Nigeria’s Borrowing Crisis: Tinubu’s N45 Trillion Debt Push Suffers Setback

By Blessing Uma & Godfrey Asuquo

President Bola Tinubu’s administration is confronting a growing storm of protest as it seeks approval for an ambitious foreign borrowing plan of approximately ₦45 trillion (over $24 billion) for the 2025 budget. This request, part of the 2024-2026 External Borrowing Rolling Plan, has ignited fierce debate across Nigeria, drawing sharp criticism from opposition figures, economists, and civil society groups concerned about the nation’s burgeoning debt.

The administration’s financing strategy has already hit a significant obstacle, with talks for a potential $5 billion oil-backed loan from Saudi Aramco stalling. This setback highlights the profound vulnerabilities in Nigeria’s borrowing plans and gives concrete weight to the alarms being raised by critics.

Table: Breakdown of 2025 Proposed Borrowing by Currency and Sector

Source: 2024–2026 External Borrowing Rolling Plan

The Government’s Justification and Critics’ Alarms

The government maintains that these substantial funds, encompassing significant sums in US Dollars, Euros, and Japanese Yen, are critical for vital sectors such as infrastructure, agriculture, healthcare, education, water resources, security, and public finance reforms. President Tinubu’s administration argues that these investments are essential to address Nigeria’s substantial infrastructure deficit and bridge financial shortfalls amid declining domestic funding, ultimately aiming to stimulate employment, promote skill acquisition, foster entrepreneurship, reduce poverty, and enhance food security. The proposed borrowing, which constitutes nearly two-thirds of the average annual budget and approximately 60% of the 2025 budget, underscores the sheer scale of the administration’s financial aspirations.

However, this ambitious plan has been met with widespread apprehension. Former Vice President Atiku Abubakar has vehemently condemned the move as “reckless and dangerous,” warning of a threat to Nigeria’s future. He highlights Nigeria’s public debt, which soared to ₦144.7 trillion by December 2024, a 65.6% increase since President Tinubu assumed office in 2023. Atiku criticises the administration’s “addiction to borrowing,” likening it to a “Ponzi scheme” where new loans are secured to service existing ones.

Data source: Debt Management Office (DMO), Central Bank of Nigeria (CBN)

Economists share this alarm about debt sustainability. If fully approved, the new borrowing could escalate Nigeria’s external debt by nearly 50% from its 2023 baseline in just two years, potentially pushing the total public debt to over ₦182 trillion by 2026, or around $64.65 billion. Ikemesit Effiong, Head of Research at SBM Intelligence, cautions that while a short-term increase in debt might be defensible if resources were channelled towards urgent developmental priorities like health, education, social services, and infrastructure, this is not the most opportune time for Nigeria to be taking on new debt due to the current global economic situation. He highlights the elevated interest rates associated with borrowing from foreign investors across different currencies, which will make the overall debt more expensive to service compared to previous years. A particularly pressing concern for Effiong is the potential need for refinancing in the near to medium term, given the “sheer pile of debt that we want to take on.” He warns that if Nigeria’s economy doesn’t significantly improve within the next two to three years, “the net effect of that could be that debt, you know, the overall debt file will be more expensive to service.”

Professor Simeon Nnah, director-general of the Research Institute for African Development, has also raised critical points, criticising the lack of detail and absence of specific projects in the initial borrowing announcement. He fears that the National Assembly might not demand enough information, potentially leading to borrowed money not being used for genuine development. A major red flag for Professor Nnah is the possibility of borrowing for consumption rather than productive infrastructure, a practice he argues is destructive to the economy. He highlights the unsustainable nature of Nigeria’s debt servicing costs, which have previously exceeded budgets for crucial sectors like education and health, seeing this as evidence of borrowing for consumption.

The Local Impact: Voices from the Micro-Economy

The proposed borrowing plan has been met with widespread public scepticism and disillusionment, rooted in the perceived lack of tangible development and accountability for past loans. Reactions to questions by these reporters reveal a striking disconnect between government policies and many everyday Nigerians, with the majority of market women, unionists, and motor park operators largely unaware or indifferent to these proposed borrowing plans. Questions like, “How does the government’s borrowing put food on my table?” and “Since they’ve been borrowing the money, what good has it done to us?” reflect a deep public distrust in the benefits of past borrowing.

