States hosting internally displaced persons are set to earn up to $12m from a World Bank–backed loan if they meet a series of strict data, governance, and integration benchmarks under a new federal project targeting displacement and host communities.
The funding forms part of a $300m concessional credit approved by the International Development Association for the Solutions for the Internally Displaced and Host Communities Project, signed between the Federal Government and the World Bank.
The Solutions for the Internally Displaced and Host Communities Project was approved by the World Bank on August 7, 2025. The agreement ties disbursement of part of the loan to performance-based conditions rather than upfront spending, with states paid only after independently verified results are achieved.
Under Performance-Based Condition Two, which focuses on closing data gaps on displacement-related vulnerabilities, $12m has been earmarked for states that successfully register and profile displaced persons living within host communities. The disbursement is spread over three years, with escalating requirements.
In the first year after the project becomes effective, participating Tier 1 and Tier 2 states must launch registration and profiling of IDPs in selected host communities and complete comprehensive demographic and vulnerability assessments in at least two wards. States that meet this initial threshold are entitled to $0.25m ($250,000) each.
The report read, “Participating Tier 1 and Tier 2 States launched registration/profiling of IDPs in selected host communities, and completed: comprehensive demographic and vulnerability assessment; in at least 2wards. Each State which completes the assessment and surveys in the selected wards will receive $0.25m of the PBC allocation.”
By the second year, the requirements deepen for Tier 1 states, which must conduct intention surveys and stability index assessments in areas targeted for local integration. They must also produce detailed analyses of the drivers of displacement, including underlying causes, socioeconomic impacts on displaced persons, outward migration pressures, and risks linked to trafficking and smuggling. Completion of these tasks qualifies each Tier 1 state for an additional $0.5m ($500,000).
The most substantial payout is tied to the third year, when 80 per cent of IDPs in host communities across all participating Tier 1 and Tier 2 states must be registered and profiled. Each state that meets this benchmark will receive $0.5m ($500,000), bringing the total allocation under this performance condition to $12m.
“80 per cent of IDPs in host communities in all Participating Tier 1 and Tier 2 States are registered and profiled. Each Participating State that completes all the above will receive $0.5m of the PBC allocation,” the report read.
By the fourth year, the agreement expects data gaps on displacement-related vulnerabilities to be comprehensively addressed, with no further payments attached. Beyond IDP data, the financing agreement outlines two additional performance-based conditions that states must meet to access other tranches of the loan.
Performance-Based Condition One focuses on improving asset management by participating local governments. Tier 1 states are required to issue asset inventory reporting guidelines and operations and maintenance standards aligned with international benchmarks, approved by state oversight agencies, and verified through project audits.
Selected local governments must then issue asset inventory reports and O&M plans, followed by full approval of all local government–level asset inventories by governors. Up to $9m is allocated to this condition, with states receiving $0.5m ($500,000) at each verified stage.
Performance-Based Condition Three targets the long-term integration of IDPs into development processes. Participating Tier 1 states must provide financial and technical support to local registration facilities to help IDPs access basic documentation such as birth, marriage, death and educational certificates, residence identification, travel documents and driving licences. States that complete this stage are eligible for $1m each.
Further requirements include legalising ownership transfer of land and property to IDPs through transparent processes, establishing monitoring mechanisms to manage tensions between displaced persons and host communities, and opening at least three development programmes covering skills development, livelihoods or infrastructure to displaced populations. A total of $12m is allocated under this condition, spread across successive milestones.
Only states that meet strict eligibility criteria can participate. Tier 1 states must have an IDP population exceeding 150,000 and accounting for more than two per cent of the state population, while Tier 2 states qualify with at least 100,000 IDPs or an IDP share above one per cent.
States must also sign subsidiary agreements with the Federal Government and adopt approved security management plans before accessing funds. The agreement stipulates that all performance claims must be backed by eligible expenditures and verified by independent agents acceptable to the World Bank.
Failure to meet milestones within specified timelines allows the Bank to withhold, reallocate or cancel funds tied to the affected performance condition.
The broader $300m credit finances infrastructure, livelihoods support, institutional strengthening, and project management across northern Nigeria, but the performance-based components reflect the World Bank’s emphasis on accountability and measurable outcomes in displacement policy.
On repayment, the loan is structured as long-term concessional financing. Principal repayments will commence on January 15, 2031, and continue semi-annually on January 15 and July 15 each year until July 15, 2050.
Each instalment represents 2.5 per cent of the principal amount, spreading repayment evenly over 20 years. The payment currency is the US dollar, and the interest charge is based on a reference rate plus a variable spread, subject to agreed ceilings and floors
With repayments deferred for several years and disbursements tied to performance, the agreement places the burden on states not just to spend, but to deliver verifiable results in data quality, asset management, and the long-term integration of displaced persons into Nigeria’s development framework.
The World Bank Group remains Nigeria’s largest single creditor, accounting for $19.39bn of the total, comprising $18.04bn from the IDA and $1.35bn from the IBRD. This represents 41.3 per cent of the country’s external debt, underscoring the bank’s dominant role in financing Nigeria’s development initiatives.
The PUNCH earlier reported that the World Bank loans to Nigeria between 2023 and 2025 are projected to reach $9.65bn by the end of this year as fresh approvals, ongoing negotiations, and disbursements gather pace across key sectors.
The amount covers International Bank for Reconstruction and Development and International Development Association loans only, according to an analysis of data on the bank’s website by The PUNCH. When grants are added, total World Bank support rises to about $9.77bn within the three-year window.
The International Bank for Reconstruction and Development provides loans on commercial or near-commercial terms to middle-income and creditworthy low-income countries, while the International Development Association offers highly concessional loans and grants to the world’s poorest nations.
The PUNCH also reported that Nigeria’s stock of World Bank International Development Association loans rose to $18.5bn, making it the largest IDA borrower in Africa and the third-biggest in the world.
Fresh data from the IDA’s unaudited financial statements for the third quarter of 2025 confirmed that the country has maintained the ranking it first attained in 2024, when it climbed to third place after overtaking India. The country was the fourth-largest borrower in 2023.
According to the report, Nigeria’s exposure increased from $17.1bn in September 2024 to $18.5bn in September 2025, representing a rise of $1.4bn or 8.2 per cent. The increase reflects the country’s heavier reliance on concessional financing to plug infrastructure gaps, stabilise its reform programme, and support social spending amid volatile oil earnings.
Economists warn that the rising loan pipeline, while potentially beneficial for long-term development, could deepen fiscal pressures if not matched with stronger domestic revenue mobilisation and prudent expenditure management.
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