Tinubu and Nigeria’s Reckless Waltz with Debt
Barely two years into President Bola Tinubu’s administration, Nigeria has accumulated N13.21 trillion ($8.6 billion) in loans from the World Bank, with an additional $2.2 billion expected in 2025.
While concessional borrowing can spur development, Nigeria’s growing dependence on external loans—amid a staggering national debt now standing at N144.67 trillion—raises serious concerns about debt sustainability and repayment capacity.
The 2025 federal budget paints a troubling picture. Out of the proposed N54.99 trillion expenditure, N14.32 trillion—or 26%—is allocated to debt servicing.
This amount surpasses the entire recurrent expenditure (N13.64 trillion) and eclipses the combined funding for essential sectors such as health, education, agriculture, and social welfare.
President Tinubu insists that loans are necessary for development. However, the pace and volume of borrowing under his administration demand urgent scrutiny.
Under former President Muhammadu Buhari, Nigeria’s debt rose from N42 trillion to N77 trillion in eight years. In contrast, Tinubu has nearly doubled the debt burden in under two years.
Nigeria’s debt-to-GDP ratio is fast approaching 40%—a level widely considered risky for developing economies. Despite official assurances, the implementation and impact of these loans offer little reassurance.
According to the Lagos Chamber of Commerce and Industry, only 16% of previously approved loans have been disbursed. This raises red flags about Nigeria’s institutional capacity, transparency, and utilisation of funds.
Equally concerning is the lack of transparency surrounding Nigeria’s forward sales of crude oil. While these transactions offer short-term liquidity, they compromise long-term fiscal independence.
With an estimated $21 billion worth of future oil barrels already sold, the country’s financial future is being mortgaged. This is a dangerous gamble for an oil-dependent economy, especially in the face of global market volatility.
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Oil prices recently plunged to a four-year low of $65.58 per barrel amid escalating global trade tensions. These crude-backed loans taken by previous administrations have largely contributed to the Nigerian National Petroleum Company Limited’s (NNPCL) inability to sustain naira-denominated crude oil sales to domestic refineries.
The Tinubu administration must ensure that all loans are channeled into projects with clear, measurable economic returns. Priorities should include critical infrastructure in power, transport, and digital connectivity—sectors essential for driving private-sector-led growth.
A national project audit mechanism must be institutionalized to monitor loan-funded initiatives, ensuring transparency, accountability, and performance evaluation.
Tax reform is equally urgent—but it must avoid overburdening citizens. The government should broaden the tax base through digital systems, close loopholes, and enforce compliance.
Effective and fair taxation can significantly boost revenue without worsening the cost of living. Rather than resorting to further borrowing, the government should explore monetizing state assets.
The NNPCL holds an estimated $370 billion in assets as of 2024. A partial privatization through public listings could inject much-needed liquidity without incurring more debt, while also enhancing transparency and corporate governance.
Nigeria must develop a comprehensive debt management framework—one that sets clear borrowing limits, links loans to productive outcomes, and restricts further borrowing until previous funds are accounted for and evaluated.
Debt is not inherently detrimental, but it must be concessional, transparently disbursed, and tightly linked to a national development strategy focused on productivity, job creation, and economic diversification beyond oil.
The government must also trim public expenditures by merging or eliminating redundant agencies—a cost-saving strategy even adopted by larger economies such as the United States under President Donald Trump.
To safeguard Nigeria’s economic future, the Tinubu administration must pivot from debt dependency toward sustainable revenue mobilization.
Transparent loan utilization, an end to reckless forward oil sales, and a firm commitment to fiscal discipline are critical steps to avoid an unsustainable debt trap that threatens national prosperity.
Umar Farouk Bala is a serving corps member with PRNigeria Centre, Abuja. He can be reached at: [email protected].