This chart shows that debt servicing eclipses critical social investments.
Data source: 2024 Budget Brief, Federal Ministry of Finance

Concerned citizens, including students and business owners, express profound frustration. Mr. Etim, a student, voiced deep anger and exhaustion, stating, “Every time I hear that Nigeria wants to borrow again, my blood boils because I already know it’s not for the people. It’s for the political elite. We borrow billions, yet there’s nothing on the ground to show for it.” He believes more borrowing will only worsen lives, asserting, “Borrowing hasn’t solved anything — it has only mortgaged our future and deepened our misery.” For Mr. Etim, the solution lies in tackling corruption: “Corruption is bleeding this country dry. We don’t even need to borrow — we make enough from oil, taxes, customs, and exports. But greedy, wicked leaders steal it all.” He argues that previous loans have brought no improvement to any sector: “Nigerian workers are suffering. Salaries can’t buy anything. Pensioners are begging. ASUU strikes keep students at home. Health workers are running to Canada. There’s nothing to show for the billions we’ve borrowed. Bad roads, no electricity, hospitals without paracetamol. Where’s the improvement?” He concludes that the primary beneficiaries of Nigeria’s burgeoning loans are clear: “Let’s not deceive ourselves — it’s the politicians that benefit from these loans. In fact, borrowing is a buffet for the politicians, but a coffin for the people.”

Ayo, a business owner, echoed these concerns, emphasising that “Borrowing has become a tool for looting, not development.” He highlights inefficient spending, citing, “Take the recent budget allocation for streetlights — they’re spending close to ₦236 million for just 1,047 units. That’s outrageous!” He believes loans aren’t alleviating hardship, stating, “There’s no tangible development anyone can point to that has come from these loans. It’s just a waste — they are borrowing to loot.” From a business perspective, he confirmed, “I haven’t seen a single gain for businesspeople like myself from these loans. No infrastructure, no support, no tax relief — nothing.”

An anonymous postgraduate student further criticised the government’s borrowing, asserting that, “The borrowing we’ve seen over the years hasn’t translated into any meaningful input. Instead, it appears to fund the lavish expenses of those in power.” While acknowledging the necessity of borrowing for development, they stressed, “Borrowing is not a crime if it is done for the right reasons. If you borrow to increase productivity—through industrialisation and manufacturing—it can improve the country. But borrowing to fund government spending only makes things worse.” The long-term consequences, in their view, are dire: “Our children will be left to repay these debts. Yet, critical sectors like education, business, and health which would benefit ordinary citizens are not top priorities when loans are taken.”

Civil Society Demands Transparency and Accountability

Prominent civil society voices are also expressing alarm at the scale of the proposed borrowing. Seun Onigbinde, founder of BudgIT, a civic tech organisation promoting transparency in public finance, questioned the figures and purpose of the loan on social media. Sharing an image of Nigeria’s external debt stock as of December 31, 2024, from the Debt Management Office, Onigbinde tweeted, “Billion or million? Our total external debt as at December 2024 stands at $45.8bn.” He followed this with a stark question: “How do you attempt to borrow half of a country’s external debt in a single request? For what purpose?” Onigbinde’s comments underscore the perception that the proposed $24 billion new loan, relative to the existing $45.8 billion external debt, is an unprecedented and potentially reckless proposition, demanding rigorous justification and transparency.

In a subsequent interview, Onigbinde elaborated on his concerns, questioning the necessity and prudence of seeking $21.4 billion in external debt, especially given the substantial increase in government revenue following the removal of fuel subsidies and a rise in oil production. He emphasised the inherent risks of external debt, particularly currency devaluation, and stressed that such loans should ideally be directed towards self-liquidating assets or foreign exchange-generating ventures. He highlighted that the previous administration incurred approximately $30 billion in external debt, with its utilisation remaining largely unclear, raising concerns about accountability for past borrowings. A central theme in Onigbinde’s interview was the critical lack of transparency surrounding the borrowing plan. He argued that the government should have provided more comprehensive details to the public regarding the intended use of these funds to facilitate proper scrutiny and public engagement, urging the government to “over-explain” its borrowing intentions to mitigate misinformation and public distrust.

Onigbinde also criticised the government’s fiscal efficiency and spending habits, noting that despite increased revenues, there’s no corresponding effort to cut down on unnecessary expenses or demonstrate that the government is sharing the economic burden. He cited instances of questionable spending, such as inflated allocations for palace renovations and boreholes, suggesting a misallocation of resources. He further contended that the federal government’s budget appears overly focused on local, constituency-type projects rather than impactful, large-scale infrastructure. Onigbinde called for the National Assembly to enhance its role in scrutinising borrowing plans, advocating for expert consultations and meticulous assessment of each borrowing item to ensure funds are directed towards genuinely productive projects.

