Still on Nigeria’s debt burden

THE latest figures on Nigeria’s debt-service obligations raise troubling questions about the Federal Government’s management of public finances. According to the World Bank’s October 2026 Nigeria Development Update titled “Beyond the Federal Purse: How Higher Revenues Shaped State Priorities”, the Federal Government spent ₦7.7 trillion on interest payments in the first half of 2026, compared with ₦5.6 trillion during the corresponding period of 2025, an increase of 37.5 percent. Interest payments amounted to 124.2 percent of reported federal revenue. For every ₦100 earned by the Federal Government, approximately ₦124 was required to meet interest obligations alone, excluding repayment of loan principal. Although federal revenue increased from ₦3.6 trillion to ₦6.2 trillion, reported interest payments exceeded revenue by ₦1.5 trillion. This demands serious reflection, not another routine justification for borrowing.

The Federal Government has disputed this interpretation, arguing that the calculation includes debt obligations serviced on behalf of states while excluding certain government revenues. The Ministry of Finance maintains that the full-year debt-service-to-revenue ratio has fallen below 60 percent. These explanations deserve consideration but do not invalidate concerns about borrowing costs and fiscal priorities. The government has yet to provide reconciled figures resolving the discrepancy. Whatever accounting basis is adopted, how much public revenue remains for development after meeting debt obligations? This question is important given the economic sacrifices Nigerians have endured since petrol subsidy removal in May 2023. The government presented that policy as a necessary correction that would release resources for infrastructure, public services and development. Nigerians were urged to endure immediate hardship in anticipation of long-term benefits. More than three years later, they are entitled to ask what became of the promised fiscal savings.

Yet the government continues to seek fresh loans. The World Bank reports that federal capital expenditure fell to approximately ₦700 billion, or 0.3 percent of GDP, in the first half of 2026, even as interest payments rose. A government spending eleven times as much on interest as on reported capital projects must explain how its priorities will deliver the development Nigerians desperately need. Borrowing is not inherently objectionable. Governments borrow to finance infrastructure, address emergencies and support productive investment. Properly managed, debt can stimulate growth and generate future revenues. But borrowing becomes problematic when servicing costs overwhelm resources and developmental benefits remain difficult to establish. The questions are not merely how much Nigeria borrows, but what the loans finance, whether projects are completed and whether their economic returns justify their costs.

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The Federal Government must undertake a comprehensive review of its debt portfolio, including borrowing costs, maturity profiles, refinancing risks and performance of loan-funded projects. Fresh non-essential borrowing should be restrained, while additional loans must satisfy rigorous tests of necessity, affordability and measurable public benefit. The Debt Management Office, Ministry of Finance and National Assembly should make this information publicly accessible.

Equally important is confronting government waste. Nigeria cannot credibly plead inadequate resources while maintaining overlapping agencies, questionable expenditure priorities and institutions whose existence cannot be justified by demonstrable value. The long-promised rationalisation of government establishments must move beyond declarations. Every naira wasted on unnecessary bureaucracy is unavailable for healthcare, education, security or productive infrastructure. The contradiction deepens when revenue-generating agencies announce improved collections while the government seeks additional loans. Increased revenue should strengthen fiscal capacity. If debt obligations, personnel expenditure and recurrent commitments absorb these gains, Nigerians deserve an explanation of how the government intends to reverse the pattern. Higher collections cannot be celebrated independently of expenditure quality.

Meanwhile, prolonged hardship is taking a heavy social toll. Inflation, high transportation costs, expensive food and declining purchasing power have placed enormous pressure on workers, pensioners and vulnerable households. For many Nigerians, financial discomfort has become a daily struggle for survival. Families are reducing meals, postponing medical treatment and sacrificing their children’s education. Such conditions can weaken social cohesion, deepen distrust and create environments in which criminal exploitation flourishes. Poverty does not excuse criminality, nor should violence automatically be interpreted as political protest. Nevertheless, prolonged economic exclusion and hopelessness can aggravate insecurity. Even personnel entrusted with protecting the country are not insulated from declining purchasing power and hardship affecting their families.

The debt problem also has an intergenerational dimension. Loans contracted today may impose repayment obligations on Nigerians who had no voice in creating them. Borrowing is defensible when future generations inherit productive infrastructure, stronger institutions and expanded opportunities. It becomes harder to justify when they inherit liabilities without corresponding assets. The government must adopt a disciplined fiscal framework incorporating realistic revenue projections, enforceable expenditure controls, transparent project evaluation, elimination of waste and a credible strategy for reducing debt-service pressure. Available revenues should prioritise essential services and high-impact investments, while borrowing should serve clearly justified purposes. The National Assembly must scrutinise loan requests rather than treat them as routine administrative matters.

Above all, President Bola Tinubu’s administration must recognise that macroeconomic reform cannot be measured solely by increased revenue, improved fiscal indicators or favourable assessments from international financial institutions. Its ultimate justification must be improved living standards, productive employment, affordable essential services and restored public confidence. Nigeria cannot indefinitely continue along a path in which citizens bear the immediate costs of reform while increasing public resources service yesterday’s obligations. Fiscal responsibility requires more than raising revenue and negotiating fresh loans. It requires restraint, accountability and visible development. Otherwise, the country’s mounting debt burden will remain not merely a financial problem, but a mortgage on the future of generations yet unborn.