The borrowing spree in which Nigeria is currently embroiled is worrying, bearing in mind her yet unstable economy, and the prevailing fluctuations that may affect the servicing of the loans. No doubt, loans taken for developmental purposes and expended judiciously can have a positive impact on the economy. But uncontrolled borrowings hold the potential of undermining the country both in the short term and in the long term, particularly if the borrowed funds are not judiciously utilised. It therefore behoves the Bola Ahmed Tinubu administration to exercise greater discipline, reduce the rate of borrowing, spend borrowed money for the purpose assigned for it, and ensure accurate mobilisation of parameters for repayment.
As the records indicate, Nigeria’s total public debt rose by 48.6 per cent to N144.66 trillion in 2024 from N97.34 trillion in 2023, with about 95 per cent of this being incurred by the Federal Government. This is currently being accentuated by the recent request by President Tinubu to the National Assembly seeking for new external borrowing plan of over $21 billion. The recurring news of government borrowing has left many Nigerians worried as to the propriety of the government’s acclaimed rescue mission.
Of particular concern is whether the interests of the next generation are being adequately taken into consideration. Hence, this precarious trend needs to be closely scrutinised. Stakeholders have also expressed concern about the repayment of these loans and if this will not be a heavy burden on future generations and governments. Indeed, the current state of a growing public debt profile in the country is scary. Official data indicate that total debt grew from N12.118 trillion in May 2015 to N144.66 trillion in 2024 and may likely hit N180 trillion with the current borrowing trend of the government. There are fears, too, that the borrowings have skyrocketed because the Tenth National Assembly, under the headship of Senator Godswill Akpabio, is not doing enough to question the necessity for the loans, as part of its oversight.
In relation to external borrowing, Tinubu sought approval in May 2025 for $21.5 billion, €2.2 billion, and ¥15 billion in external loans for 2025–2026. At an estimated exchange rate of $1/N1,600, €1/N1,800 and ¥1/N11, this translates to about N38.525 trillion in all for these new requests. Other external indebtedness incurred by the administration include $800 million (or N1.28 trillion) World Bank Loan, approved in July 2023 to cushion fuel subsidy removal; $3 billion (or N4.8 trillion) Afrexim loan of August 2023, secured by NNPC against future oil royalties to stabilise the naira; $7.8 billion (or N12.48 trillion) of November 2023, as part of the 2022–2024 external borrowing plan for infrastructure, health, education, and security; $6.45 billion (or N10.32 trillion) World Bank Loans of April 2025.
On domestic borrowing, the administration borrowed N20.1 trillion in bonds between June 2023 and May 2024; N757.98 billion (or N0.758 trillion) requested in May 2025 for pension liabilities through bonds to clear pension debts under the Contributory Pension Scheme; $2 billion (or N3,2 trillion) foreign currency-denominated bonds in the domestic market; N7.3 trillion Ways and Means loan securitised in December 2023 and converted into long-term debt, an addition to the N22.7 trillion securitised under the Buhari administration totalling N30 trillion.
With all these, the Tinubu administration may have borrowed over N90 trillion in two years, if all requests are approved and the loans taken. That would surpass the record of the immediate past administration of Muhammadu Buhari. An articulation of the recent borrowing plans sheds more light on the uncertain trend the economy is taking.
There are indeed more questions than answers. Government should not insist on procuring these liabilities without adequately considering the reservations expressed by different stakeholders on the dangers this new indebtedness poses to the health of the Nigerian economy, moreover, when the government has shied away from drastically reducing the cost of governance. The usual response by the authorities, that following from the debt-to-gross domestic product (GDP) ratio criteria, the country is currently under-borrowed, is not altogether comforting. The debt service-to-revenue ratio is still unfavourable, even though it has improved markedly from the pre-2023 era.
The current debt service-to-revenue ratio has deteriorated to over 130 per cent, from about 118 per cent in the corresponding period of 2024. What would be the country’s future creditworthiness with this huge debt, particularly when the international oil market, which guarantees the country’s major foreign exchange earnings, is volatile and highly unpredictable, especially with the cessation of the Israel-Iran war and the return of Iran to the export of crude oil?
Aside from these, are issues of repayment being seriously considered when these loans are being approved? In the event of a future sovereign default, what remedies are in place to address the problem? Or what national assets would have to be sold to service the debts? The sorry public debt situation in a number of African countries, such as Zambia and Kenya, among others, which have run into serious crises in this regard, is quite instructive and should serve as a lesson for Nigeria.
The National Assembly can improve on its current lame role in the ballooning of these public debts. Where then are the expected benefits derivable from the checks and balances of the Presidential system of government, which is designed to strengthen governance in the pursuit of the common good? The government is better advised that the debt-to-GDP ratio does not guarantee debt repayment. The federal government should not make things difficult for future administrations by borrowing too many loans and thus making it difficult to govern the country in future. Nigeria needs stability, not the building of a pack of cards that would easily crumble at the slightest turbulence.
