Documents obtained from the World Bank show the cancellation followed a formal request from the Federal Government.

Both parties agreed to discontinue the remaining financing under the Power Sector Recovery Performance-Based Operation after key reform targets failed to materialise.

The decision also brings the programme to an earlier close. Its end date was moved from June 30, 2027, to May 31, 2026.

According to the restructuring document, “The restructuring will result in the cancellation of the entire undisbursed balance in the amount of $717.7 million equivalent, and no further disbursements will be made under the Program following approval of this restructuring.”

The programme was introduced in 2020 as part of efforts to restore financial stability in Nigeria’s electricity sector, improve power supply and reduce the industry’s dependence on government support.

At the start, the World Bank approved about $752.5 million for the initiative. Three years later, after early reforms showed some progress, the bank approved an additional financing package of roughly $763.5 million to extend the programme and deepen reforms across the sector.

Together, both facilities were worth around $1.52 billion.

Still, the additional financing package struggled almost from the beginning.

The World Bank said the fall of the naira after the foreign exchange market liberalisation in June 2023 significantly raised electricity generation costs because gas prices are tied to the US dollar.

More than 70% of electricity supplied into Nigeria’s national grid comes from gas-fired plants.

At the same time, electricity tariffs were largely unchanged for most consumers. Only Band A customers saw tariff adjustments in April 2024.

That gap between high production costs and revenues collected from consumers widened rapidly.

According to the World Bank, tariff shortfalls climbed from N140 billion in 2022 to about N1.9 trillion annually in both 2024 and 2025.

The bank said the growing deficits placed heavy pressure on government finances and weakened the reform programme.

“Due to the mismatch between the electricity generation costs and the sector tariff revenues, the tariff shortfalls increased sharply in the last 3 years, moving from a low of N140bn in 2022 to a high of N1.9tn per year in 2024 and 2025, putting serious pressure on the limited Federal Government of Nigeria’s fiscal space,” the report stated.

The World Bank also pointed to deeper structural problems in the electricity sector, including weak performance by distribution companies, transmission bottlenecks, underused generation capacity, poor cost recovery, and high technical and commercial losses.

Those problems slowed implementation and made it difficult for Nigeria to meet conditions tied to further disbursements.

The bank said authorities failed to establish a credible financing framework capable of reducing tariff deficits over time.

“Recent financing plans have not fully identified sufficient sources of funding to cover tariff shortfalls, nor established a credible trajectory for their reduction,” the report stated.

Even so, the original phase of the programme achieved some measurable results before conditions worsened.

The World Bank said tariff shortfalls dropped by 71% between 2019 and 2022, falling from N581 billion to N166 billion.

Regulatory cost recovery improved from 56% to 94% during the same period, while electricity supplied to distribution companies increased by 13% between 2018 and 2021.

These encouraged the bank to approve additional financing in 2023.

However, implementation later stalled. The World Bank said none of the global indicators tied to the additional financing arrangement were achieved.

It also downgraded implementation progress under the programme to “Moderately Unsatisfactory.”

Financial records in the restructuring document show that only about 9% of the additional financing package was eventually disbursed.

Out of the programme’s total commitment of roughly $1.52 billion, around $796 million had been released before the cancellation, leaving $717.7 million undrawn.

The World Bank concluded that the programme’s structure no longer matched realities in Nigeria’s power sector.

“Taken together, these developments point to a misalignment between the design of the operation and the evolving implementation context,” the report stated.

The cancellation comes days after the Accountant-General of the Federation, Dr Shamseldeen Ogunjimi, warned that Nigeria could reconsider future World Bank loan arrangements if approval and disbursement delays continue.

Speaking during a meeting with a World Bank delegation in Abuja, Ogunjimi said Nigeria should not face long delays in accessing funds tied to development projects because the facilities are loans, not grants.

He said, “If approvals take more than six months, the Nigerian Government may no longer honour such arrangements.”

Ogunjimi also urged the World Bank to speed up approvals and disbursements to support Nigeria’s development priorities.

“That pain which we’ve had for 18 months is abating somewhat … the business is growing very strongly. So I’m actually very bullish and confident that we’ll see strong recovery in Nigeria,” CEO Ralph Mupita told Reuters.

But the damage is still obvious. MTN reported a pre-tax loss of 4.4 billion rand ($243 million) for the year ending December 31, a sharp contrast to its 12.2 billion rand profit in 2023. In Nigeria, the financial blow was worse, with pre-tax losses growing over 200% to 550.3 billion naira ($355.76 million). 

