Loan May Sink Nigeria As FG Seeks Fresh $500M World Bank Loan

The Nigerian federal government is seeking a $500 million loan from the World Bank to enhance rural road infrastructure, improve agricultural product access, and combat rising food prices.

The World Bank disclosed that this funding aims to address the needs of 92 million rural residents who lack adequate road networks. The Nigerian government made the request in the final draft of the Resettlement Policy Framework for the Nigeria Rural Access and Agricultural Marketing Project Scale-Up (RAAMP-SU), spearheaded by the Federal Ministry of Agriculture and Rural Development.

The RAAMP-SU project is set to finance three main components: Improvement of Resilient Rural Access ($387 million), Climate-Resilient Asset Management ($158 million), and Institutional Strengthening and Project Management ($55 million). The project's total cost is estimated at $600 million, with the World Bank expected to cover 83.33% of the funding, marking a 79% increase from its initial commitment of $280 million for the parent project.

According to the policy document, participating states must have a fully functional Roads Fund and Roads Agency, complete with appointed boards and staff, and budget provisions for administrative costs.

"Rural access is particularly restricted in areas densely populated by the economically disadvantaged. These factors underscore the imperative to expand and enhance the rural road network, as well as conserve rural road and transport assets," the document stated.

The document further emphasized that the new project requires states to have established Roads Fund and Roads Agency with active boards and staff, along with budget allocations for administrative costs. Additionally, the project promotes women's representation in the transport sector through RARAs.

This development comes amid escalating food inflation in Nigeria. In April 2024, the National Bureau of Statistics reported that food inflation rose to 40.53%. Experts attribute the spike in food prices to insecurity, high energy costs, and expensive transportation.

As of the end of 2023, Nigeria's total debt stock stood at N97.341 trillion, with foreign debt accounting for N38.22 trillion or 39% of the total debt, according to the Debt Management Office.