For over a decade, the story of Nigeria’s national development has been inextricably linked to the story of its debt. The journey, chronicled in loan approvals from the National Assembly, began with a clear, tangible vision: to build. From 2010, massive loans from lenders like the China Exim Bank were earmarked for specific, transformative projects—the Abuja Light Rail, the modernisation of the Lagos-Ibadan railway line, the Second Niger Bridge. The promise was that debt today would fuel the infrastructure for tomorrow’s prosperity.
But a sharp pivot occurred. The data reveals a clear shift from project-based loans to a relentless pursuit of “budget support.” The $1 billion+ package during the 2016 recession was a harbinger. It was followed by a cascade of deficit-financing loans: $5.3 billion in 2022, $6.18 billion in 2021, and a staggering $21.5 billion plan for 2025. The narrative changed from building bridges to simply bridging fiscal gaps, a transition that has drawn intense scrutiny from civic watchdogs.
This fundamental lack of transparency is the core of the public’s anxiety. At a recent public dialogue on fiscal sustainability hosted by the Centre for Journalism Innovation and Development, Gabriel Okeowo, Country Director of BudgIT, underscored this point, stating: “Our work tracking public expenditure consistently reveals a black box of information when it comes to these budget support loans. We can see the approval, we can see the debt service deductions, but Nigerians cannot see the specific roads, schools, or hospitals this money purchased. This opacity is the fertilizer for misuse and a direct insult to citizens bearing the brunt of these reforms.”
This shift has brought Nigeria’s debt situation to a dangerous inflection point. The country’s public debt stock stood at approximately ₦149 trillion (about $97.32 billion) as of March 2025. More alarming than the principal, however, is the cost of servicing it. In 2024, Nigeria spent a colossal ₦13.12 trillion on debt service—a 68% increase from the previous year. For 2025, at least ₦16 trillion is earmarked for this purpose. This has created a suffocating fiscal reality where, according to recent data, a staggering 77.5% of all government revenue is funneled into servicing existing debt, leaving little for the very development these loans were meant to enable.
The international community, however, appears to be sending a vote of confidence. The recent approval of a $500 million loan by the African Development Bank (AfDB) in 2025 is the second tranche of a $1 billion budget support initiative, explicitly backing President Bola Tinubu’s ambitious reforms—the removal of the costly petrol subsidy, the unification of the multiple exchange rates, and a comprehensive tax overhaul.
An AfDB director, speaking on the condition of anonymity regarding the sensitive negotiations, stated, “Our support is a signal to the market and to other development partners that Nigeria is serious about making the tough, necessary macroeconomic corrections. The reforms are painful but essential for long-term stability. This budget support is designed to cushion the transitional impact and prevent the reforms from stalling.”
This endorsement underscores a belief in the administration’s policy direction. Yet, this very support is at the heart of a raging domestic debate. The AfDB facility, like many before it, is not tied to a specific capital project. It is a general budget support loan, intended to bridge the deficits aggravated by the reforms themselves.
This sentiment echoes the concerns of Dr. Ngozi Okonjo-Iweala, a former Nigerian finance minister and current Director-General of the World Trade Organization, who has often spoken broadly about fiscal transparency in developing nations. “For debt to be sustainable, there must be a clear, transparent line of sight from the loan to a development outcome. When funds are simply absorbed into the general budget without public tracking, it fuels corruption, misallocation, and ultimately, public distrust.”
The core economic problem, however, lies in the structure of the debt itself. “The fundamental issue is that Nigeria’s debt is not structured for growth,” says Ikemesit Effiong, the head of research at SBM Intelligence. “We have moved from borrowing for specific, high-impact capital projects that can generate future returns, to borrowing to finance recurrent expenditures and plug holes in the budget. This is a recipe for a debt trap, as the loans themselves do not create the new wealth needed to repay them.”
The human cost of this debt spiral is immense. As the government spends more on servicing debt, it spends less on everything else. Healthcare, education, and social welfare programs are starved of funding. Meanwhile, citizens are grappling with the triple shock of subsidy removal, a soaring cost of living, and a devalued currency.
A leading voice in civil society, Aisha Salaudeen of the Fiscal Transparency Initiative, argues that the burden of adjustment is unfairly distributed. “The government is asking Nigerians to endure immense hardship from these reforms, yet we do not see a corresponding austerity from the government itself. The persistence of lavish spending on travel, renovations, and prestige projects for officials, while borrowing to pay salaries, completely undermines the social contract and the moral argument for these loans,” she contends.
The most dramatic illustration of the depth of the fiscal crisis was the 2023 approval to restructure N22.7 Trillion in Ways and Means Advances—essentially the government’s massive overdraft from the Central Bank of Nigeria—into a 40-year bond. This was a desperate move to convert short-term fiscal recklessness into long-term manageability, a stark admission that the debt problem was not just external, but profoundly domestic.
The path forward is narrow and fraught with risk. While external lenders remain supportive of the reform agenda, the alarming debt-service ratio and the lack of transparency—so clearly highlighted by watchdogs like BudgIT—create a precarious balance. Nigeria is borrowing billions to stay afloat, but the water is rising faster than the boat.
The story of Nigeria’s loans is no longer one of building for the future, but of paying for the past and present. The $21.5 billion approved for 2025 is intended for everything from critical infrastructure to settling pension liabilities—a clear sign that new debt is now being used to pay old promises. The nation stands at a precipice, caught between the necessity of reform and the crushing weight of its obligations, with its people watching anxiously to see if this mountain of debt will eventually yield prosperity, or simply collapse under its own weight.