The issues? A weakened naira, skyrocketing costs, and an economy choked by inflation and foreign exchange shortages.

MTN is fighting back. The company has renegotiated tower leases, saving 1.2 billion rand. A tariff hike in January is expected to ease some of the financial stress. The company is also betting on mobile money and data services to stabilise revenue. Altogether, cost-saving efforts have shaved off 3.8 billion rand in expenses.

In Sudan, ongoing conflict has affected MTN’s operations, leading to impairments of 11.7 billion rand. Network disruptions in Khartoum and surrounding areas have been severe, though Mupita noted that some sites are gradually coming back online.

Service revenue fell 15% to 177.8 billion rand, but in constant currency terms, it rose 14%. The real shock came in MTN’s headline earnings per share, which plummeted by 69%. Nonetheless, investor trust hasn’t collapsed—by 12:20 GMT, MTN shares were up 2.39%. 

Analysts see resilience beneath the issues. “If you look at the underlying performance, which is service revenue at constant currency, it does look strong. Management team is executing well,” said Peter Takaendesa, head of equities at Mergence Investment Managers.

Nigeria’s economic policies under President Bola Tinubu—removal of fuel subsidies, exchange rate reforms—are designed to attract foreign investment. But inflation is still high, and forex volatility isn’t going away overnight.

MTN’s strategy is to push mobile money, expand data services, and keep costs in check. The company has weathered crises before. Whether this recovery holds, however, depends on how well it navigates Nigeria’s economic sector and its own internal restructuring.

This development follows the Nigerian Communications Commission’s (NCC) reluctance to approve a tariff increase, which operators have sought to mitigate the impact of naira’s devaluation and rising inflation.

The operators have resorted to load shedding, a practice where services are deliberately reduced in specific areas to prevent system-wide failures and cut costs. 

Although the operators have not officially confirmed this move, there is noticeable prioritisation of service in high-revenue areas, leading to varying service quality across different regions.

The telecom sector in Nigeria is currently faced with several challenges, including the escalating costs of diesel, maintenance, and infrastructure, compounded by a rapidly depreciating naira. 

FDIs in Nigeria’s Telecom Sector: Opportunities and Risks in 2024

For instance, MTN Nigeria, with nearly 80 million subscribers, reported a huge loss of ₦137 billion after tax for the first time since its 2019 listing, primarily due to foreign exchange losses amounting to ₦740 billion. 

Similarly, Airtel Africa, which serves over 50 million Nigerian subscribers, recorded a loss of $89 million for its fiscal year ending in March 2024, largely due to foreign exchange challenges.

The economic downturn has greatly affected the sector’s investment capacity. Airtel Nigeria’s CEO, Carl Cruz, spoke on the sharp devaluation of the naira and how it has hindered the industry’s growth, given its reliance on imported infrastructure. 

MTN Nigeria’s CEO, Karl Toriola, stated that the sector is on the brink of collapse unless urgent interventions, such as tariff increases, are implemented.

The situation has become so dire that operators are now exploring load shedding as a cost-saving measure. This strategy involves reducing the number of operational base stations, particularly in low-revenue areas, to cut costs. 

This has inevitably led to poor service quality in these regions, as the remaining infrastructure struggles to cope with the demand.

The NCC has not issued an official response to the operators’ demands, leaving the industry in a state of uncertainty. The regulatory body’s silence has increased fears of continuous service disruptions becoming large if a resolution is not reached soon.

And I heard the older sister rebuke her, “Stop it, don’t you know Nigeria is hard?” it was startling and unsettling to realise that children are no longer immune from inflationary pressure.

It is no longer news that Nigerians are facing tough economic times. Recent government decisions like removing fuel subsidies, devaluing the Naira, and now eliminating electricity power subsidies have caused a lot of stress for businesses and citizens.

These changes, meant to help the economy in the long run, are right now difficult for everyone. Let’s break down what’s happening and explore ways for Nigerians to cope.

Fuel Subsidy Removal: The government removed fuel subsidies in its desire to free up money to attend to other important areas in the economy.

A fallout of the policy is that businesses that rely on affordable fuel, especially small and medium-sized ones, got squeezed.

Costs went up, profits went down, and some people even lost their jobs. Household expenses went up in smoke. This made the whole economy unstable.

Naira Devaluation: As with devaluation anywhere in the world, the goal was to make Nigerian exports cheaper and possibly attract more foreign investment.

It however backfired spectacularly. What happened was that the value of the Naira went down and everything became more expensive.

People couldn’t buy as many goods with their money, and businesses that import things had to pay more for them. Inflation went off seeming on steroids.

