As Nigeria prepares to take on new external and domestic loans totalling over $21 billion, economists are urging the government to prioritise sustainable funding models and utilise domestic revenues more effectively.
Professor Sherifdeen Tella of Babcock University and Dr Ayo Teriba, CEO of Economic Associates, raised concerns over the federal government’s latest borrowing plan presented to the National Assembly by President Bola Tinubu. The loans aim to support infrastructure, social services, and pension liabilities.
Prof Tella questioned the rationale behind the loan request, especially in light of increased government revenues following the removal of fuel subsidies. “There’s no clear justification for more debt when allocations to all tiers of government have risen. These gains must be accounted for before seeking further loans,” he said.
He recommended leveraging public-private partnerships and local resource mobilisation instead of relying on foreign debt. “We should encourage innovation and transparency by involving private investment in infrastructure development,” he suggested.
Dr Teriba, meanwhile, advocated for equity investment as a more transparent and accountable alternative. “Equity financing requires rigorous evaluation and prioritisation, which ensures better oversight than traditional government borrowing,” he noted.
Both experts called on the government to provide greater clarity around its borrowing plans, especially regarding how funds will be distributed and utilised across different levels of government.
In a follow-up statement, the Federal Ministry of Finance clarified that only $1.23 billion of the proposed loans are related to the 2025 budget and would not be accessed until the second half of the year. The ministry also emphasised that the External Borrowing Rolling Plan should not be confused with immediate debt disbursements.
