THE most alarming signal in Nigeria's current fiscal trajectory is not the size of the loans being contracted but the speed and ease with which they are being approved. So, the National Assembly's instantaneous endorsement of President Bola Tinubu's latest $6 billion borrowing request speaks less to urgency than to an apparent collapse of legislative scrutiny.
It is disturbing that what should be a rigorous parliamentary interrogation of assumptions, terms, and long-term implications instead descended into routine paperwork.
This is not merely procedural laziness. It is a fundamental failure of constitutional responsibility. Borrowing at this scale is not a clerical exercise; it is a generational decision. Each loan binds future revenues, constrains fiscal flexibility, and transfers today's governance failures to tomorrow's taxpayers.
Yet the legislature appears increasingly content to wave through requests with minimal debate, limited transparency, and little cost-benefit analysis.
This dereliction comes at a particularly paradoxical moment. Global oil prices, elevated by geopolitical tensions in the Middle East, have climbed well above the $100-per-barrel threshold.
Ordinarily, such windfalls offer Nigeria a rare chance to rebuild fiscal buffers, reduce deficits, and stabilise its currency.
Instead, the country appears to be moving in the opposite direction, borrowing more aggressively even as revenues should, in theory, be improving.
This is a well-trodden path. The $12.4 billion 1990 Gulf War oil windfall "evaporated" into various non-generative projects under Ibrahim Babangida.
While external debt was relatively flat at around $33 billion between 1990 and 1994, domestic debt rose from N84 billion to N407 billion.
This time around, the 2026 federal budget highlights such contradictions. Originally presented at N58.18 trillion, it was expanded by roughly 17 per cent to an unprecedented N68.3 trillion.
Yet projected revenues stand at only N34.33 trillion, leaving a yawning deficit of N23.85 trillion, about 4.28 per cent of GDP. This gap is being bridged through more debt rather than structural reforms, productivity gains, or improved tax collection.
The proposed $5 billion facility from First Abu Dhabi Bank and a further $1 billion loan for port rehabilitation backed by UK Export Finance will increase Nigeria's total public debt to N195 trillion.
Nigeria's total public debt stood at approximately $59 billion when Tinubu took office in 2023. By September 2025, that figure had surged to $103.94 billion (N153.29 trillion).
In just over two years, the country accumulated roughly $45 billion in additional debt, outpacing that of previous administrations.
Defenders of this approach often point to Nigeria's relatively modest debt-to-GDP ratio, projected at around 34 to 35 per cent by 2026. But this metric can be misleading. Debt sustainability is not determined by the size of the economy alone, but also by the government's ability to generate revenue.
Here, Nigeria lags woefully.
The debt-service-to-revenue ratio paints a more accurate picture. In the 2026 fiscal plan, approximately N15.8 trillion is earmarked for debt servicing, nearly half of projected revenues. In recent years, this ratio has exceeded 60 per cent. That is not fiscal prudence; it is fiscal suffocation.
Equally troubling is that these borrowed funds are largely being used to plug budget deficits, service existing debt, and roll over prior obligations rather than finance infrastructure and other investments that generate future growth and revenue. This is the textbook definition of a debt trap.
The structure of some of these loans also compounds the risk. The proposed $5 billion facility, for instance, is reportedly backed by naira-denominated securities and includes margin call provisions. In a volatile exchange-rate environment, this creates significant exposure.
The government's argument that borrowing is necessary to fund infrastructure would carry more weight if Nigeria had a credible track record of executing capital projects. It does not.
Historically, capital expenditure implementation rates have hovered between 26 and 30 per cent. Projects are frequently underfunded, delayed, or abandoned altogether, only to be rolled over into subsequent budgets.
The 2026 budget, again, highlights this dysfunction. It includes N5.71 trillion in outstanding capital obligations from previous budgets, along with an additional N2 trillion for projects omitted in earlier appropriations.
This is a deeply troubling and unacceptable pattern, where the government borrows to finance projects, fails to execute them, carries forward the liabilities, and then borrows again.
This persistent "rollover culture" undermines fiscal discipline, complicates oversight, and obscures the true impact of government spending.
The result is a steadily rising debt stock without a corresponding increase in productive assets. It is debt accumulation without real transformation.
All of this is unfolding against the backdrop of record oil prices. According to Comercio Partners, every $10 increase in oil prices can translate into approximately $5.1 billion in additional annual revenue for Nigeria. Yet the country consistently fails to meet its production targets due to oil theft, pipeline vandalism, and ageing infrastructure.
Moreover, part of Nigeria's crude output is tied up in forward sales ($21.5 billion in the last six years) and other pre-existing obligations, limiting the volume available for immediate revenue generation. Even local refiners cannot get enough Nigerian crude. In effect, high oil prices exist largely as a theoretical benefit, rather than as concrete gains.
Rather than confronting these structural inefficiencies, the government's borrowing spree is accelerating. This strategy rests on optimistic assumptions that future growth will outpace current liabilities rather than on evidence.
The consequences are already visible in Nigeria's shrinking fiscal space. Persistent deficits above 4.0 per cent of GDP, rising debt-servicing costs, and increased domestic borrowing are placing mounting pressure on the economy.
Heavy government borrowing is also crowding out the private sector, driving up interest rates and restricting access to credit for businesses, especially SMEs, that might otherwise generate growth and employment.
The IMF has repeatedly warned about rising debt vulnerabilities among low-income and emerging economies, particularly those with weak revenue bases and exposure to commodity price volatility. Nigeria fits this profile uncomfortably well.
The Northern Elders Forum has described the government's borrowing strategy as "reckless and unsustainable," warning that the country's economic future is being mortgaged. Civil society organisations have echoed these concerns, pointing to a lack of transparency in both the approval and utilisation of loans.
A debt crisis does not begin with a single catastrophic decision, but with a series of small, unchallenged ones.
Nigeria's current path is not inevitable. There are credible alternatives to debt-fuelled expansion. Asset-led strategies, including the sale or concession of underutilised government assets, could unlock significant value without increasing liabilities.
Specifically, the NNPC must see partial privatisation to function optimally at the very least. Public-private partnerships offer a tested avenue for financing infrastructure while leveraging private sector efficiency.
Equally important is the need to rein in the cost of governance. Tinubu's administration has expanded the government despite the Steve Oronsaye Report's recommendations emphasising prudence.
Nigeria's recurrent expenditure remains disproportionately high and fully funded, consuming resources that could otherwise be directed toward productive investment or critical services in health and education. Rationalising these costs would create fiscal space without resorting to additional borrowing.
Revenue mobilisation must be addressed with urgency. Oil theft, tax evasion, and inefficiencies in public financial management, including outright stealing by high state officials, continue to deprive the government of substantial income. Plugging these leakages would yield more sustainable gains than any external loan.
Underpinning all of this must be a genuine commitment to accountability. Every naira lost to corruption or mismanagement ultimately translates into higher borrowing and greater fiscal strain.
Other countries have demonstrated that discipline and innovation can avert debt crises. Indonesia imposed strict fiscal rules following the Asian financial crisis, capping deficits and stabilising debt levels.
Chile built sovereign wealth funds to manage commodity revenues prudently. Rwanda has focused on concessional financing and high-impact investments.