Nigeria to Commence $500 Million Health Loan Repayment from 2029

Nigeria will repay a $500 million concessional loan from the World Bank from 2029 to 2054. The funds will enhance primary healthcare services, focusing on maternal and child health and pandemic preparedness. Despite the favorable terms, concerns over Nigeria’s rising debt levels persist as the country incurs substantial debt servicing costs.

The Federal Government of Nigeria is set to start repaying a concessional loan of $500 million from the International Development Association beginning in 2029, with repayments continuing until 2054. This agreement was formalized through a financing contract signed with the World Bank’s lending division.

This loan is part of the Nigeria Primary Healthcare Provision Strengthening Programme, aimed at enhancing primary healthcare services in Nigeria, focusing predominantly on maternal and child health, emergency medical care, and preparedness for pandemics. Funds will be managed by the Federal Ministry of Health and Social Welfare, in collaboration with several key agencies, including the National Primary Healthcare Development Agency and the Nigeria Centre for Disease Control and Prevention.

The repayment plan includes servicing the loan bi-annually, with payments scheduled for April 15 and October 15. The repayment of the principal will occur at 1.65% annually from 2029 until 2049, after which the interest rate will rise to 3.40% until the end of the repayment period in 2054. There are additional costs related to unutilized funds and serviced balances that may impact total repayment amounts.

Crucial to the disbursement of funds is the adherence to healthcare performance indicators, which encompass increased access to healthcare services, improvements in emergency obstetric and neonatal care, and enhancements to Nigeria’s pandemic response capacities. A segment of the loan will also focus on developing digital health infrastructure and facilitating healthcare access for vulnerable groups.

Despite the favorable loan terms, there are rising concerns regarding Nigeria’s escalating external debt and its servicing liabilities. Given the ongoing depreciation of the naira, real repayment costs may significantly increase over the 25-year duration. The loan agreement was granted on September 26, 2024, with operations expected to commence in fiscal year 2025, and the programme will last approximately four years unless extended.

In a broader context, the World Bank is anticipated to approve an additional $1.13 billion in loans for Nigeria by March 2025, targeting economic resilience, health security, and education reform. Proposed projects include an $80 million initiative aimed at enhancing nutrition, a $500 million economic stimulus plan for community initiatives, and a $552.2 million project focused on improving basic education quality.

Currently, Nigeria is addressing several economic issues, including foreign exchange liquidity shortages and fiscal deficits. Data from the Central Bank of Nigeria indicates that the country incurred $5.47 billion in external debt servicing costs between January 2024 and February 2025, highlighting the burdensome nature of its debt obligations.

In summary, Nigeria is poised to manage a significant health loan from the World Bank with a structured repayment plan spanning from 2029 to 2054. This funding aims to bolster primary healthcare services amidst growing national debt concerns. Future potential loans from the World Bank further underscore the critical ongoing economic challenges the country faces, particularly in external debt management and fiscal stability.

Original Source: punchng.com