Nigeria’s debt profile is rising at an unprecedented rate, with the country securing a staggering ₦13.21 trillion ($8.6 billion) in loans from the World Bank alone over the last 20 months—and an additional $2.2 billion in borrowing already projected for 2025. While these concessional loans are often deemed essential for development financing, analysts warn that the pace and scale of Nigeria’s debt accumulation is fiscally dangerous and increasingly unsustainable.

According to the latest data, Nigeria’s total public debt now stands at ₦144.67 trillion, up from ₦77 trillion at the end of the Buhari administration in 2023. In less than two years, the Tinubu administration has nearly doubled the national debt—an alarming acceleration that has triggered growing scrutiny from economists, civil society, and business groups.

Debt Servicing Now the Largest Line Item in the Budget

The 2025 federal budget paints a troubling picture. Out of the ₦54.99 trillion total, ₦14.32 trillion—or 26 percent—is allocated to debt servicing, surpassing allocations for recurrent expenditure (₦13.64 trillion) and far outweighing the combined budgets for education, health, agriculture, and social welfare.

While President Bola Tinubu defends the borrowing as necessary for national development, experts argue that Nigeria is approaching a fiscal cliff. The country’s debt-to-GDP ratio is inching toward 40 percent, a threshold many economists consider dangerous for emerging economies.

“This rate of borrowing is simply unsustainable,” said an economist from the Lagos Chamber of Commerce and Industry, which recently flagged Nigeria’s poor loan disbursement and utilisation record. Only 16 percent of previously approved loans have been disbursed, raising red flags over institutional inefficiencies, transparency lapses, and mismanagement.

Crude Oil Forward Sales Raise Sovereignty Concerns

Compounding the issue is Nigeria’s reliance on forward sales of crude oil to raise short-term liquidity. An estimated $21 billion worth of future oil barrels has already been sold, effectively mortgaging the country’s fiscal future.

Critics warn that these forward sales expose the oil-dependent economy to global market volatility. Oil prices have slumped to a four-year low of $65.58 per barrel amid a U.S.-led global trade war, further threatening revenue projections.

“The government is gambling with our future,” said a financial analyst. “We’re locking in low prices today without safeguards for tomorrow’s shocks.”

Untapped Revenue Potential: Oil Debts and State Assets

Despite the gloomy outlook, there are opportunities for financial recovery. The Nigeria Extractive Industries Transparency Initiative (NEITI) recently reported that oil companies owe the federal government ₦9.33 trillion—an amount capable of covering 72 percent of Nigeria’s projected ₦13 trillion budget deficit for 2025.

Experts are calling on the Economic and Financial Crimes Commission (EFCC) and NEITI to fast-track recovery efforts and reduce Nigeria’s borrowing needs.

Additionally, state-owned assets, particularly those under the Nigerian National Petroleum Company (NNPC), offer a lifeline. With an asset base valued at $370 billion, analysts suggest partial privatisation through public listings could unlock liquidity without increasing debt. Transparent divestments would also promote stronger corporate governance and operational efficiency.

What Needs to Be Done

Policy experts recommend a multi-pronged response to steer Nigeria away from a looming debt crisis:

• Tie All Loans to Productive Projects: Future borrowings must be linked to measurable economic returns in infrastructure, power, and digital access.
• Audit and Track Projects: A national loan project audit mechanism must be institutionalised to ensure accountability.
• Reform Taxation Without Burdening Citizens: Broaden the tax base using technology, enforce compliance, and plug leakages rather than raising rates.
• Monetise Public Assets: Leverage existing state assets to generate revenue without incurring debt.
• Cap Future Borrowing: A comprehensive debt management strategy must set limits, enforce utilisation conditions, and restrict new loans until past ones deliver results.
• Cut Government Waste: Redundant agencies must be merged or scrapped to reduce fiscal pressure.

Conclusion

While debt itself is not inherently bad, Nigeria’s current path threatens to trap future generations in a cycle of unsustainable borrowing. The Tinubu administration must urgently recalibrate its fiscal strategy—shifting from debt dependency to robust revenue mobilisation, strict loan oversight, and forward-looking economic reforms.

Only through disciplined governance and strategic investment can Nigeria avoid a debt spiral and secure lasting prosperity.