Nigeria to Commence $500 Million Health Loan Repayment in 2029

Nigeria is to repay a $500 million loan from the World Bank from 2029 to 2054, aimed at strengthening primary healthcare. The loan management involves several federal and state health entities, with repayments structured on specific performance indicators. Additional financial support from the World Bank is anticipated, but concerns about rising external debt and fiscal stability remain pertinent.

The Federal Government of Nigeria is set to commence repayment of a $500 million concessional loan from the International Development Association, beginning in 2029 and continuing until 2054. This financing, documented in an agreement with the World Bank, targets improvements in primary healthcare services, particularly regarding maternal and child health, emergency medical care, and pandemic preparedness.

The administration of the loan will be overseen by the Federal Ministry of Health and Social Welfare, collaborating with crucial agencies including the National Primary Healthcare Development Agency and the Nigeria Centre for Disease Control and Prevention. State governments will also participate in the implementation alongside their respective health ministries and agencies.

Repayment of the loan will occur biannually, with obligations scheduled for April 15 and October 15. The principal will be serviced at an annual rate of 1.65% from 2029 to 2049, before an increase to 3.40% is enacted from 2049 until the end of the repayment period in 2054. Additional charges include a commitment fee of 0.5% on unwithdrawn funds and a service fee of 0.75% on withdrawn amounts.

The total repayment cost may be subject to variations due to currency fluctuations. The disbursement of funds is contingent upon meeting established healthcare performance indicators, which include enhancing access to primary healthcare, improving emergency care services, and fortifying responses to pandemics.

Significant investments will also focus on developing digital health systems, bolstering climate resilience within the healthcare sector, and increasing participation of at-risk populations in health insurance programs. Despite favorable terms, concerns persist regarding Nigeria’s escalating external debt and rising servicing costs, especially as the naira continues to depreciate, potentially inflating the local currency repayment costs over the 25-year term.

The loan was officially approved on September 26, 2024, with its operational phase anticipated to begin in fiscal year 2025 and a closing window of June 30, 2029. If no extensions are made, the program will span approximately four years, followed by a significant repayment phase.

Furthermore, the World Bank may authorize an additional $1.13 billion in loans for Nigeria by the end of March 2025 to bolster economic resilience, health security, and educational reforms. Projects under negotiation include an $80 million initiative aimed at improving nutrition for vulnerable populations, a $500 million economic stimulus program, and a $552.2 million project to enhance basic education quality.

As Nigeria faces economic challenges, including fiscal deficits and constrained foreign exchange liquidity, data from the Central Bank of Nigeria indicates that the country allocated $5.47 billion for external debt servicing between January 2024 and February 2025, highlighting the increasing pressure this places on its fiscal stability.

In summary, Nigeria will begin repaying a $500 million loan from the World Bank in 2029, with the repayment scheduled to extend until 2054. The funds aim to enhance primary healthcare and are bound by numerous performance indicators. Also noteworthy are additional loans projected from the World Bank to support Nigeria’s broader economic and developmental goals. However, rising external debt and the depreciation of the naira pose significant concerns for the country’s fiscal health going forward.

Original Source: punchng.com