The World Bank has approved a $1.25 billion Development Policy Financing loan for Nigeria despite widespread public criticism over the country’s rising debt profile, as it unveiled a new six-year partnership strategy aimed at accelerating private sector-led growth and job creation.

The lender announced on Wednesday that its Board had approved the Nigeria Actions for Investment and Jobs Acceleration Development Policy Financing operation as part of a broader Country Partnership Framework covering 2026 to 2032.

The approval comes days after a number of Nigerians criticised the proposed facility on social media, questioning the country’s growing reliance on external borrowing and demanding greater accountability over previous World Bank loans.

The statement read, “The World Bank Group has endorsed a new Country Partnership Framework (CPF) for Nigeria spanning 2026–2032, setting out a strategy to create more and better jobs at scale by unlocking private sector–led growth. As part of this broader support, the World Bank has also approved the Nigeria Actions for Investment and Jobs Acceleration (NAIJA) Development Policy Financing (DPF) operation, which supports Nigeria’s transition toward a more inclusive growth model that spurs growth and create jobs.”

According to the World Bank, the $1.25 billion facility will support reforms designed to strengthen the foundations for economic growth, improve competitiveness and stimulate private sector investment.

The statement noted, “The NAIJA DPF operation, which amounts to $1.25 billion, supports a set of Government reforms to strengthen the foundations for growth and competitiveness.”

The lender said the operation would back reforms to deepen Nigeria’s capital markets, modernise regulations for the digital economy and e-governance, advance power sector reforms, reduce trade barriers under the country’s commitments to the Economic Community of West African States and the African Continental Free Trade Area, improve access to quality agricultural seeds and strengthen domestic revenue mobilisation.

The financing forms part of the World Bank Group’s wider support package for Nigeria, combining policy-based lending with investments in energy, digital infrastructure, agriculture, private sector development and social protection.

The bank said the package is intended to help create jobs, strengthen economic resilience and reduce poverty by encouraging greater private sector participation in the economy.

Nigerian banks are expected to contend with elevated loan losses through 2026 as high interest rates, persistent inflation and the withdrawal of regulatory forbearance continue to weigh on the quality of their loan books, S&P Global Ratings has said.

The outlook reflected a broader trend across Africa’s largest banking markets, with lenders in Nigeria, South Africa and Egypt forecast to face rising credit losses as geopolitical tensions, tighter global financial conditions and stubborn inflation increase pressure on businesses and households.

The projections are contained in S&P Global Ratings’ ‘Global Banking Outlook 2026 Midyear Update: Emerging Europe, Middle East and Africa (EMEA),’ release.

The ratings agency said banking systems across emerging Europe, the Middle East and Africa remain broadly resilient, but warned that operating conditions are becoming more challenging.

“We expect many banking sectors in emerging EMEA, despite general resilience, will face increasing credit losses, as rising inflation weighs on household disposable income and corporate profitability,” the report stated.

S&P said a prolonged conflict in the Middle East could further worsen banks’ asset quality across the region.

“If the instability in the Middle East continues for a prolonged period, asset quality deterioration and the related increase in credit losses could be significant,” it said.

The report also identified uncertainty over the United States Federal Reserve’s interest-rate path and weaker investor confidence in emerging markets as additional risks that could tighten financing conditions across emerging Europe, the Middle East and Africa.

For Nigeria, however, S&P said the country is less vulnerable to the direct spillover effects of the Middle East conflict because it is a net oil exporter and an emerging producer of refined fuels.

“As a net oil exporter and an emerging producer of refined fuels, Nigeria is less exposed to the spillover effects from the Middle East war,” the report noted.

Even so, S&P expects domestic economic conditions to remain a challenge for the banking sector, with inflation, unemployment and poverty projected to stay elevated. It added that high interest rates and the removal of regulatory forbearance would continue to put pressure on banks’ asset quality.

“Additionally, the removal of regulatory forbearance and high interest rates will continue to weigh on banks’ asset quality,” the report said.

Against that backdrop, S&P expects Nigeria’s non-performing loan ratio to stabilise at between six and seven per cent in 2026, while credit losses remain elevated at between two and 2.5 per cent.

Despite those pressures, the agency said Nigerian banks are expected to generate sufficient earnings to absorb higher provisioning costs.

“We expect most banks will be able to absorb the incremental provisioning requirements thanks to their strong profitability, even as average return on equity normalises at about 20 per cent to 23 per cent in 2026, compared with an estimated 25 per cent in 2025,” it stated.

In Egypt, S&P said banks’ creditworthiness remains closely tied to that of the sovereign because exposure to the public sector accounted for about 61 per cent of total banking assets as of December 31, 2025.

It expects the Middle East conflict to slow economic growth and weaken private sector credit demand in the country. Combined with tighter monetary policy, average credit losses are projected to increase to about 150 basis points in 2026 and 2027 from about 130 basis points in 2025.

Central Bank of Nigeria (CBN) has revoked the operating licences of 46 Microfinance Banks (MFBs) across the country with effect from July 1, 2026.

The apex bank announced the decision in a statement signed by its Acting Director, Corporate Communications Department, Mrs Hakama Sidi-Ali, on Wednesday.

According to the CBN, the action was taken pursuant to the powers conferred on it by Sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA), 2020.

The statement said the withdrawal of the licences was approved by the Governor of the CBN, Mr Olayemi Cardoso, after the affected institutions failed to satisfy the regulatory conditions required to continue operating as licensed financial institutions.

The bank explained that the affected microfinance banks were found to have breached one or more provisions of the regulatory framework guiding their operations.

According to the CBN, some of the infractions include insolvency, where the institutions’ assets were insufficient to meet their liabilities, cessation of banking operations without the approval of the apex bank, prolonged inactivity, failure to commence operations within one year of being licensed, and inability to maintain the prescribed minimum capital requirement.

The CBN said the decision forms part of its ongoing efforts to safeguard the stability of Nigeria’s financial system and strengthen regulatory compliance among licensed financial institutions.

It reiterated its commitment to ensuring that banks operating in the country adhere strictly to extant laws, prudential guidelines and other regulatory requirements aimed at protecting depositors and preserving confidence in the financial sector.

The apex bank advised customers of the affected institutions to await further directives regarding the resolution process in line with existing regulatory procedures.

The CBN also released the list of the affected microfinance banks whose operating licences have been withdrawn.

See affected banks below