Economists Warn Nigeria's $21.7bn Loan Risks Fiscal Crisis

Economists have cautioned that the Nigerian federal government's plan to borrow approximately $21.7 billion could result in debt servicing costs exceeding 100% of government revenue. This warning follows President Bola Tinubu's presentation of the borrowing plan, which includes $20.52 billion and €1.05 billion for 2026 and 2027, to the Senate.

The loans aim to fund projects in sectors such as power, transportation, healthcare, agriculture, education, water supply, security, and employment generation. Analysts, including Bongo Adi from Lagos Business School and Dr Femi Egbesola from the Association of Small Business Owners of Nigeria, emphasized the importance of assessing the debt service-to-revenue ratio, which indicates how much government income is allocated to debt repayment.

They expressed concerns over Nigeria's weak revenue base and the sustainability of its debt obligations, urging the government to demonstrate that previous loans have yielded economic benefits before taking on additional debt.