Tinubu’s borrowings sink Nigeria deeper into poverty, debt trap 

• Doubles stock from N87 trn to N170 trn in three years 

Nigeria’s rising debt has once again come under intense scrutiny, as fresh data and recent borrowing approvals deepen concerns that the country may be sliding into a full-blown debt trap, worsening poverty with little to show in terms of tangible development.

From a modest debt profile just over a decade ago, Africa’s largest economy now finds itself grappling with a staggering public debt of N159.28 trillion as of December 2025 – a figure that is projected to exceed N170 trillion when newly approved loans are fully drawn.

The trajectory has sparked renewed debate among economists, policymakers, and political stakeholders, many of whom argue that the pace of borrowing has far outstripped the country’s capacity to generate revenue, or deliver commensurate infrastructure.

A decade of mounting debt

Nigeria’s debt story over the past ten years reflects a steady and, in recent times, accelerated climb. Following the debt relief which required the the country to pay $18 billion cash to be forgiven $35 billion secured under the administration of Olusegun Obasanjo, the country experienced a relatively moderate borrowing pattern during the tenures of Umaru Musa Yar’Adua and Goodluck Jonathan.

However, the trend shifted significantly under Muhammadu Buhari, during which Nigeria’s debt rose sharply from about N12 trillion in 2015 to approximately N87 trillion by the time he left office in 2023. The problem is not the the debt was acquired but that they were frivolously utilized for debt servicing and recurrent expenditures. So, the benefits were not felt.

That upward trajectory has not only continued but intensified under President Bola Ahmed Tinubu. Within less than four years, the country’s debt stock has nearly doubled, driven by both domestic and external borrowings.

According to data from the Debt Management Office (DMO), Nigeria’s total public debt rose from N87.4 trillion in June 2023 to N159.28 trillion by the end of 2025 – an increase of over 80 per cent within a relatively short period.

In dollar terms, the debt climbed to $110.97 billion, reflecting sustained reliance on borrowing to finance government expenditure.

A breakdown of the figures shows that domestic debt now accounts for a larger share, rising from N48.3 trillion in June 2023 to N80.5 trillion in December 2025 – a 67 per cent increase. External debt, on the other hand, grew by 19 per cent within the same period, reaching $46.2 billion.

Borrowing without visible impact

Despite the massive increase in debt, a central question continues to dominate public discourse: what exactly has Nigeria gained from the borrowing spree?

Critics argue that, unlike in previous periods where borrowed funds or special recoveries were tied to specific infrastructure projects, recent borrowing lacks clear, visible outcomes.

During the Buhari administration, despite significant borrowing, including an outrageous N23 trillion ways and means, notable projects – including Lagos -Ibadan highway road,  and the Second Niger Bridge, Kano- Kaduna road – were largely funded through repatriated funds linked to the late military ruler Sani Abacha, commonly referred to as the “Abacha loot.”

Other infrastructure financing was supported through Sukuk bonds, which were explicitly linked to road development projects across the country.

Even as Buhari’s numbers are a source worry, analysts say it has become increasingly difficult to identify projects directly tied to the bulk of Nigeria’s recent borrowings.

“There is a fundamental disconnect between borrowing and development outcomes,” said a Lagos-based financial analyst, who preferred not to be named. “You expect to see large-scale infrastructure transformation when debt rises at this pace, but that has not been the case.”

This concern is echoed by former Anambra State governor and Labour Party presidential candidate, Peter Obi, who has been one of the most vocal critics of the country’s borrowing pattern.

“When Buhari came in, our borrowing was about N13 trillion; when he left, it was N87 trillion. Today, we’re hitting N200 trillion without anything to show for it. Subsidy has been removed in petroleum and power, and yet we have borrowed more. Our budgets are not financed. In the entire 2025 budget for capital projects, contractors are being owed,” Obi said during a recent Arise TV interview.

His remarks capture a growing sentiment among many Nigerians, who are increasingly questioning the value derived from government borrowing, especially in the face of worsening economic conditions.

Rising borrowing amid reform policies

One of the most puzzling aspects of the current debt trajectory is that it continues to climb despite major fiscal reforms introduced by the Tinubu administration. The removal of fuel subsidies, long considered a significant drain on public finances, was expected to free up substantial revenue for government spending and reduce the need for borrowing.

Similarly, reforms in the foreign exchange market were aimed at improving efficiency and boosting investor confidence. Yet, despite these measures, borrowing has not only persisted but expanded.

In 2026 alone, the National Assembly approved an additional $6 billion external loan requested by the presidency, intended to support budget financing and infrastructure development.

This comes on top of other recent borrowings, including a $1.57 billion loan from the World Bank targeted at human capital development, as well as a £746 million facility secured for the upgrade of Lagos sea ports.

When combined with the existing debt stock, these new obligations are expected to push Nigeria’s total debt beyond N170 trillion.

The continued reliance on borrowing has raised questions about the effectiveness of fiscal reforms and whether they are sufficient to address the country’s structural revenue challenges.