Government’s Defence and Broader Implications

In response to these mounting concerns, Dr. Tope Fasua, Special Advisor to President Tinubu on Economic Affairs, offered a detailed explanation of the government’s borrowing strategy. He clarified that the $21.5 billion borrowing request is a planned limit over several years, not a lump sum to be borrowed at once, stating that for 2025, the planned borrowing is $1.3 billion. These loans are targeted for specific, well-defined projects. Dr. Fasua addressed concerns about Nigeria’s debt sustainability, stating that the debt-to-GDP ratio was 52% in 2020 and the debt service to revenue ratio was 64% as of December 2024, down from 120% in December 2022. He emphasised the government’s commitment to increasing tax revenue and pointed out that, in dollar terms, Nigeria’s debt fell by $10 billion between 2023 and 2024. He also highlighted that Nigeria has never defaulted on its loans, having recently paid off its IMF debt taken in 2020 for COVID-19 assistance. Dr. Fasua acknowledged that Nigeria is currently producing 1.4 million barrels of oil per day, falling short of its 2 million barrel target, but noted efforts to ramp up production to 1.8 to 1.9 million barrels. He also stressed the importance of diversifying the economy away from oil dependency, highlighting the potential for increased revenue from property taxes. He further noted that reforms have significantly increased revenue for state governments. Dr. Fasua defended the borrowing as necessary for expanding the economy and funding crucial infrastructure projects, citing airports and railroads as examples, arguing that these investments are essential for improving Nigeria’s GDP and the overall standard of living. He maintained that Nigeria has one of the best debt management strategies in Africa and that its debt position is better than many other African nations.

Despite these reassurances, civil society groups, such as the Civil Society Legislative Advocacy Centre (CISLAC), caution that even if drawn later, these substantial loans will eventually require servicing, potentially impacting future budgets for essential sectors like health and education. Past experiences with uncompleted road segments and stalled irrigation projects further fuel scepticism about project selection and execution risks, underscoring the need for rigorous feasibility studies and transparent contract awards. The persistent depreciation of the naira against foreign currencies introduces significant exchange rate volatility. As concessional loans often require counterpart funding in naira, a continued weakening of the local currency could drastically inflate local currency costs for projects, placing additional pressure on state governments. This risk is compounded by highly optimistic revenue projections for the 2025 budget, which are unlikely to be met due to ongoing shortfalls in oil production and global oil prices, inevitably forcing the government to resort to further borrowing.

The troubling trend in Nigeria’s external debt profile, which has nearly quadrupled between 2015 and 2024, with sharp increases in recent years and rising interest rates, further compounds the debt burden. The most concerning aspect for critics is the apparent absence of accompanying fiscal reforms. The proposed borrowing is not paired with discernible cost-cutting or efficiency-driven spending initiatives designed to curb the pervasive waste for which Nigerian governments are widely known.

Political Divisions and Global Parallels

The widespread public opposition and civil society concerns strongly suggest a brewing political storm. The calls for transparency and accountability from groups like BudgIT, and the vehemence of opposition figures like Atiku Abubakar, highlight deep divisions within the Nigerian political landscape regarding the handling of the nation’s finances. The lack of specific project details and the general perception of corruption in past borrowings also point to potential friction between the executive and legislative branches, as the National Assembly prepares for committee hearings on President Tinubu’s request in June 2025. Governors, grappling with their own state budgets, may also be wary of increased federal debt obligations that could strain state revenues and exacerbate economic hardship at the local level.

Nigeria’s situation with mounting debt and the pressure to borrow more echoes the challenges faced by other indebted Global South nations. Countries like Kenya and Ghana have also grappled with burgeoning debt burdens, often leading to increased reliance on international financial institutions like the IMF and World Bank. This reliance frequently comes with conditionalities, including austerity measures and economic reforms, which can be politically unpopular and lead to public backlash. Similar to Nigeria, these nations often face the dilemma of borrowing for essential development projects versus the risk of debt distress and increased debt servicing costs. The public distrust in the use of borrowed funds, as seen in Nigeria, is a common theme across many of these countries, where citizens question whether loans genuinely translate into tangible improvements in their daily lives or merely line the pockets of the elite. The struggle to diversify economies away from reliance on volatile commodity prices, as highlighted by Dr. Fasua for Nigeria’s oil dependency, is another shared challenge that contributes to the debt cycle in many developing nations.

As the National Assembly prepares for committee hearings on President Tinubu’s request, the debate surrounding this substantial borrowing plan is set to intensify. Critics are urging the government to demonstrate a concrete commitment to fiscal discipline, including transparent cost-cutting measures, diversification of revenue streams away from volatile oil earnings, and strict debt management policies that tie new borrowing exclusively to high-impact, revenue-generating projects. Without such corrective actions, there is a significant risk that Nigeria could slide into a debt trap, where an ever-increasing share of its revenue is consumed by debt servicing, leaving little for essential public services and infrastructure. The voices from the micro-economy serve as a stark reminder that the consequences of these high-level financial decisions are profoundly felt by ordinary Nigerians, who are demanding tangible improvements to their lives, not just an ever-growing pile of debt.