Amanze Chinonye
Former presidential candidate of the Labour Party, Peter Gregory Obi, has raised concerns over Nigeria’s growing debt servicing obligations and what he described as an imbalance in fiscal priorities, citing figures presented by President Bola Ahmed Tinubu during a recent foreign engagement.
Obi, in a detailed statement on Nigeria’s fiscal outlook, referenced the President’s disclosure that the country is projected to spend about $11.6 billion on debt servicing, a development he said should draw attention to the sustainability of public finances and the direction of government borrowing.
He noted that while borrowing is not inherently problematic, its effectiveness depends on how the funds are deployed.
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According to him, countries such as Japan, the United States, the United Kingdom, the United Arab Emirates, Singapore, and Indonesia maintain high debt levels but channel such resources into productive sectors including infrastructure, education, healthcare, and innovation, thereby sustaining long-term repayment capacity.
Obi argued that Nigeria’s own debt profile differs significantly, alleging that a substantial portion of past borrowing has gone into consumption with limited developmental impact.
He further stated that a significant share of the debt currently being serviced was accumulated under the present administration, adding that external borrowing has continued through multiple channels.
He listed recent external financing arrangements to include a $5 billion facility from First Abu Dhabi Bank, $1 billion via Citibank in London through UK Export Finance, a proposed $1.25 billion loan from the World Bank, and about $516 million arranged through Deutsche Bank, bringing recent external borrowing commitments to approximately $7.8 billion.
He also referenced continued domestic borrowing through regular bond issuances, which he said contributes further to the overall debt stock.
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On budgetary allocations, Obi highlighted that Nigeria’s 2026 estimates allocate approximately ₦2.46 trillion to health, ₦2.56 trillion to education, and ₦865 billion to poverty alleviation programmes totalling about ₦5.885 trillion for key social sectors.
He contrasted this with projected debt servicing obligations, which he estimated at about $11.6 billion (roughly ₦17–₦18 trillion depending on exchange rates), arguing that debt servicing now significantly outweighs combined spending on health, education, and social protection.
Obi cautioned that such an imbalance risks crowding out investments in human capital development and poverty reduction, warning that even allocated funds to critical sectors may not always be fully released or efficiently utilised.
He maintained that the central issue is not the act of borrowing itself, but whether borrowed funds are deployed productively to generate growth, improve living standards, and strengthen repayment capacity. Without this, he said, debt servicing could become a structural burden on Nigeria’s fiscal stability.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
