4 million adolescent girls benefitted from improved school infrastructure, scholarships, and digital literacy training by 2025. Over one million women were empowered through Women Affinity Groups, accessing savings, livelihood grants, and skills training under IDA-financed programmes.

These outcomes are real and significant. The question, however, is whether they are being achieved at a cost — and pace of debt accumulation — that is fiscally manageable.

One decision can change your entire career. Take that step with our Online courses in ACCA, HESI A2, ATI TEAS 7, HESI EXIT, NCLEX-RN, NCLEX-PN, and Financial Literacy. Join Serrari Ed and start building your brighter future today.

The Debt Sustainability Question

IDA loans carry highly concessional terms — typically zero to low interest rates and repayment tenures of up to 38 to 40 years, far more favourable than commercial borrowing in international capital markets. But economists are increasingly vocal about the risks that accompany even concessional debt accumulation at Nigeria’s current pace.

Dr Muda Yusuf, economist and CEO of the Centre for the Promotion of Private Enterprise, has warned that rising World Bank commitments must be evaluated within the context of Nigeria’s Medium-Term Expenditure Framework and annual budgets, which already factor in domestic and foreign borrowing. He stressed that debt sustainability depends primarily on revenue capacity. Without sufficient and growing cash flow, he cautioned, Nigeria risks entering a cycle of borrowing to repay existing loans — a pattern that deepens fiscal vulnerability rather than alleviating it.

Yusuf also flagged the exchange-rate risk that accompanies foreign-currency-denominated loans. Exchange-rate depreciation can significantly inflate the naira value of repayments, putting pressure on foreign reserves and further weakening the naira. In this regard, domestic debt is generally easier to manage — it can be rolled over in naira terms and does not expose the government to the foreign exchange risk that characterises external obligations.

The numbers bear this concern out. Nigeria’s 2026 budget projects a deficit of at least N23.85 trillion, representing 4.28 percent of GDP, with borrowing expected to cover a substantial portion. The federal government spent N8.93 trillion ($6.2 billion) on debt servicing in the first nine months of 2025 alone — equivalent to 61 percent of the N14.55 trillion revenue generated during the same period. When debt service consumes the majority of government revenue, the fiscal space available for new development investments narrows sharply, creating a compounding challenge.

Nigeria’s 36 states, meanwhile, paid a combined N455.38 billion in foreign debt service deductions in 2025, according to Federation Account Allocation Committee figures released by the National Bureau of Statistics — a figure that illustrates the debt burden’s penetration to the subnational level.

IDA’s Own Monitoring Framework

IDA has acknowledged the significance of monitoring large exposures relative to its lending ceilings. The institution noted in its December 2025 management report that assessing loan sustainability requires consideration of repayment profiles of existing loans, disbursement trends, and projected new financing commitments — a framework that applies directly to large borrowers like Nigeria.

The institution’s Sustainable Development Finance Policy is designed to help borrowing countries strengthen debt transparency, debt management, and fiscal sustainability over time. In fiscal year 2025, IDA commitments globally totalled $33.8 billion, of which $8.2 billion took the form of grants. Africa received 66 percent — $22.4 billion — of total IDA commitments in FY25, reflecting the continent’s dominant role in the institution’s development agenda.

For Nigeria specifically, the IDA confirmed that its single borrower limit of $51 billion remains well above current exposure levels, giving the country room to continue borrowing. Yet the institution’s emphasis on careful monitoring signals awareness that exposure at this scale warrants ongoing scrutiny of how loans are being absorbed and whether borrowing countries are building the fiscal foundations to repay them.

Government’s Stated Strategy and Market Confidence

The Tinubu administration has sought to manage the narrative around Nigeria’s debt accumulation by emphasising the productive purpose of borrowed funds and its stated intention to shift away from expensive borrowing over time. Finance Minister Wale Edun, speaking at the G-24 Technical Group Meeting in Abuja, declared that Nigeria was “deliberately shifting away from a model overly reliant on expensive external borrowing toward a more resilient growth framework powered by domestic reforms, private capital, and diversified financing instruments.”

The Debt Management Office also pushed back in January 2025 against claims that the debt stock had risen from N21 trillion to N142 trillion under the current government, clarifying that it stood at N87 trillion when Tinubu assumed office — a still-significant figure that has since climbed further. Whether the shift toward domestic borrowing and private capital mobilisation will be sufficient to change the trajectory remains to be seen.

Development economists remain divided. Some, like Lagos-based analyst Adewale Abimbola, argue that borrowing is not inherently problematic when tied to viable, revenue-generating projects. Others, like CSA Advisory CEO Dr Aliyu Ilias, warn that Nigeria’s debt trajectory is unsustainable, projecting total debt could approach N180 trillion if the current trend continues.

Africa’s Largest IDA Borrower — Opportunity or Warning Sign?

Nigeria’s position as Africa’s largest IDA borrower reflects both the scale of its population and the depth of its development financing gaps. With approximately 220 million people, significant infrastructure deficits, and some of the world’s highest rates of out-of-school children and maternal mortality, the country’s need for development finance is not in doubt. The World Bank has, by all accounts, channelled significant resources into addressing these gaps through IDA-financed projects.

But being the largest borrower on the continent also carries reputational and institutional weight. It means Nigeria’s fiscal management choices — and the outcomes of World Bank-funded projects — will shape how multilateral institutions evaluate the country’s creditworthiness and governance capacity for years to come. The IDA’s emphasis on monitoring repayment profiles and ensuring that borrowed resources translate into measurable economic gains is not merely procedural; it is a signal to borrowing governments that concessional financing is not unconditional and that accountability for development outcomes is expected.

For Nigeria, the $18.7 billion figure is not simply a debt statistic. It is a reflection of the country’s aspirations, its fiscal vulnerabilities, and the urgent need to ensure that every dollar borrowed from the world’s largest development institution finds its way into outcomes that strengthen the economy’s capacity to repay — and to ultimately finance its own development.

Ready to take your career to the next level? Join our Online courses: ACCA, HESI A2, ATI TEAS 7 , HESI EXIT  , NCLEX – RN and NCLEX – PN, Financial Literacy!🌟 Dive into a world of opportunities and empower yourself for success. Explore more at Serrari Ed and start your exciting journey today! ✨

Track GDP, Inflation and Central Bank rates for top African markets with Serrari’s comparator tool.

See today’s Treasury bonds and Money market funds movement across financial service providers in Kenya, using Serrari’s comparator tools.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

23rd February, 2026