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In Nigeria, public debt has expanded rapidly since the transition of power in May 2023. Official figures indicate that total debt climbed from approximately ₦77 trillion at the end of the previous administration to over ₦152 trillion by mid-2025. Projections suggest this could approach ₦187 trillion before the end of the year.
This pace of borrowing marks one of the sharpest increases in the country’s history, prompting concerns among economists about fiscal sustainability and Nigeria’s capacity to meet its long-term obligations without significant economic strain.
A central issue raised by critics is not just the scale of borrowing, but how the funds are being deployed. A significant portion of recent loans—including financing from institutions such as the World Bank and proceeds from Eurobond issuances—has reportedly been directed toward budget support, debt servicing, and recurrent expenditure.
Economic observers argue that this approach contrasts with debt strategies in other developing economies, where borrowing is often tied to infrastructure projects such as transportation networks, power generation, and industrial development—investments that can stimulate growth and generate future revenue.
The growing reliance on government borrowing is also affecting the financial system. Reports indicate that a large share of Nigerian banks’ assets is now concentrated in government securities. While these instruments are considered low-risk, their dominance in bank portfolios may be limiting credit availability for businesses.
For small and medium-sized enterprises, widely regarded as critical drivers of employment and innovation, access to affordable financing remains a challenge. High interest rates and constrained lending conditions are seen as barriers to private sector expansion.
Analysts warn that sustained borrowing without corresponding economic growth could translate into higher taxes, inflationary pressures, and reduced government spending on essential services in the future.
In 2023, debt servicing reportedly consumed nearly all federal revenue, leaving limited fiscal space for development initiatives such as education, healthcare, and infrastructure.
Food Security and Agricultural Challenges
Beyond fiscal concerns, Nigeria continues to face significant challenges in agriculture. Insecurity in rural areas has disrupted farming activities, contributing to rising food prices and increased reliance on imports.
Once a major agricultural producer in West Africa, the country now grapples with food inflation that affects both urban and rural populations. Experts emphasize that improving security and supporting farmers will be key to restoring agricultural productivity and reducing dependency on imports.
Government interventions, including the distribution of food and other palliatives, have sparked debate. While such measures provide short-term relief amid economic hardship, critics argue they do little to address underlying structural issues such as unemployment, productivity, and economic diversification.
The broader concern among policy analysts is that without reforms aimed at boosting investment, improving security, and strengthening institutions,
Nigeria stands at a critical economic juncture. While borrowing remains a common tool for governments worldwide, its effectiveness depends largely on how funds are utilized. Redirecting debt toward productive investments, alongside structural reforms, could help mitigate risks and unlock growth.