Nigeria Seeks $1.5 Billion Aid from World Bank to Alleviate Naira’s Decline

In a bid to address the severe dollar shortage affecting the naira, Nigeria is actively pursuing a $1.5 billion aid package from the World Bank. Finance Minister Wale Edun expressed optimism, stating that discussions with the World Bank are underway, emphasizing the country’s commitment to ongoing economic reforms. The potential issuance of a Eurobond in late 2024 is also on the table as part of Nigeria’s strategy to navigate challenging economic conditions.

Nigeria, Africa’s largest economy, has a history of utilizing Eurobonds to fund infrastructure and boost economic growth. Notably, the country redeemed a $500 million Eurobond in 2023, reflecting its engagement in international debt markets.

The Finance Minister highlighted that the proposed $1.5 billion World Bank loan would carry zero interest, providing a significant boost to Nigeria’s development initiatives. Despite grappling with a substantial debt of about N87 trillion, the International Monetary Fund has deemed it “manageable,” though acknowledging the challenge of high-interest payments.

Amidst concerns about a record low in the naira’s value, the Central Bank of Nigeria has taken steps to settle forex forwards, demonstrating its commitment to bolstering confidence in the foreign exchange market. President Bola Tinubu outlined a comprehensive financing approach to address the budget deficit, including new borrowings, privatisation proceeds, and multilateral loans for specific development projects.

As Nigeria faces persistent economic challenges, the pursuit of financial support from the World Bank emerges as a crucial step to stabilize the nation’s currency and foster economic growth.