Nigeria has secured a $1.5 billion loan from the World Bank following the removal of fuel subsidies and tax reforms. This marks one of the fastest disbursements in the country’s history, with both tranches released in under six months.
The loan, part of the Reforms for Economic Stabilisation to Enable Transformation (RESET) initiative, aims to stabilize Nigeria’s economy and promote growth. The first $750 million tranche was disbursed in July 2024, while the second was released in November 2024, tied to the removal of fuel subsidies and tax reform commitments.
The World Bank lauded Nigeria’s swift action, stating: “The Borrower has exceeded expectations, fully deregulating the fuel market and introducing impactful reforms.”
Fuel Subsidy Removal: Fiscal Relief, Public Outcry
Nigeria’s fuel subsidy removal has saved billions but increased petrol prices fivefold since mid-2023. Citizens, however, face skyrocketing transportation and living costs. Protests erupted in Abuja, Kano, and Lagos, highlighting economic hardships.
President Bola Tinubu defended the reforms, pledging redirected funds toward infrastructure and social welfare. He announced direct cash transfers of ₦25,000 to 15 million households, though only 4 million have benefited so far.
Tax Reforms and Economic Diversification
A proposed tax bill aims to increase VAT to 10% by 2025 while simplifying compliance and expanding tax credits for businesses. These reforms target Nigeria’s historically low tax-to-GDP ratio, which the World Bank described as a barrier to sustainable growth.
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Despite praise for fiscal discipline, critics argue the reforms could widen regional economic disparities.
Debt and Future Loans
The $1.5 billion loan is part of Nigeria’s broader financial engagement with the World Bank, which has loaned $6.95 billion to the country in 18 months. Plans are underway for three new loans in 2025, focusing on education, nutrition, and aid for displaced persons.
The World Bank called the reforms necessary, urging Nigeria to sustain efforts to address inefficiencies like fuel subsidies and low revenue mobilization.
