Nigeria will begin repaying a $500 million loan from the World Bank in 2029, aimed at improving primary healthcare services. This concessional loan has specific performance outcomes tied to disbursements and includes multiple health initiatives. Concerns exist over the growing external debt and repayment costs due to currency fluctuations, with additional loans anticipated to support various economic and health projects before March 2025.
The Federal Government of Nigeria is set to commence the repayment of a $500 million concessional loan from the International Development Association (IDA) starting in 2029, continuing until 2054. This financial arrangement, confirmed by a signed agreement with the World Bank, is part of the Nigeria Primary Healthcare Provision Strengthening Programme aimed at enhancing primary healthcare services, including maternal health and emergency medical care.
Management of the loan will be overseen by the Federal Ministry of Health and Social Welfare, in conjunction with agencies such as the National Primary Healthcare Development Agency and the Nigeria Centre for Disease Control and Prevention. State governments will contribute through their Ministries of Health and Primary Healthcare Development Boards, ensuring collaborative implementation of the programme.
Repayment details reveal that Nigeria will service the loan semi-annually, with payments due on April 15 and October 15 of each year. The initial 20-year period from 2029 to 2049 will incur an annual interest rate of 1.65%, increasing to 3.40% from 2049 to 2054. An additional commitment charge and service charge are applicable on unutilized and utilized funds, respectively, while total repayment costs may vary due to currency adjustments.
Disbursements of the loan funds will be contingent upon meeting specific performance indicators in healthcare, including improved access to primary services, expanded maternal care, enhanced medicine supply, and fortified pandemic response mechanisms. Considerable investment will also target digital health infrastructure and health insurance enrollment for vulnerable populations.
Despite its favorable terms, there are apprehensions regarding Nigeria’s escalating external debt situation, particularly given the naira’s depreciation which may inflate the local currency repayment costs over the loan’s duration. Approved on September 26, 2024, the programme aims to initiate operations in the fiscal year 2025, with a tentative closing date of June 30, 2029.
Additionally, the World Bank is anticipated to approve approximately $1.13 billion in loans by March 2025 for various initiatives, including projects focused on nutrition improvement, economic resilience, and educational reform. These upcoming projects reflect Nigeria’s ongoing efforts to address pressing economic challenges and bolster its overall resilience amidst financial strains, as indicated by the Central Bank of Nigeria’s data showing $5.47 billion expended on external debt servicing from January 2024 to February 2025.
In conclusion, the $500 million loan from the International Development Association marks a significant step towards strengthening Nigeria’s primary healthcare system over a 25-year repayment period. While the arrangement offers essential support, concerns regarding the increasing external debt burden and potential currency impacts remain pertinent. The prospective approval of additional loans emphasizes the need for sustainable economic practices amid Nigeria’s complex financial landscape.
Original Source: punchng.com
