CONCERNS OVER GROWING DEBT PROFILE
The spate of borrowing is excessive Nigeria’s burgeoning public debt stock has become a subject of intense debate within and outside the country. Multilateral institutions and corporate analysts have been
Concerns have been mounting over Nigeria's increasing public debt, with both domestic and international entities warning against excessive borrowing. According to the World Bank's International Debt Report 2026, Nigeria's external debt stock rose to $145.02 billion by the end of 2025, marking a 6.6 percent increase from the previous year. This comes after Nigeria's external debt in 2015 was $83.21 billion, signifying an increase of about $61.8 billion over the past decade.
Former President Olusegun Obasanjo has compared Nigeria's financial predicament to mortgaging future generations. He questioned, "How did we get ourselves into this trap?" However, the federal government remains steadfast in its request for $7.707 billion (approximately N10.79 trillion) to help cover the 2026 budget deficit. President Bola Tinubu defended this decision, emphasizing the intent to redirect new borrowing towards productive capital investment while maintaining fiscal discipline.
Nigeria has long been told that borrowing can positively impact its economy and spur growth. While the government acknowledges that borrowing is not inherently bad and that infrastructure development is necessary, there are worries about inefficient loan utilization and poor debt management. Public debt has become a significant burden, making it challenging to allocate funds to essential services such as public health and education.
Interest payments have skyrocketed, reaching N7.7 trillion in the first half of 2026, an amount that far exceeds reported federal revenues.
Despite the federal government's efforts to present a positive outlook, the debt situation is becoming increasingly perilous. The Debt Management Office (DMO) reported that the debt stock further soared to about N167 trillion by mid-2026, and this trend is expected to continue. The debt management deal proposed may only exacerbate the problem, placing further strain on already stressed budgets at the state and federal levels.
The World Bank has noted that interest payments are diverting much-needed funds away from critical areas like roads, schools, hospitals, and electricity.
While the federal government maintains that Nigeria does not have a debt problem, the consensus among experts and observers is that the situation is dire. Some have drawn parallels to the wisdom imparted by Benjamin Franklin, who famously warned, "He who goes a borrowing goes a sorrowing." As with individuals, nations must also adhere to disciplined borrowing limits to avoid falling into another debt trap. It is imperative that Nigeria heeds this advice to ensure sustainable economic growth and development.
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