“Nigeria’s Debt Is Moderate, Low Revenue Remains Major Challenge” – World Bank

The World Bank has said Nigeria’s biggest fiscal challenge is weak revenue mobilisation rather than excessive borrowing, urging the government to increase revenue generation to support sustainable economic growth.

Speaking on Channels Television on Friday, World Bank Country Director for Nigeria, Mathew Verghis, said Nigeria’s debt profile remains moderate by international standards and is different from countries facing debt distress.

“From our assessment, Nigeria doesn’t have a high indebtedness problem; it has a low revenue problem,” Verghis said.

He explained that Nigeria’s debt-to-GDP ratio is lower than that of many comparable countries, stressing that the focus should be on improving government revenue rather than limiting borrowing.

“When we looked at the numbers, Nigeria is a moderately indebted country,” he said, adding that Nigeria is in “a very different situation than Ghana,” which is undergoing debt restructuring.

Verghis defended borrowing as necessary for long-term investments that drive growth and improve living standards.

“Nigeria borrows for the same reasons that all countries borrow. If you want to deliver results to people, the money available on an annual basis is not enough. So you borrow, deliver results, and that improves your ability to repay,” he said.

Using electricity as an example, he said Nigeria must borrow to connect about 32 million people to power, adding that increased access would strengthen the economy and improve its ability to repay loans.

He warned that low government revenue poses a greater threat than the current debt level.

“Nigeria’s debt is not particularly high… Its revenues are very low by international standards, and unless those revenues are raised, it will not be able to pay back debt,” he said.

He added that stronger revenue mobilisation would boost investment in infrastructure, healthcare, education, agriculture and digital connectivity, creating jobs, improving human capital and reducing poverty.

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