Nigeria’s rising debt burden has sparked fresh concern after the Federal Government exceeded its 2025 borrowing target by a staggering 55.6 per cent, fuelling fears of an impending fiscal crisis and a potential crowding-out of the private sector.
Official data show that the government has borrowed ₦17.36 trillion from both domestic and external sources in just ten months — far above the ₦10.9 trillion benchmark contained in the 2025 Appropriation Act. With plans already underway to secure an additional $2.35 billion (₦3.38 trillion) through a Eurobond issuance, total borrowings could climb to nearly ₦21 trillion before the end of the year.
Financial experts warn the trend paints a grim picture of fiscal recklessness, ballooning debt-service costs, and shrinking access to credit for businesses.
“What we are witnessing is a clear reflection of fiscal indiscipline and poor expenditure control,” said Andrew Uviase, Managing Partner at Ecovis OUC. “The government appears unconcerned about its spending habits. Without honesty and transparency, this excessive borrowing will persist — because, realistically, money is never enough.”
Figures obtained from the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN) show that ₦15.8 trillion of the total borrowing came from domestic investors through bonds, treasury bills, and other debt instruments. Only ₦1.56 trillion was raised externally during the same period.
Under the 2025 budget, the government projected total expenditure of ₦54.99 trillion and revenue of ₦41.91 trillion, leaving a deficit of ₦13.08 trillion. But analysts say weak revenue performance, coupled with optimistic oil assumptions, has made the borrowing plan unrealistic.
“The 2025 budget was built on sand,” remarked David Adonri, Vice Executive Chairman of Highcap Securities. “Oil output has remained between 1.6 and 1.7 million barrels per day, far below the 2.06 million barrels target. With prices also dropping to around $65 per barrel, the revenue base simply cannot sustain this level of borrowing.”
Adonri warned that Nigeria’s “addiction to debt” was becoming dangerous, adding that the removal of fuel and forex subsidies had not translated into disciplined spending.
“Government borrowing has become a narcotic,” he said. “It gives temporary relief but worsens long-term pain.”
Economists argue that the government’s appetite for domestic credit is squeezing the private sector out of the lending market.
“Excessive borrowing by the government escalates the cost of funds and crowds out production,” Adonri explained. “Lenders prefer risk-free government securities to financing real business ventures.”
Uviase added that when banks channel most of their resources to government bonds, “private enterprises struggle to access credit, interest rates soar, and the manufacturing sector suffers.”
Tunde Abidoye, Head of Research at FBNQuest Merchant Bank, echoed similar concerns.
“High yields on government instruments attract investors away from private borrowers. As rates remain elevated, credit flow to the real economy continues to weaken,” he said.
Analysts estimate that total government borrowing for 2025 could approach ₦23 trillion, representing an 80 per cent excess over the amount approved in the budget.
Clifford Egbomeade, a public finance analyst, said the situation has become a “double-edged sword.”
“While it provides short-term cash to fund the budget, it worsens long-term debt vulnerability,” he said. “Between January and August 2025, the CBN raised ₦26.4 trillion through Treasury Bills and OMO operations — a 57 per cent jump from last year. With yields above 20 per cent, debt servicing is now outpacing revenue growth.”
He warned that Nigeria is edging closer to a debt trap, where “new borrowing only serves to pay old debts.”
Experts also say the borrowing overshoot directly undermines Nigeria’s Medium-Term Fiscal Framework (2025–2027), which seeks to narrow the deficit to below 3 per cent of GDP.
The International Monetary Fund (IMF) and the World Bank have both warned that the country’s debt service-to-revenue ratio — estimated at 83 per cent in 2024 — is “unsustainable without decisive action.”
“When the government exceeds its borrowing projections, it signals weak fiscal discipline,” said Uviase. “It also delays projects and deepens public mistrust.”
Adonri added, “The government talks about fiscal consolidation, but its actions tell a different story. There’s no real intention to balance the budget.”
Experts agree that Nigeria’s debt problem cannot be solved by borrowing more. They recommend stronger revenue mobilisation, spending efficiency, and a leaner public sector.
“Government must trim wasteful expenditures, plug leakages, and limit its involvement in sectors better managed by private investors,” said Adonri.
Egbomeade called for urgent non-oil revenue reforms and digital tax collection to expand the fiscal base.
“With a 93-million-barrel oil shortfall this year, Nigeria must broaden VAT to cover informal trade and rebalance borrowing toward longer-tenor, concessional external loans,” he said.
While Abidoye acknowledged that recent tax reforms could boost revenue, he warned that excessive taxation might stifle growth.
“Raising the capital gains tax and increasing the minimum effective tax rate may help in the short term,” he noted, “but without cutting spending, it’s like saving a man from the lion only to hand him over to the shark.”
