ActionAid slams IMF over Nigeria’s massive debt burden

Nigeria spends nearly five times more of its national revenue on servicing external debts than on healthcare and education combined, according to a new report by ActionAid International and ActionAid Nigeria.

In the report released on Tuesday, the international organisation accused the International Monetary Fund of pushing policies that have undermined social spending and worsened economic hardship.

The report, titled “Still Cooking with a Failed Recipe: A Review of IMF Country Advice on Social Spending, Public Services, Debt, Tax and Gender Equality”, examined 29 IMF documents across 11 countries, including Nigeria, between February 2022 and February 2025.

The countries studied included Brazil, Ghana, Kenya, Malawi, Nepal and Nigeria.

Others are Senegal, Uganda, United Kingdom, Zambia and Zimbabwe.

According to the report, Nigeria spends 20.1 per cent of its national revenue on external debt payments, compared to 4.06 per cent on health and 4.40 per cent on education.

It stated, “In 2025, seven of the eight African countries studied spent more on servicing their debts than on health – and six more than double. Only Ghana and Zimbabwe managed to spend more on education than they do on debt servicing. The scale of the debt burden relative to social spending is stark.”

The report added that “for most lower-income countries, debt is now the single biggest obstacle to increasing their social spending and public services.”

ActionAid said the IMF failed to connect debt servicing with its implications for health and education funding.

“The IMF did not connect debt to social spending. Across all eight African countries studied, no IMF document compared external debt payments against health or education spending or evaluated the policy trade-offs, despite debt servicing exceeding health spending in seven of the eight African countries,” it said.

The report further stated that debt repayment was treated as “an unalterable reality”, with countries expected to allocate resources to social services only after paying creditors.

On fuel subsidy removal, the report said the IMF itself acknowledged that the government’s measures to cushion the impact on poor Nigerians were inadequate.

“The IMF recommended in ArtIV24 that Nigeria remove its fuel subsidy,” the report stated, adding that “adequate compensatory measures for the poor were not scaled up in a timely manner.”

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It noted that the failure to adequately protect vulnerable households and the resulting cost-of-living pressures forced the government to later reintroduce a subsidy measure to ease the burden on Nigerians.

The report also alleged that IMF policy advice to Nigeria remained largely unchanged despite the institution’s public commitments to social spending and gender equality.

It found that Nigeria’s public sector wage bill had remained frozen at 1.9 per cent of GDP for six consecutive years, the lowest among the 11 countries reviewed and significantly below the African average of 7.6 per cent and the global average of nine per cent.

Despite this, the report said the IMF did not recommend increasing spending on the public workforce.

It contrasted Nigeria’s situation with that of the United Kingdom, which spends 15.9 per cent of its GDP on public-sector workers and is encouraged by the IMF to expand public investment further.

ActionAid Nigeria’s Country Director, Andrew Mamedu, criticised what he described as the IMF’s double standards.

“For six years running, the IMF has looked at a wage bill that funds Nigeria’s teachers, nurses and doctors at less than a quarter of the regional average and found nothing to recommend beyond keeping it frozen.

“Meanwhile, ordinary Nigerians are being asked to absorb a doubling of VAT and the lingering effects of a poorly cushioned subsidy removal. This is not the advice of an institution that has reformed. It is the same recipe, repackaged,” Mamedu said.

The report also disclosed that the IMF advised Nigeria to increase its Value Added Tax from 7.5 per cent to 15 per cent by 2026 and recommended higher excise duties on tobacco and alcohol.

According to ActionAid, the measures are “clearly regressive” because they place a disproportionately heavier burden on low-income households without a corresponding increase in taxes on the wealthiest Nigerians.

The report concluded that the IMF “remains the institution most actively empowered by the debt crises” and described it as “the world’s debt collector and lender of last resort.”

It added, “The IMF may claim that it is not ‘your grandmother’s IMF’ but, in its core practices and ideology, it is unreformed. With its outdated mindset and lack of understanding of gender equality, it is not fit for purpose. It is time for the IMF to be retired, not reformed.”