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 unrelenting in their call for restraint on the level of borrowing, particularly under the present administration. According to the World Bank’s International Debt Report 2026 released last week, Nigeria’s external debt stock increased to $145.02 billion at the end of 2025, representing a 6.6 per cent rise from the previous year. Since Nigeria’s external debt in 2015 stood at $83.21 billion, the latest figure represents an increase of about $61.8bn over the 10-year period, highlighting the growing scale of indebtedness.
While making explicit reference to excessive borrowing, former President Olusegun Obasanjo said generations are being increasingly mortgaged. “How did we get ourselves into this trap?” he asked. But amid these concerns, the federal government is defending its reduced request of $7.707 billion (approximately N10.79 trillion) to part-finance the 2026 budget deficit. “The objective is to increasingly direct new borrowing towards productive capital investment, while maintaining fiscal discipline, reducing financing pressures and ensuring that public debt translates into measurable economic value,” said President Bola Tinubu who has defended the decision. “Nigeria borrows to invest in roads, ports, rail and power that will generate growth, revenue and jobs for decades.”
Over the years, Nigerians have been fed with a steady diet that loans will impact positively on the economy and generate stronger growth. Indeed, borrowing is not essentially bad. And there is no doubt that Nigeria needs some borrowing to fix infrastructural and other development needs. However, public debt has been a dangerous drain, costly to sustain, and leaving all with a sense of bewilderment. In several cases, loans have translated to short-term consumption, rather than productive economic value. Public debt obligations have increasingly crippled fiscal space for many essential social services like public health and education.
It is concerning that public debt has climbed astronomically. According to the Debt Management Office (DMO), the debt stock further rose to about N167 trillion by mid-2026. The deal in the offing will only heighten the debt burden. Besides, the states and the FCT, many of which are also implicated in the current effort, are constantly under fiscal stress as debt services rose to uncomfortable levels, while recurrent expenditure is almost crowded out. But even more harrowing is that interest payments are money diverted from roads, schools, hospitals, electricity or social protection.
The World Bank reported recently that interest payments hit N7.7 trillion in the first half of 2026, an amount that far exceeded reported federal revenues. Even though the federal government discounted the figures, arguing that part of the debt was induced by subnational governments, there is no doubt that the ratio is still elevated. This is despite the marginal progress in increased revenue as well as in the current tax-to-GDP ratio.
Thus, though the federal government has always used infrastructure as an alibi for the rising borrowing, there are concerns about inefficient loan utilisation and poor debt management practices. Regrettably, whether the loans are well applied or not, meeting debt obligations is a given. The federal government should therefore listen to the wise counsel from within and outside the country to halt the journey to another debt trap.
Even if the now familiar refrain by government officials that “Nigeria does not have a debt problem,” is to be taken on its face value, we believe the wise counsel of Benjamin Franklin that “he who goes a borrowing goes a sorrowing,” should provide a useful guide. As it is for individuals, so it is for nations. Nigeria must stay within disciplined borrowing limits.