AS THE BORROWING BINGE CONTINUES…

The rate of borrowing is increasingly becoming excessive

Last week revelation by the Debt Management Office (DMO) that Nigeria spent N10.81 trillion servicing outstanding debt obligations in the first nine months of 2025 is quite concerning. This amount, according to the DMO, comprised external debt service payments of $3.34 billion (N4.49 trillion, converted at the Nigerian Foreign Exchange rate of N1,346 per dollar) and domestic debt service payments of N6.32 trillion during the period. The agency further revealed that Nigeria’s public debt profile rose to N153.3 trillion ($103.93 billion) as of 30 September 2025, representing a 0.59 per cent quarter-on-quarter increase from N152.4 trillion ($99.66 billion) in June 2025.

Already battered by high levels of socio-economic stress, Nigeria’s ever rising debt portfolio is causing increasing anxiety.  Unfortunately, authorities in Abuja and the 36 states have continued to sneer at genuine concerns as the loans keep piling up, raising the spectre of another debt trap in future. As of last September, the current debt stock for the three tiers of government consisted of domestic debt of $55.47 billion (N81.81 trillion) and external debt of $48.46 billion (N71.47 trillion). The federal government accounted for the bulk of domestic debt, which rose to N77.81 trillion in the third quarter of 2025 from N76.58 trillion in the second quarter of 2025. Similarly, the domestic debt stock owed by states and the FCT increased slightly to N4 trillion as of last September from N3.96 trillion in June 2025.

We understand that borrowing may be inevitable, especially at a period like this. But there are serious concerns at the rate these debts are being piled up in Nigeria. Aside from the fact that the funds are not being deployed into projects that generate income, borrowing should not be done in such a way to mortgage the future of the country. Indeed, experts within Nigeria and multilateral lenders have continued to advise against increased borrowings amid plummeting revenues.

Since borrowing is extra money in circulation that is not backed by production, a profligate mindset is one of the worst ailments that can afflict a government. Meanwhile, all Nigerians are paying for the overdraft to government not just in increased public debts eventually but also, and more importantly, through increased inflation. To worsen matters, most of the federal government projects for which jumbo loans were obtained cannot even earn enough to fund their operations, leaving many to wonder how the debts would be repaid.

Despite being rated as the third biggest economy in Africa, Nigeria still ranks among the poorest nations in the world, essentially because dependence on oil receipts has been a burden due to poor governance in the sector. But the problem goes beyond the federal government to many of the states where the fiscal outlook is increasingly darkening. Indeed, the rising debt profile has continued to elicit serious concerns as most of the states have feeble revenue base, too weak to service the mounting debts.

While it is standard practice for government all over the world to borrow, either externally or from the capital market within the country to finance projects, the International Monetary Fund (IMF) has consistently warned Nigeria of the consequences, particularly of the servicing costs which could consume substantial amount of government revenues. If the aim of borrowing is to help government attain developmental needs in the areas of infrastructure, health, education, power, and transportation, it is a laudable idea. The challenge, however, is that over the years, authorities in both the federal and states have accumulated huge debts at public expense which were largely frittered away.

It is important for authorities in Nigeria to understand that the solution to our challenges can be found inwards. There is no record that any country has borrowed its way into prosperity.