Borrowing For Development Or Passing The Bill To Tomorrow? Nigeria’s Debt Dilemma Deepens
By OBIOMA TORI
NIGERIA’S growing public debt has come under renewed scrutiny following President Bola Tinubu’s request for legislative approval to secure another $21.7 billion in external loans.
The Federal Government says the proposed facilities will finance major infrastructure and support economic development. However, economists, business leaders and ordinary citizens are asking whether the country can afford additional obligations and whether previous loans have delivered enough value.
The debate is particularly significant because Nigeria has already removed petrol subsidies, introduced foreign-exchange reforms and recorded higher government revenue. Yet, its reliance on borrowing continues.
A Rapidly Expanding Debt Profile
According to the Debt Management Office, Nigeria’s total public debt stood at ₦97.34 trillion at the end of 2023. It rose to ₦144.67 trillion in 2024 before reaching ₦159.28 trillion by December 2025.
The increase exceeds ₦61 trillion in two years. Nevertheless, the figures also reflect the effects of naira depreciation and the recognition of previously accumulated liabilities.
President Tinubu maintains that the new borrowing will support productive investments rather than recurrent spending.
Among the proposed projects are the Lagos-Calabar Coastal Highway, Sokoto-Badagry Superhighway, Trans-Sahara Superhighway, electricity-grid improvements and the modernisation of Lagos ports. The President’s explanation indicates that approximately $10.6 billion would be allocated to transport infrastructure.
While these projects could address important development needs, their expected economic returns remain central to the borrowing debate.
Can Government Revenue Carry the Burden?
Professor Bongo Adi, an economist and Professor of Economics and Business Intelligence at Lagos Business School, warned that the proposed loans could push Nigeria’s debt-service-to-revenue ratio above 100 per cent.
He explained that such a development would mean government earnings could be consumed entirely by debt servicing, leaving insufficient resources for other priorities.
Dr. Femi Egbesola, President of the Association of Small Business Owners of Nigeria, also warned against expanding public debt without strengthening the country’s revenue base.
In his view, borrowing can support development, but only when the resulting investments generate enough economic returns to cover their financing costs.
Egbesola further argued that debt servicing as a proportion of revenue provides a clearer indication of the government’s immediate repayment pressure than debt-to-GDP alone.
Meanwhile, development economist Aliyu Ilias of CSA Advisory questioned the continued accumulation of loans after major economic reforms.
He observed that about ₦15 trillion was needed for debt servicing in the budget. Moreover, he warned that additional borrowing could intensify inflation if it did not stimulate domestic production.
Ilias also raised concerns about delayed capital projects and repeated budget rollovers, which can weaken the benefits of public investment.
Why Higher Revenue Has Not Ended Borrowing
Nigeria’s revenue position has improved in recent years. Gross FAAC revenue reportedly increased from ₦17.08 trillion in 2023 to ₦29.45 trillion in 2024. It rose further to ₦37.44 trillion in 2025.
Despite that growth, the government continues to seek additional loans.
Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, believes Nigeria must strengthen revenue generation and adopt strategies that keep borrowing within sustainable limits.
He also expects tax reforms to improve government earnings and reduce dependence on external financing.
However, higher revenue alone will not resolve the country’s fiscal challenges unless authorities improve spending priorities, project execution and financial accountability.
The Human Cost of Poor Public Investment
For millions of Nigerians, the consequences of government borrowing are measured through daily economic pressures.
A trader wants dependable electricity to preserve goods and operate a business. Commercial drivers face rising transport and maintenance costs, while manufacturers struggle with unreliable power and limited access to affordable credit.
Isaiah Itodo, a commercial driver who operates between Nasarawa and Abuja, said he would support borrowing if it helped Nigerians avoid hunger. Nevertheless, he lamented the hardship confronting households.
University of Abuja student union activist Ben Dagoma questioned the rationale for additional loans when living standards continue to deteriorate.
Likewise, young graduate and small-business owner Ade Sofunmi expressed doubts about whether another borrowing programme would solve Nigeria’s economic problems. He argued that previous loans had not produced sufficient improvements to justify the hardship many citizens continue to face.
Their concerns reinforce the need to judge public borrowing by its actual impact on employment, household welfare, business productivity and access to essential services.
The World Bank’s Revenue Argument
The World Bank’s Country Director for Nigeria, Mathew Verghis, offered an important perspective during a July 2026 interview with Channels Television.
He argued that Nigeria’s central fiscal problem was weak revenue mobilisation rather than necessarily excessive indebtedness.
This assessment shifts attention towards the country’s ability to generate more income through an effective tax system, stronger economic activity and improved revenue administration.
Nevertheless, better revenue collection must go hand in hand with transparency and responsible public spending. Otherwise, increased earnings could simply support further expenditure without resolving the underlying fiscal weaknesses.
National Assembly Must Demand Answers
The proposed borrowing also places significant responsibility on the National Assembly.
Before approving the facilities, lawmakers must examine their interest rates, repayment schedules, conditions and project allocations. They should also demand evidence of how earlier loans were utilised and what benefits those investments have delivered.
Former Vice-President Atiku Abubakar has called on lawmakers to withhold approval until the Federal Government provides detailed information about the projects, contractors, costs and repayment obligations.
His position highlights the importance of legislative scrutiny in protecting public finances.
Furthermore, Nigeria could consider alternative financing arrangements, including public-private partnerships for commercially viable infrastructure. Such partnerships may attract private investment while reducing the immediate financial burden on government, provided their terms remain transparent and protect public interests.
A $1 Trillion Ambition Requires More Than Loans
The Federal Government’s ambition to build a $1 trillion economy by 2030 will demand significant investment in infrastructure, industry, electricity, education and healthcare.
However, borrowing cannot substitute for a productive economy or an effective revenue system. Projects must be completed on schedule, operate efficiently and generate benefits that justify their costs.
Therefore, the proposed $21.7 billion package should be judged against clear economic objectives, transparent implementation plans and measurable outcomes.
Nigeria may still need external financing to address its development needs. Even so, the country must demonstrate that new loans will create sustainable employment, strengthen industries, improve public services and expand its revenue base.
Ultimately, the question is not simply how much more Nigeria can borrow. It is whether the government can turn additional debt into lasting prosperity without leaving future generations with an unbearable repayment burden.
