Economy
World Bank explores expanding loan guarantees for private financing, Banga faces pressure on resources, shareholder schisms
The World Bank on Monday said it is looking at ways to expand the guarantees it provides for commercial loans to boost the private financing available to developing countries just as World Bank President Ajay Banga will come under pressure this week to focus on climate change, but the former Mastercard CEO first needs to get shareholders in line on how to grow the bank. Banga, just 130 days into the job, has a mandate to broaden the multilateral development lender’s mission to tackle global crises including climate change, pandemics and fragile states. Some emerging economies have been unable to tap international markets as global interest rates soar and with uncertainty about when the U.S. Federal Reserve will reach the end of its current tightening cycle. A recent selloff in U. S. Treasuries pushed yields on 10-year notes to a 16-year high, in turn lifting borrowing costs for developing economies. “We are looking very systematically at how we can expand our work with the private sector. And that includes many forms of guarantees,” World Bank Senior Managing Director Axel van Trotsenburg told Reuters on the sidelines of the World Bank and International Monetary Fund annual meetings in Marrakech.
One of the biggest challenges, Van Trotsenburg said, is how to provide more funding for climate change initiatives. “The financing falls short and governments do not have the firepower to do that. So we need to complement intelligently with the private sector,” he added. Van Trotsenburg did not provide any figures nor a timeframe. World Bank guarantees have mobilised more than $42 billion in commercial capital and private investment spanning energy projects to sovereign financing in the last two decades, according to its website. The multilateral lender has already provided partial guarantees for sovereign bonds through its International Development Association (IDA), including for a $1 billion Eurobond issue by Ghana in 2015.
U.S. Treasury Secretary Janet Yellen in April said the bank must take steps to allow its private sector and poor country lending arms to lend tom sub-sovereign entities such as cities and regional authorities. The bank is currently pressing for more grants and new capital from member countries, even as it leverages its balance sheet to scale up lending for responses to climate change and other global crises.
Meanwhile, World Bank President Ajay Banga will come under pressure this week to focus on climate change, but the former Mastercard CEO first needs to get shareholders in line on how to grow the bank. Banga, just 130 days into the job, has a mandate to broaden the multilateral development lender’s mission to tackle global crises including climate change, pandemics and fragile states. But with annual climate transition finance needs estimated at up to $3 trillion for emerging market and low-income economies by 2030, development advocates are calling on him to make tackling global warming the priority at his first World Bank and International Monetary Fund (IMF) annual meetings. A G20-commissioned panel of experts recommended in July that the World Bank and other multilateral development banks (MDBs) increase annual lending by $260 billion, more than three times their current pace, to help meet climate needs.
“We’d love to shareholders see come out with a strong endorsement of that target and a plan to push that forward,” said Amy Dodd, development policy director at ONE Campaign. Banga, however, has said the major step from the meetings in Morocco will be the long-awaited shareholder endorsement of modifying the bank’s anti-poverty mission statement. The move to add “on a livable planet” has been in process for a year, and the development community is eager for next steps to maintain momentum and scale up financing quickly. The World Bank in April lowered its equity-to-loan ratio to boost lending by $50 billion over 10 years. But many further steps are more complicated and need countries to decide how much taxpayer funds they are willing to contribute or put at risk. “I’m very skeptical that there’s going to be a big step forward on the size of the institution in Marrakech,” said Clemence Landers, a former U.S. Treasury official now with the Center for Global Development in Washington.
This group on Monday published a new scorecard for MDB reforms, saying that broad changes are “firmly in play” but progress in implementing them has been limited. For now, the U.S. wants countries to back loan guarantees by the World Bank, with President Joe Biden pushing a request that Congress approve $2.1 billion in new funding that could unlock $25 billion in new concessional loans over a decade. A World Bank report to be considered in Marrakech estimates that $10 billion in guarantee commitments could boost lending by $60 billion over that period. But no other major shareholders have joined the U.S. move, which is viewed as a more palatable alternative for U.S. lawmakers to a general capital increase as this would likely lead to a bigger Chinese shareholding at the bank. British officials have expressed support for a capital increase, but Germany has favoured more issuance of hybrid capital, a debt-like instrument, that the World Bank estimates could add another $40 billion in new lending over a decade.
