The Federal Government of Nigeria has formally requested a six-month extension to complete a $132.42 million loan project, funded by the World Bank. This project, part of the Innovation Development and Effectiveness in the Acquisition of Skills (IDEAS) Project, is crucial to enhancing Nigeria’s ability to produce relevant skills for both the formal and informal sectors.
IDEAS Project: Overview and Current Status
The IDEAS Project was approved by the World Bank on February 18, 2020, and became effective on March 15, 2021. The primary aim is to improve Nigeria’s skills development system, targeting youth employment and skills acquisition.
- Initial Project Timeline: The project was initially scheduled to close on June 30, 2025.
- Funding Disbursed: So far, $40.42 million of the total $132.42 million loan has been disbursed, leaving $92 million for further implementation.
- Restructuring: In June 2024, the project underwent a significant restructuring, focusing on results-based contracting (RBC) for demand-driven training (DDT), particularly aimed at literate and numerate youth.
The restructuring also included the establishment of the Nigerian Youth Employment Skills Acquisition Fund (NYESAF), a program designed to equip around 75,000 youth with market-relevant skills. However, this restructuring resulted in the partial cancellation of $70 million from the original project funds.
Reason for Extension Request
According to the restructuring document, the government’s request for a six-month extension stems from the need to meet specific training targets under the Results-Based Contracting (RBC) approach. The government intends to use the additional time to complete key project components and ensure the independent verification of training results.
- Government Statement: “In a letter dated June 27, 2024, the Federal Government of Nigeria requested a restructuring of the IDEAS project… and a 6-month extension to meet their training targets,” the document reads.
The proposed new project closing date is December 31, 2025, specifically for the NYESAF activities. This additional time is considered essential to completing three rounds of skills training, with the final phase expected to conclude by December 2025.
Addressing Youth Unemployment through Skills Training
The extension and restructuring of the IDEAS Project is part of Nigeria’s broader strategy to tackle youth unemployment by equipping young people with the skills necessary for employment. The initiative is seen as a vital component in addressing the country’s unemployment crisis and boosting economic productivity.
Nigeria’s Growing Debt to the World Bank
This extension request also comes in the context of Nigeria’s increasing financial exposure to the World Bank. Recent reports indicate that Nigeria has become the third-largest debtor to the World Bank’s International Development Association (IDA), with the country’s debt rising from $14.3 billion in 2023 to $16.5 billion in 2024.
- Loan Growth: Nigeria’s borrowing from the World Bank has surged by $2.2 billion, placing it among the top three IDA debtors.
- Recent Loans: Under the administration of President Bola Tinubu, Nigeria has secured $4.95 billion in loans from the World Bank, with only 16% of these loans disbursed so far.
The World Bank is expected to approve four additional loan projects worth $2 billion for Nigeria in 2024. As of March 31, 2024, Nigeria’s total debt to the World Bank stood at $15.59 billion.
Conclusion
The six-month extension requested by Nigeria for the IDEAS Project is a strategic move to ensure the successful completion of the initiative, which is critical to the country’s efforts to address unemployment through skills development. With substantial investments from the World Bank and the government’s ongoing reforms, the project aims to transform Nigeria’s workforce and boost economic growth. However, this comes amid growing concerns about the country’s rising external debt and the costs of servicing it.