Experts, lawmakers demand transparency, reforms as debt hits N149 trillion; servicing costs gulp one-quarter of 2025 budget
Nigeria’s mounting debt profile has once again taken centre stage in national discourse as President Bola Ahmed Tinubu seeks parliamentary approval for fresh external borrowings, amounting to $2.3 billion and a $500 million debut international Sukuk. The new loan request, coming amid concerns over rising debt-service costs and dwindling fiscal space, has triggered a wave of scrutiny from economists, lawmakers, and civil society, who warn that the country may be walking a perilous path of unsustainable borrowing.
The proposed borrowing plan, transmitted to the National Assembly in a letter read by Speaker Tajudeen Abbas, seeks legislative endorsement to fund components of the 2025 Appropriation Act, refinance maturing Eurobonds, and expand Nigeria’s debt instruments to include Islamic finance options. According to the President, these steps are necessary to “guarantee debt sustainability and boost investor confidence.”
A growing burden
Since assuming office in May 2023, President Tinubu has presided over what analysts describe as one of Nigeria’s most aggressive borrowing cycles in modern history. Within two years, the administration has reportedly secured $29.2 billion in new loans, in addition to domestic borrowings through bonds and treasury bills. The government insists these loans are part of a reform agenda to improve infrastructure, stabilise the naira, and enhance power supply. Yet, for many Nigerians, the rapid accumulation of debt has yielded little visible relief. Inflation remains high, electricity erratic, and living costs have soared since the removal of fuel subsidies and exchange-rate unification.
The administration points to reform successes such as the interest-free student loan scheme, which has funded over 510,000 students, and the $2 billion loans for electricity supply improvements. But experts warn that these achievements are being overshadowed by rising debt-service obligations. For the 2025 fiscal year, debt servicing is projected to consume N13–N16.3 trillion, or about 25–27 percent of the national budget—a figure higher than the combined allocations for education, health, and defence.
According to the Debt Management Office (DMO), Nigeria’s debt-service-to-revenue ratio remains perilously high, between 65 and 77 percent, compared with the World Bank’s benchmark of 22.5 percent.
“If we must borrow, let it be to build tomorrow—not to mortgage it.” – House Lawmaker, Abuja Plenary
Promises and paradoxes
When he took office, President Tinubu vowed to reduce Nigeria’s dependence on borrowing and redirect subsidy savings into productive sectors like infrastructure and job creation.
“We shall instead re-channel the funds into better investments in public infrastructure, education, healthcare and jobs that will materially improve the lives of millions,” — Tinubu, Inauguration Address, May 2023
Less than two years later, however, the picture looks different. Borrowing has intensified, and critics argue the proceeds have not translated into proportional economic productivity or revenue growth. Economist Dr. Olisa Udeh notes that “Nigeria’s current debt trajectory reflects a mismatch between borrowing and output. Much of what we borrow goes into consumption and recurrent spending, not long-term capital investments.” This disconnect has heightened calls for parliamentary oversight and transparent loan utilisation. Lawmakers are urging the executive to disclose project outcomes, repayment terms, and fiscal impact assessments for every new borrowing.
The Sukuk strategy and the search for cheaper credit
A key feature of Tinubu’s borrowing plan is the proposed $500 million sovereign Sukuk—Nigeria’s first in the international Islamic finance market. Finance Minister Wale Edun said the focus on green bonds, Sukuk, and diaspora bonds is designed to access cheaper, non-traditional credit and attract Middle Eastern and Asian investors. Nigeria’s domestic Sukuk programme, introduced in 2017, has already raised N1.39 trillion for road and infrastructure projects. Expanding to global markets could strengthen Nigeria’s credibility, Edun said.
Under the new plan, 25 percent of Sukuk proceeds will repay expensive debts, while the remainder will fund specific infrastructure projects. Analysts agree the initiative could lower borrowing costs—if accompanied by fiscal discipline. Still, some warn the Sukuk could become another temporary patch if structural issues persist. “We cannot bond or borrow our way out of poor fiscal management,” said an investment banker in Lagos.
A nation spending to standstill
Nigeria’s debt dilemma has deep roots. After the 2006 Paris Club debt relief, the debt-to-GDP ratio dropped sharply, but from 2010–2022 it quadrupled to over 47 percent. Between 2015 and 2025, total public debt ballooned from N12.1 trillion to N149.3 trillion, with forecasts suggesting it could hit N187 trillion by year-end. As of Q1 2025, domestic debt makes up 52.7 percent, external 47.3 percent, exposing Nigeria to both local inflationary and global interest rate shocks. More troubling, debt servicing now exceeds capital expenditure—a situation analysts describe as “spending to stand still.” “We are borrowing to service debt, not to build the economy,” warned BudgIT’s Kemi Akinyemi. “It’s a dangerous spiral that crowds out growth-oriented spending.”
The call for fiscal discipline
Economists insist that the path to sustainability lies not in more loans but in fiscal responsibility. They call for widening Nigeria’s tax base, plugging revenue leakages, cutting governance costs, and ensuring that every loan is tied to verifiable, revenue-generating projects. Civil society groups, including the Centre for Social Justice and the Nigerian Economic Society, have called for a comprehensive debt audit to trace how past and current borrowings were spent. Lawmakers, too, are urging stricter oversight of the Debt Management Office and Finance Ministry, to ensure all future debts are obtained under transparent and prudent terms.
The road ahead
The Tinubu administration stands at a fiscal crossroads. On one side lies the urgent need for investment in education, infrastructure, and energy; on the other, the risk of over-borrowing that could stifle growth for generations. There is growing agreement that borrowing is not inherently bad—but borrowing without accountability is. Unless the government strengthens transparency, revenue generation, and project performance monitoring, Nigeria may soon find itself spending to stay afloat rather than growing to prosper.
“Borrowing is not the sin; waste is.” — Fiscal Policy Commentator, Lagos
As global financial markets tighten and interest rates rise, Nigeria’s fiscal managers face their toughest challenge yet: to build tomorrow without mortgaging it today