A bigger move would boost lending against the World Bank’s “callable capital,” a cushion of emergency funds pledged by shareholders but not paid-in, but this would require some countries to change laws. Banga has said the move is complex and will take time to negotiate. But the payoff could be huge, with the Rockefeller Foundation estimating a lending increase of some $900 billion over a decade if ratings agencies modified their evaluations. A U.S. Treasury official told Reuters that the department is working to develop rules for callable capital so that decisions could be made by April 2024. Banga has played down the lending increases and emphasised his efforts to make the 16,000-strong organisation more nimble and focused on projects with measurable impacts , saying he wants “to fix the plumbing”.
Other World Bank presidents, including Jim Yong Kim, were unable to meaningfully reform the bank, which Banga has called “dysfunctional”, despite a talented and dedicated staff. “He is shaking things up,” said a senior official at the U.S. Treasury, which nominated him for the job. While the Indian born American citizen’s approach has caused some internal friction, according to bank staff, Banga, 63, has received high marks for pushing the envelope. Banga had a good start,” said Michael Krake, who represents Germany on the World Bank’s executive board. Let Banga be Banga. Good leaders take thoughtful risks and also make some mistakes,” Krake added.
The Arab Africa Trade Bridges (AATB) Program and the Federal Republic of Nigeria formalized a partnership with the signing of the AATB Membership Agreement, officially welcoming Nigeria as the Program’s newest member country. The signing ceremony took place in Abuja on the sidelines of the 5th AATB Board of Governors Meeting, hosted by the Federal Government of Nigeria.
The Membership Agreement was signed by Eng. Adeeb Y. Al Aama, the CEO of the International Islamic Trade Finance Corporation (ITFC) and AATB Program Secretary General, and H.E. Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, Federal Republic of Nigeria. The Agreement will provide a strategic and operational framework to support Nigeria’s efforts in trade competitiveness, promote export diversification, strengthen priority value chains, and advance capacity-building efforts in line with national development priorities. Areas of collaboration will include trade promotion, agribusiness modernization, SME development, businessmen missions, trade facilitation, logistics efficiency, and digital trade readiness.
The Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, called for deeper trade collaboration between African and Arab nations, stressing the importance of value-added Agribusiness and industrial partnerships for regional growth. Speaking in Abuja at the Agribusiness Matchmaking Forum ahead of the AATB Board of Governors Meeting, the Minister said the shifting global economy makes it essential for African and Arab nations to rely more on regional cooperation, investment and shared markets.
He highlighted projections showing Arab-Africa trade could grow by more than US$37 billion in the next three years and urged partners to prioritize value addition rather than raw commodity exports. He noted that Nigeria’s growing industrial base and upcoming National Single Window reforms will support efficiency, investment and private-sector expansion.
“This is a moment to turn opportunity into action”, he said. “By working together, we can build stronger value chains, create jobs and support prosperity across our regions”, Edun emphasized. “As African and Arab nations embark on this journey of deeper trade collaboration, the potential for growth and development is vast. With a shared vision and commitment to value-added partnerships, we can unlock new opportunities, drive economic growth, and create a brighter future for our people.”
Speaking during the event, Eng. Adeeb Y. Al Aama, Chief Executive Officer of ITFC and Secretary General of the AATB Program, stated: “We are pleased to welcome Nigeria to be part of the AATB Program. Nigeria stands as one of Africa’s most dynamic and resilient economies in Africa, with a rapidly expanding private sector and strong potential across agribusiness, energy, manufacturing, and digital industries. Through this Membership Agreement, we look forward to collaborating closely with Nigerian institutions to strengthen value chains, expand regional market access, enhance trade finance and investment opportunities, and support the country’s development priorities.”
