Nigeria’s debt is the new oil curse: A crisis of leadership!

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Read History Go to My Account Log Out Enhanced by Google Opinion Nigeria’s debt is the new oil curse: A crisis of leadership! There was a time when oil was Nigeria’s greatest blessing. Today, many would argue that it might also be a

Listen to this article Share There was a time when oil was Nigeria’s greatest blessing. Today, many would argue that it might also be a curse.

Oil gave Nigeria effortless money. Easy money weakened discipline. It established a rentier economy. It fostered waste. It broadened corruption. It rendered productivity non-compulsory, and for decades, Nigeria has been trapped in borrowing against oil and spending freely with limited productivity-enhancing reforms. Scholars described this catastrophe as the oil curse.

But Nigeria may now be entering a second curse. This time, it is not oil. It is a debt.

Debt is gradually replacing oil as the government’s new comfort zone. Like oil revenues in the past, debt now offers political convenience without demanding economic discipline. And if current trends continue, Nigeria may soon discover that debt can be as destructive as oil dependency.

The Debt Management Office says Nigeria’s total debt, as of September 2026, has reached ₦166.7tn! This equates to every Nigerian shouldering a debt of N716,822, whether old or young, dying or alive, working or not, rich or poor. In fact, a baby born as you are reading is shouldering a certain amount of debt. What an intergenerational debt burden!

Worse still, the new loans already approved were not included in the above figures, and President Bola Tinubu has just written a letter to the National Assembly for approval to borrow an additional $21.682 billion. This means that every Nigerian currently owes more.

Debt, by itself, is not evil. Every serious economy borrows. The United States borrows. China borrows. India borrows. Borrowing becomes dangerous when it finances consumption instead of productivity.

Today, Nigeria spends almost five times as much on debt servicing as it does on health and education combined. Think about that. A nation that is struggling with widespread poverty. A nation with 63 percent of the population living below the national poverty line. About 10.5 million out-of-school children. Roughly 80 million unemployed young people. Failing schools, failing health centres, decaying infrastructure, unreliable power supply, and a bad road network. Yet we have been paying creditors rather than our own people. This is not only a problem but also a moral issue.

A major concerning economic development issue now is that Nigeria is spending more on debt interest than it generates in revenue. In the latest Nigeria Development Update, the World Bank reported that Nigeria spent about N7.7 trillion on debt interest payments between January and June 2026 but earned only N6.2 trillion from all revenue sources. This means we spent about 124.2 percent of our total revenue on debt interest payments, with investments to bring in additional revenue considered merely optional. No wonder the World Bank expressed serious concern about Nigeria’s fiscal health.

Minister of Finance Taiwo Oyedele tried to dispute the World Bank report on Nigeria’s precarious situation on Sunday. He claimed the World Bank presented misleading debt-servicing figures, arguing that they omit certain revenue streams and aggregate debt servicing across different levels of government.

Whatever the case, Nigeria’s debt profile is disturbing and should be addressed urgently; otherwise, it will swallow even more revenue meant for future public investment. Even though Nigeria recorded a 72.2 percent increase in revenue, from N3.6 trn in the first half of 2025 to N6.2 trn in the same period in 2026, debt servicing still outpaced it, rising 37.5 percent to N7.7 trn. This critical imbalance casts severe doubt on the sustainability of Nigeria’s debt.

A comprehensive analysis of Nigeria’s debt by Olajide Oyadeyi of the Commonwealth Secretariat and Imperial College Business School, United Kingdom, and others shows Nigeria’s debt fails the sustainability test in the short and long run. They may be right.

124.2 percent of Nigeria’s revenue goes to interest payments. Not the principal. In other words, Nigeria receives far less from the revenue earned than it pays in interest in H1 2026. Before the government can even consider building roads, upgrading health centres, or paying nurses, debt servicing has already swallowed more than its entire revenue base. This is the tragedy that is gradually and quietly suffocating our country.

When governments become addicted to borrowing, reform becomes optional. Why improve tax administration if you can borrow? Why cut waste if creditors are willing to lend? Why diversify exports if oil and loans can sustain the budget?

Nigeria’s debt crisis is not fundamentally an economic crisis. It is a leadership crisis.

For years, internal and external borrowing have been seen by leadership as an opportunity to pursue its copious manifestos, causing the government to borrow its way into a debt crisis. Unfortunately, a significant percentage of the borrowed funds has fuelled recurrent expenditure, subsidies, rent-seeking, and leakages, rather than large-scale reforms in the agricultural, manufacturing, and infrastructure sectors. This is why debt is escalating without any productivity gains.

Dele Oye, Chairman of the Alliance for Economic Research and Ethics LTD/GTE, recently lamented in a report published by the Nigerian Tribune that the current administration added more debt in two years than what Nigeria accumulated in the previous fifty-five years combined. Whether one agrees with that framing or not, the symbolism is damning. It reflects a state increasingly normalising debt expansion as a governance strategy.

The greater number of Nigerians who may finance the current debt in the future might not have been born yet, and it might include the teeming youth currently unemployed and unsecured who never approved it.

The next administrations may indeed face a situation in which debt servicing represents an even larger share of fiscal spending, thereby leaving much less room for new initiatives in research, development, healthcare, or industrial activities.

This is how nations borrow against future generations.

It also raises important questions: what exactly are Nigerians gaining with this excessive borrowing? Are road networks getting better as fast as we’re borrowing? Is the country’s security situation improving? Is the power supply improving?

What has the government done regarding the high unemployment rate and poverty in the country? What is happening to our federal universities? Are they world-class, globally competitive? Is the country’s healthcare still underfunded to the point that it is spawning an unprecedented volume of medical tourism?

If the answers are predominantly ‘negative’, it means that debt is not a development lever. It’s enabling survival. This is untenable.

Zero debt is not what Nigeria needs (not realistic); productive debt is what Nigeria needs.

Borrowing ought to be used for projects that yield tangible returns, such as a modern rail system, robust export infrastructure, integrated industrial clusters, energy sector reforms, equitable tax structures, effective agricultural value chains, and a secure and safe Nigeria. Critical to this is fiscal responsibility.

The Debt Management Office has a huge task in embedding sustainability in our debt management. The Nigeria Revenue Service (NRS) needs to boost tax efficiency and stop further squeezing already taxed ordinary people and legitimate businesses in the country. It has to diligently plug all avenues through which public finance leaks. We need to cut down on frivolous recurrent expenditure.

We must bring leadership back to what it is expected to be. Borrowing is not development. It is just a tool.

Whether that tool drives development depends on how wisely it is employed.

For a while, the Nigerian government believed we had economic power because of our oil. It took decades to realise that mistake.

We cannot make the same mistake now and confuse debt for growth. Because if oil was yesterday’s curse, today’s may be debt, and leadership cannot escape history if it permits this transition to take place in our nation’s history.

Professor Franklin Nnaemeka Ngwu and Oluwasegun Olawale Benjamin are with the Lagos Business School Public Sector Initiative, Pan-Atlantic University.