Nigeria Seeks Six-Month Deadline Extension for World Bank’s $132 Million Loan Project
The Federal Government of Nigeria has requested a six-month extension for the completion of a $132.42 million loan project financed by the World Bank.
This is according to the restructuring paper for the Innovation Development and Effectiveness in the Acquisition of Skills (IDEAS) Project, which was seen by Nairametrics.
The loan, allocated through the Innovation Development and Effectiveness in the Acquisition of Skills (IDEAS) Project, aims to enhance the country’s capacity to produce relevant skills for both the formal and informal sectors.
According to the restructuring paper, this extension is pivotal for Nigeria to meet critical training targets and finalize key project components.
IDEAS Project Overview and Current Status
The IDEAS Project, approved by the World Bank’s Board of Executive Directors on February 18, 2020, and effective since March 15, 2021, was designed to improve Nigeria’s skills development system.
The original closing date for the project was set for June 30, 2025. As of the last mid-term review conducted between October and December 2023, approximately $40.42 million of the $132.42 million has been disbursed, with a balance of $92 million remaining.
Following the first restructuring on June 29, 2024, the project shifted focus towards results-based contracting (RBC) for demand-driven training (DDT), specifically targeting literate and numerate youth.
This new approach also included the establishment of the Nigerian Youth Employment Skills Acquisition Fund (NYESAF), designed to provide around 75,000 youth with market-relevant skills.
The restructuring also resulted in a partial cancellation of about $70 million of the project funds.
Reason for Extension Request
According to the restricting paper, the request for a six-month extension stems from the Federal Government’s intention to fulfil training targets.
The document read: “In a letter dated June 27, 2024, the Federal Government of Nigeria requested a restructuring of the IDEAS project to increase the focus on results-based contracting of skills training targeted at literate/numerate youth seeking employment, and to limit other training modalities to activities that are already sufficiently advanced and likely to complete prior to closure, and to amend activities and results framework of the IDEAS Project; and to cancel US$70.0 million.
“In the same letter, the Federal Government of Nigeria also requested a 6-month extension in order to meet their training targets under the Results-Based Contracting (RBC) for demand-driven training (DDT).”
This extension would move the project’s new completion date from June 30, 2025, to December 31, 2025, specifically for the NYESAF activities.
The government argued that additional time is required to complete three rounds of training and independent verification of results.
According to the project plan, these trainings are scheduled to be completed in three phases, with the last phase anticipated by December 2025.
The government’s request for an extension comes as part of a broader restructuring effort to address youth unemployment through skills training.
What you should know
Nairametrics earlier reported that Nigeria was the third-largest debtor to the World Bank’s International Development Association (IDA) as of June 30, 2024, reflecting a significant increase in the country’s borrowing from the institution.
- According to the World Bank’s financial statements, Nigeria’s exposure to the IDA rose by 14.4% from $14.3 billion in the fiscal year (FY) of 2023 to $16.5 billion in FY2024.
- This $2.2 billion increase places Nigeria among the top three IDA debtors for the first time, a notable shift from its previous position as the fourth-largest borrower in 2023.
- The fiscal year for 2024 runs from July 2023 to June 2024, which means that Nigeria has received at least $2.2 billion from the World Bank under the administration of President Bola Tinubu.
- This debt is different from any outstanding loan from the World Bank’s International Bank for Reconstruction and Development (IBRD).
- Nairametrics also reported that Nigeria secured a total of $4.95 billion in loans from the World Bank under Tinubu amid concerns over the country’s rising external debt servicing costs.
However, Nigeria has received only about 16% of these fresh loans.
The World Bank may approve four loan projects totalling $2 billion for Nigeria this year.
Data from the external debt stock report of the Debt Management Office (DMO) shows that Nigeria owes the World Bank a total of $15.59 billion as of March 31, 2024.