The signing of this Agreement underscores AATB’s continued engagement with African countries and its evolving portfolio of programs supporting trade and investment. In recent years, AATB has worked on initiatives across agribusiness, textiles, logistics, digital trade, export readiness under the AfCFTA framework, and other regional initiatives such as the Common African Agro-Parks (CAAPs) Programme.
With Nigeria’s accession, the AATB Program extends it’s presence in the region and adds a key partner working toward advancing trade-led development and fostering inclusive economic growth.
Federal Executive Council (FEC) has approved the 2026–2028 Medium-Term Expenditure Framework (MTEF), a key fiscal document that outlines Nigeria’s revenue expectations, macroeconomic assumptions, and spending priorities for the next three years. The approval followed Wednesday’s FEC meeting presided over by President Bola Tinubu at the State House, Abuja. The Minister of Budget and Economic Planning, Senator Atiku Bagudu made this known after the meeting.
The Minister said the Federal Government is projecting a total revenue inflow of N34.33 trillion in 2026, including N4.98 trillion expected from government-owned enterprises. Bagudu said that the projected revenue is N6.55 trillion lower than earlier estimates, adding that federal allocations are expected to drop by about N9.4 trillion, representing a 16% decline compared to the 2025 budget.
He said that statutory transfers are expected to amount to about N3 trillion within the same fiscal year. On macroeconomic assumptions, FEC adopted an oil production benchmark of 2.6 million barrels per day (mbpd) for 2026, although a more conservative 1.8 mbpd will be used for budgeting purposes. An oil price benchmark of $64 per barrel and an exchange rate of N1,512 per dollar were also approved.
Bagudu said the exchange rate assumption reflects projections tied to economic and political developments ahead of the 2027 general elections. He said the exchange rate assumption took into account the fiscal outlook ahead of the 2027 general elections.
The minister said that all the parameters were based on macroeconomic analysis by the Budget Office and other relevant agencies. Bagudu said FEC also reviewed comments from cabinet members before approving the Medium-Term Fiscal Expenditure Ceiling (MFTEC), which sets expenditure limits. Earlier, the Senate approved the external borrowing plan of $21.5 billion presented by President Tinubu for consideration The loans, according to the Senate, were part of the MTEF and Fiscal Strategy Paper (FSP) for the 2025 budget.
The spot rate on Nigerian Treasury bills has been increased by 146 basis points by the Central Bank of Nigeria (CBN) following tight subscription levels at the main auction on Wednesday. The spot rate on Treasury bills with one-year maturity has now surpassed Nigeria’s 16.05% inflation by 145 basis points following a recent decision to keep the policy rate at 27%.
The Apex Bank came to the primary market with N700 billion Treasury bills offer size across standard tenors, including 91-day, 182-day and 364 day maturities. Details from the auction results showed that demand settled slightly above the total offers as investors began to seek higher returns on naira assets despite disinflation.
Total subscription came in at about N775 billion versus N700 billion offers floated at the main auction. The results showed rising appetite for duration as investors parked about 90% of their bids on Nigerian Treasury bills with 364 days maturity. The CBN opened N100 billion worth of 91 days bills for subscription, but the offer received underwhelming bids totalling N44.17 billion.
The CBN allotted N42.80 billion for the short-term instrument at the spot rate of 15.30%, the same as the previous auction. Total demand for 182 days Nigerian Treasury bills settled at N33.38 billion as against N150 billion that the authority pushed out for subscription. The CBN raised N30.36 billion from 182 days bills allotted to investors at the spot rate of 15.50%, the same as the previous auction.
Investors staked N697.29 billion on N450 billion in 364-day Treasury bills that was offered for subscription. The CBN raised N636.46 billion from the longest tenor at the spot rate of 17.50%, up from 16.04% at the previous auction.
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