Government acknowledges risks

Interestingly, even within the government, there is growing recognition of the risks associated with excessive borrowing.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has repeatedly warned that Nigeria cannot sustain a debt-driven economic model.

Speaking on the sidelines of the IMF and World Bank Spring Meetings in Washington, D.C., Edun emphasised the need to prioritise domestic revenue mobilisation over external borrowing.

“Nigeria has no plan at the moment to approach the IMF for any other such burden,” he said, signalling a cautious stance toward additional external debt.

In a separate intervention, the minister also highlighted systemic issues undermining the country’s fiscal position.

He noted that significant revenue is lost through inefficiencies and illicit financial flows, making it imperative for the government to plug these leakages rather than resort to borrowing.

However, the government’s actions appear to contradict these warnings.

Even as Edun calls for restraint, the approval of fresh loans suggests that borrowing remains a central component of Nigeria’s fiscal strategy. This apparent contradiction has further fuelled public skepticism about the coherence of economic policy under the current administration.

Experts warn of looming debt trap

Financial experts say Nigeria’s current trajectory bears the hallmarks of a classic debt trap, a situation where a country is forced to borrow continuously just to service existing obligations, with little room for productive investment.

One of such experts, Kalu Aja, has raised concerns about what he describes as excessive government spending relative to revenue.

“President Tinubu spends too much. He raises insurmountable amounts of revenue but spends gigantic amounts far in excess of those revenues raised, leading to deficits financed by debt,” Aja said.

He further warned that Nigeria risks missing opportunities to reduce its debt burden, particularly during periods of high oil prices.

“Oil at $100 is a windfall to government coffers. The best use of that windfall cash is to pay off the Eurobond liabilities that are priced in dollars and very expensive,” he noted.

Instead, Aja fears that increased revenues may simply lead to higher spending and additional borrowing.

“But I fear you will hear them talk of new projects, new salaries and new external commitments. Tinubu needs an economic team that can tell him ‘no’ — not ‘how high,’” he added.

His concerns reflect a broader apprehension among analysts that Nigeria’s fiscal discipline remains weak, with spending decisions often outpacing available resources.

Debt servicing pressure mounts

Beyond the rising stock of debt, another major concern is the growing cost of servicing these obligations. Nigeria already spends a significant portion of its revenue on debt servicing, a trend that threatens to crowd out critical investments in infrastructure, healthcare, and education.

As borrowing continues to rise, so too does the burden of repayment, creating a vicious cycle that limits the government’s fiscal flexibility.

According to analysts, this dynamic could have long-term implications for economic growth and development.

“When debt servicing takes up most of your revenue, you have very little left to invest in the economy,” said the Lagos-based economist. “That is how countries get trapped.”

The situation is further complicated by exchange rate volatility, which increases the cost of servicing external debt denominated in foreign currencies. Although recent exchange rate adjustments have helped moderate the naira value of external debt, the underlying risks remain significant.

For many Nigerians, the implications of rising debt are felt in everyday life.

This disconnect between government borrowing and citizens’ lived experiences has intensified public frustration and eroded confidence in economic management. The perception that borrowed funds are not translating into visible improvements has become a recurring theme in public discourse.

With debt levels approaching historic

At the heart of the problem lies a persistent gap between revenue generation and public expenditure – a fiscal imbalance that analysts say has worsened in recent years, even as the government introduces reforms aimed at stabilising the economy.

Data from the Debt Management Office (DMO) show that while borrowing has surged, revenue growth has lagged significantly, leaving the government with limited options beyond resorting to debt to finance its obligations.

The Tax Option

This imbalance is further compounded by what experts describe as systemic inefficiencies in revenue collection, widespread leakages, and a narrow tax base that fails to capture the full potential of Africa’s largest economy.

For Edun, Nigeria must fundamentally rethink how it funds its budget. He warned that the continuous loss of revenue through inefficiencies and illicit financial flows undermines the government’s ability to meet its financial obligations without borrowing.

The implication, according to him, is that unless Nigeria improves its revenue mobilisation framework, the cycle of borrowing will persist, regardless of policy reforms or spending cuts.

Yet, beyond revenue concerns, questions are also being raised about spending priorities.

Critics argue that even within existing resource constraints, the government’s allocation of funds does not always align with pressing development needs.

Reports of expenditure on non-essential projects, alongside delays in funding critical infrastructure and social services, have reinforced perceptions of misaligned priorities.

This concern is particularly evident in the area of capital projects, where budgetary provisions often fail to translate into actual implementation.

Contractors, according to industry sources, are frequently owed for completed projects, leading to delays, cost overruns, and, in some cases, project abandonment.

The resulting infrastructure deficit further weakens economic productivity, creating a cycle in which the government must borrow even more to address gaps that should have been filled by earlier investments.

Ultimately, analysts say Nigeria’s debt challenge is as much about governance as it is about economics. Without stronger institutions, improved transparency, and greater accountability in public finance management, efforts to control borrowing may prove ineffective.

There is also a growing call for enhanced legislative oversight, particularly in the approval and monitoring of loans.

While existing laws require National Assembly approval for borrowing, concerns persist about the depth of scrutiny applied to increasingly complex financial instruments.