Nigeria’s Shiny New Loan

Is the recent $2.25 billion loan from the World Bank a lifeline or trap door?

Before Bola Ahmed Tinubu was sworn in as president on 29 May 2023, Nigeria had faced a series of economic and social misfortunes. These included fuel scarcity, oil theft, corruption and mismanagement of taxpayer’s funds, vandalism, insecurity, high cost of living, and extremism. At his inauguration, the president, as is customary in Nigeria and every other political landscape, promised to overturn these misfortunes, and most of all, to alleviate poverty, economic liberation, and other economic challenges. 

The current reality of the economy reveals that these promises have not been kept, and worse, that Nigeria is in a poorer economic condition than it was before the Tinubu administration. Fuel price is triple what it was according to a 4 September BBC report. Food has far become a luxury for the average Nigerian, the cost of living is costing the living, and insecurity is on a rampage. All these have led to the fragile situation of Nigeria’s economy. The federal government, recognizing the crucial need to avoid a national crisis, embarked on critical reforms to address economic distortions and revive fiscal targets. The need for a bold and crucial step led to the taking of loans from the World Bank.  

On 13 June 2024, the World Bank approved financing operations in two tranches to the total sum of $2.25 billion for the benefit of Nigeria. The loan is aimed at providing rapid financial aid to support Nigeria’s unstable economy. The first tranche of the loan, which is a $1.5 billion facility, is for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing (DPF) programme. This tranche was granted to Nigeria to protect millions of citizens who have faced growing poverty since the downturn of the economy. The second tranche, which is the $750 million facility for the Nigeria Accelerating Resource Mobilization Reforms (ARMOUR) Programs-for-Results (PforR), will be disbursed majorly to support tax reforms and revenue drive, and to safeguard oil revenues, as current oil revenues suffer massively from vandalization of pipelines and oil theft...