Nigeria borrowing plan sparks concern as revenue rises 40.5%, with World Bank loans of \$1.75bn looming despite warnings on debt sustainability

Nigeria borrowing plan has come under scrutiny as the Federal Government pushes ahead with new debt proposals despite a record 40.5 per cent revenue increase in the first eight months of 2025.

Also read: World Bank loans to Nigeria hit $8.4bn in two years

According to Bayo Onanuga, Special Adviser to the President on Information and Strategy, total collections reached N20.59tn between January and August 2025, up from N14.6tn in the same period last year.

Non-oil revenue now accounts for 75 per cent of total inflows, keeping the government on track to meet its annual target.

But despite this milestone, the government is planning fresh domestic and external borrowing to close funding gaps in critical sectors.

Contractors under the All Indigenous Contractors Association staged a protest in Abuja this week, demanding payment of about N4tn owed for 2024 projects.

Meanwhile, the World Bank is expected to approve loans totalling \$1.75bn before year-end. These will support projects in agriculture, health, digital infrastructure, and MSME financing, with commitments ranging from \$250m to \$500m each.

Economists remain divided. Lagos-based Adewale Abimbola argued that concessionary loans tied to viable projects could be beneficial if well managed.

But development economist Dr Aliyu Ilias cautioned that debt has surged from N87tn at the end of Buhari’s tenure to about N149tn under Tinubu, warning it could approach N180tn soon.

He noted that debt servicing already consumes a significant share of revenue, crowding out capital investment.

Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, said deficit financing is not unusual globally, but stressed the importance of sustainability.

“Borrowing should be backed by sound reasoning and projects that expand repayment capacity,” he said, warning of exchange rate risks tied to excessive foreign loans.

Data from the Debt Management Office shows Nigeria’s debt to the World Bank rose to \$18.23bn in March 2025, representing nearly 40 per cent of total external debt and over 81 per cent of multilateral debt.

Also read: Nigeria retains position as third-largest debtor to World Bank, owes $18.2bn

With revenue rising but debts climbing faster, the power question lingers: can Nigeria strike a balance between development financing and long-term fiscal stability?