The majority of the loan is earmarked to shield millions who have been plunged into poverty since President Bola Tinubu took office a year ago and implemented drastic measures to revive the nation’s struggling economy
The World Bank has given the green light for a $2.25billion loan to Nigeria, aimed at bolstering revenue and supporting economic reforms that have led to the country’s worst cost-of-living crisis in years, according to an announcement made this week.
The majority of the loan – $1.5billion – is earmarked to shield millions who have been plunged into poverty since President Bola Tinubu took office a year ago and implemented drastic measures to revive the nation’s struggling economy. The bank stated that the remaining $750million will be used to back tax reforms and revenue, as well as protect oil revenues that are under threat due to limited production caused by persistent theft.
President Tinubu’s economic reforms, which include ending long-standing but expensive fuel subsidies and unifying multiple exchange rates, have triggered skyrocketing inflation that has hit a 28-year high. Facing mounting pressure from citizens and workers protesting the hardship, Tinubu’s government announced in May that it was seeking the loan to support its long-term economic plans.
The government also revealed it was taking steps to increase foreign investment inflows, which fell by 26.7% from US$5.3billion in 2022 to US$3.9billion in 2023, according to data from the Nigerian Economic Summit Group think tank. Nigeria is already grappling with a significant debt burden that has curtailed the government’s spending capacity.
The country’s dependence on loans for public infrastructure and social welfare schemes has resulted in a nearly 1,000% increase in public debt over the past decade. Nonetheless, the World Bank emphasised the importance of maintaining “critical to sustain the reform momentum” under Tinubu. According to Ousmane Diagana, the World Bank vice president for Western and Central Africa, the government’s economic strategies have set the nation “on a new path which can stabilise its economy and lift its people out of poverty.”
