Of debt, development and self-inflicted poverty

Nigeria’s debts continue to grow as the government shops around for all available credit, not minding the toxicity. I received a video showing African countries that are heavily indebted to the International Monetary Fund, and Nigeria’s name was absent. Many Nigerians were happy and gladly reposted the same video as if freedom from the IMF loan were freedom from toxic loans. Countries that owe the IMF substantial debt find it difficult to obtain loans from other sources, as the IMF is one of the main institutions that recommends or gives support to countries seeking loans from major private creditors. When the Nigerian government under Muhammadu Buhari owed the IMF, it could not borrow money and had to resort to borrowing from the Central Bank of Nigeria. So, the current Nigerian government has been playing its game wisely.

The Bola Tinubu administration has been active in the loan market since it came on board. It has a record-breaking loan profile. Nigeria’s addiction to borrowing has reached a crescendo under this administration. Nigeria’s external debts, according to a recent report from the Debt Management Office, are over US$51.8bn, including the US$6.45bn from the World Bank and the budget support loan of US$6bn approved by the Senate, among others.

You can imagine the worth of these in naira value under the massive devaluation. It’s over N70tn! And there are pending requests or yet-to-be-drawn-down loans from the international capital market, including the “structured Total Return Swap” with the First Abu Dhabi Bank, UAE, warned against by the IMF. Actually, the government has already ignored the warning and has started drawing from the loan facility! Addiction to any ailment requires more than warning. It requires spiritual deliverance.

The problems with the debts are clearly seen in the challenges posed by the corresponding debt service. These challenges can be gleaned from the humongous allocations for debt servicing in the federal annual budgets over time. In the 2026 budget proposal entitled “Budget of Consolidation, Renewed Resilience and Shared Prosperity”, the President indicated that Nigeria would spend US$11.6bn on debt servicing in the year. This is against US$5.2bn in 2025. That is, allocation is more than 100 per cent and about half of the country’s revenue for the same period. The concerns of many economists over these loan acquisitions and repayments have to do with inadequate revenue streams to meet the repayment and some balance for executing development projects.

Despite my conviction for under-reporting and under-recording of revenues or general leakages in the revenue record, the revenue remains insufficient to meet debt servicing and economic development. This is due to low productivity nationally and constraints on growth in economic sectors that can generate or promote employment, like the industrial sector, particularly the manufacturing sub-sector, which normally promotes ancillary services. Some reports on the Nigerian economy link debts to underdevelopment and poverty.

The Punch presented a report by ActionAid International and ActionAid Nigeria that Nigeria spends nearly five times more of the national revenue on servicing external debts than on healthcare and education combined. The ActionAid Report accused the IMF of misadvising some countries, including Nigeria, on economic issues relating to social spending, public services, debts, taxes and gender equality.

There was also a story from Arise News by the Presidential spokesperson, Bayo Onanuga, that several Nigerian ministers were using their personal funds to run their ministries, particularly with respect to executing capital budget and carrying out official government duties due to systemic funding constraints and the need to prioritise projects. The spokesperson was trying to defend public criticism of government officials or politicians living in affluence while citizens are suffering. What is responsible for such a situation? Debt and debt servicing issues.

Education and healthcare are basic needs of the people and belong to the social sector in the Federal Government budget. The inability of the government to fund such a sector from its revenues implies promotion of underdevelopment and poverty. In fact, it is common knowledge that the 2024 federal budget was partially implemented, and possibly the 2025 federal budget was not actually executed for the year. There was an argument surrounding the non-implementation of that year’s budget. If earlier contracted loans were spent on projects that have good returns on investments, the country would not be in the present economic dilemma. Should the government reassess the necessity and needs for these loans instead of moving in a cycle of using new loans to clear old loans?

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Research reports and national experiences have shown that the loans are contracted under a toxic environment of corruption, economic mismanagement, personal aggrandisement or selfishness, and other vices that have affected the implementation of good economic policies for which Nigeria is known. There is always this saying that Nigerian economic policies are always sound, but there are always problems with implementation. Those who implement our policies always look for loopholes they can take advantage of for their personal benefits at the expense of the nation. This happens at the micro and macro levels. And such actions generate national poverty, which the government is trying to manage.

At the micro level, if you employ some Nigerians to run your business and you go to sleep or are not directly involved or monitoring, they will ruin the business through corruptive activities, with the hope that they can always move on to other victims. There are so many such reports, including a recent one where staff employed in a guest house ran down the business with the manager stealing millions of naira through false claims, as he later confessed! When Dangote was reported as not employing many Nigerians to work in his refinery or preferring foreigners, my thought went to the nefarious activities Nigerians commit, not issues of qualification or competence, as was being reported. I was once a victim on a small scale.

On a larger scale, corruption in the public sector is on bigger level. It is in this country that even big personalities like the country’s accountant general, auditor general, head of service, heads of parastatals, and even the attorney general have been indicted for stealing public funds in billions and trillions. It is also in this country that we have staff “working” in NNPC with dead refineries and collecting salaries, leave allowances, and some special allowances like overtime! A forensic audit will likely show how much deliberate damage was done to the refineries to continue to collect those free salaries and allowances without carrying out any productive tasks. Recent reports on and from NNPCL have shown how the organisation has scammed the government in revenue reporting and release. All these activities affect development and are poverty-enhanced or induced. Collectively, we must find a solution to these problems.