Power Subsidy Removal: Now, the government has announced that electricity bills are going up. Families and businesses alike are likely to be hurt.

Experts argue that this makes it harder for people to afford basic needs and for businesses to be productive. It would equally contribute to widening the gap between the rich and the poor.

The good part is that the same government that triggered the problems can take steps to fix them.

The place to start is the place it has wanted to start for half a century. This is the diversification of the economy.

It is time to spread the wealth: The economy cannot continue to rely so heavily on oil. The government must as a matter of urgency begin investing in things like agriculture, manufacturing, and technology.

Through these, it can create a more stable and long-lasting economic foundation.

The second thing has equally been spoken about almost forever. The government must now move beyond talk. It needs to demonstrate that it is careful with the country’s wealth.

This means allocating resources effectively, truly cutting waste, and being transparent about spending.

The government must not only appear to be cutting the cost of governance, it must be seen to be doing it sensibly.

It is equally critical for the government to boost investment in infrastructure, especially power generation and distribution. It needs to look at all existing projects and actively encourage their completion.

The deal with German electricity giant, Siemens, which is expected to lead to the production of 25000 megawatts of electricity by 2025 must be pursued relentlessly.

It promises to be a huge game changer for the nation. It will improve electricity access, attract investment, and boost economic activity.

While the above are ongoing, the government needs to urgently create safety nets to support people who are struggling today because of these changes.

This could include targeted subsidies, cash transfer programs, and free job training initiatives. And it must communicate more.

It is not enough to leave people to make assumptions. The government has to consistently talk to the people, share its goals and where necessary voice its challenges.

The good news is that Nigerians are known for their resourcefulness. People are already exploring ways to deal with these economic challenges. Here are some quick suggestions from experts:

Create a Plan: Make a budget, track your spending, and try (as much as possible) to save some money for a rainy day. 

Improve Your Skills: Boost your capacity, learn new skills, or even consider starting your own business. No one can afford to be idle at this time

Explore Multiple Sources of Income: We have to admit at this point that motivational speakers were right after all. Multiple sources of income really can shield one from the effects of economic fluctuations. 

Use Your Voice: You may need to join advocacy efforts. For instance, talk to your representatives about the challenges the community is facing.

By working together, Nigerians can build a brighter, more resilient and inclusive economic future for ALL.

[Featured Image Credit]

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Elvis Eromosele, a corporate communication professional and public affairs analyst, wrote via: elviseroms@gmail.com

Naira touched an all-time low at the official market to trade at N435 per $1 on Thursday and Friday respectively, after the Central Bank of Nigeria (CBN) adjusted the country’s exchange rate on its website to N413.49 to a dollar.

The move by the CBN may indicate another round of devaluation of the currency by the bank.

In May, the apex devalued the naira from N379 to N411.00 per dollar after adopting the Investors and Exporters (I&E) window rate, also known as Nafex rate.

Recall that Pro. Yemi Osinbajo, the Vice President of Naira had urged the CBN to bow to market forces, saying that exchange rate is ‘artificially low’.

Meanwhile, at the close of business on Friday, being the last day of 2021, naira recorded no movement against the U.S. dollar at the official market.

It closed at N435.00 to a dollar, the same rate the currency exchanged hands with the greenback on Thursday, data published on FMDQ securities exchange windows where forex is officially traded showed.

This occurred as foreign exchange supply decreased substantially from what was recorded in the previous session Thursday.

The rate is the biggest fall Nigeria’s naira has ever experienced in the official market since February 23. Naira has weakened on a yearly basis for nine years on a stretch, according to Bloomberg data.

The Nafex rate has oscillated between 414 and 415 in the past three months before the sudden fall to 435.

Naira was devalued by 14.78 per cent at the official window in 2021, recording a significant fall from the N379.00 to a dollar rate quoted on the CBN website at the beginning of the year.

The CBN devalued the currency three times since March 2020 amidst lower oil income putting pressure on the nation’s reserves, and has resisted calls by the International Monetary Fund and the World Bank for a merger of the multiple rates.

The local unit which opened trading at N420.67 per $1 on Friday reached an intraday high of N400.00 and a low of N445.60 before closing at N435.00 again on the dot.

Forex turnover dipped by 33.90 per cent, with $150.26 million recorded at the close of trade on Friday against the $227.29 million published in the previous session on Thursday.

Currency dealers in Uyo black market exchanged the local currency with the greenback at N560.00 to a dollar and sold at N565.00, while dealers in the street of Abuja, exchanged the naira at N565.00 and sold at N567.00 to a dollar at the close of business on Friday.