Nigeria’s Borrowing Debate: Why Reforms Were Necessary, and Why Results and Discipline Are Now Non Negotiable.

Nigeria’s current debate about government borrowing, especially reports that the Federal Government may raise between ₦17 trillion and ₦20 trillion to finance the 2026 budget, goes far beyond partisan politics. It reflects a deeper and more legitimate national concern about when painful economic reforms will begin to translate into visible improvements in everyday life.

This concern deserves to be addressed calmly, honestly, and in language that ordinary Nigerians can understand.

Why the reforms were unavoidable.

Nigeria did not enter the current reform period from a position of fiscal strength. For years before this administration, the country was living with deep structural distortions.

Fuel subsidies were consuming more public resources than capital spending on roads, power, education, and health combined. The naira was artificially supported with scarce foreign exchange, creating arbitrage, corruption, and chronic dollar shortages. Government revenue struggled to cover even basic obligations such as salaries and interest payments, let alone development needs.

By the time the current administration assumed office, the system was bleeding.

In that context, fuel subsidy removal and exchange rate unification were not ideological choices or political experiments. They were emergency measures taken to prevent a deeper fiscal and balance of payments collapse. On this point, there should be little disagreement. Without these reforms, Nigeria’s situation today would almost certainly be far worse.

Why revenue has risen, yet pressure remains.

It is also true that government revenue has improved since these reforms were implemented. Federal allocations to states have increased significantly, tax and customs collections have risen, and some of the most wasteful distortions in the system have been removed.

However, it is critical for Nigerians to understand a simple but often misunderstood truth: higher revenue does not automatically mean sufficient revenue.

At the same time that revenues were improving, inflation accelerated, the naira depreciated sharply, wages and pensions came under pressure, security spending increased, and legacy debt obligations continued to weigh heavily on government finances. Debt servicing alone still consumes a very large share of federal revenue.

This explains why borrowing has continued even after reforms. It explains the situation, but it does not justify borrowing without limits.

The scale of borrowing, where caution must now replace comfort.

Borrowing between ₦17 trillion and ₦20 trillion in a single budget year is not a routine or trivial matter, even in a period of economic transition. At this scale, borrowing approaches roughly one third of total government spending, while debt service is projected to consume close to 30% of the budget.

This is where the national conversation must mature. The question is no longer simply why borrowing exists, but how long it can continue at this level without undermining fiscal stability.

Borrowing can help cushion a difficult transition. It cannot become a permanent substitute for productivity, growth, and disciplined spending.

What domestic contractor protests reveal about hidden debt.

Recent protests by domestic contractors at the Ministry of Finance provide an important insight into the nature of Nigeria’s fiscal stress. Many local contractors are owed large sums for completed or ongoing projects, with unpaid claims running into hundreds of billions of naira, and in some reports much more.

These unpaid obligations are effectively domestic debt that does not always appear clearly in headline debt figures. They matter because when contractors are not paid, projects stall, workers lose jobs, banks carry stressed loans, and public confidence erodes.

Borrowing new funds while domestic arrears accumulate creates a dangerous cycle. Projects slow down, costs rise, confidence weakens, and borrowing pressures increase further. This issue must be addressed decisively, or public trust in fiscal management will continue to erode.

Why Nigerians feel results are missing.

Many Nigerians ask a straightforward question, where is the money going?

Budgets do not operate like household savings. Revenues are pooled, obligations roll over across years, and capital projects often span multiple budget cycles. That said, the frustration Nigerians feel is real and understandable.

The deeper problem is not that revenue is disappearing, but that spending is not converting quickly or visibly into results. Roads remain incomplete, power supply is weak, schools and hospitals struggle, and agricultural productivity remains low.

This is fundamentally an implementation and absorption problem, not just a revenue problem.

Results are not only a federal responsibility.

It is also important to be honest about where Nigerians actually experience government. Most daily services, primary education, basic healthcare, agriculture support, local roads, and sanitation fall under state and local governments.

Since subsidy removal, states have received two to three times more in federal allocations than before. Yet in many cases, these additional resources have been absorbed largely by recurrent spending, including salaries, overheads, and patronage, rather than being converted into visible investments in productivity and human development.

Only a handful of states show consistent, visible progress in infrastructure, agriculture, or service delivery. This explains why reform pain is felt immediately, while benefits appear delayed. The borrowing debate cannot be honest unless this shared responsibility is acknowledged.

What must happen next.

If the painful reforms Nigerians have endured are to retain credibility, the next phase must be defined by discipline and delivery.

Borrowing must follow a clear path where it peaks and begins to decline. New loans should be strictly tied to productive, self financing projects rather than consumption. Domestic arrears to contractors must stop growing and be transparently addressed. Capital budgets must be executed faster and tracked publicly. States and local governments must be held accountable for how increased allocations are used.

Clear benchmarks also matter. Deficits must trend downward, revenue relative to the size of the economy must rise meaningfully, and Nigerians must see tangible improvements in services and opportunities.

This is simply economic common sense.

Final takeaway.

President Tinubu’s reforms were necessary and unavoidable. The macroeconomic improvements they produced are real, but incomplete. Borrowing during a transition can be justified, but only temporarily.

If borrowing continues at high levels without faster, shared delivery across federal, state, and local governments, Nigeria risks sliding into a credibility and debt trap. If discipline, productivity, and accountability follow the reforms, the pain Nigerians have endured will have meaning.

Nigeria does not need denial or panic, it needs results.

#yb-Dec250