Former Vice President Atiku Abubakar has criticized President Bola Tinubu’s inclination towards borrowing, following the rapid approval of the president’s recent request to secure N1.77 trillion (approximately $2.2 billion) to support the N28.7 trillion budget for 2024.
Additionally, the Lagos Chamber of Commerce has raised significant concerns regarding Nigeria’s status as the third largest debtor to the International Development Association (IDA), an entity of the World Bank that provides grants and low-interest loans to assist the world’s most impoverished nations.
With the recent endorsement of Tinubu’s loan request to finance the remaining six weeks of the current fiscal year, Nigeria’s total debt has reached a historic peak of N136 trillion. The approval, which marks a record for the 10th National Assembly, was granted within 48 hours of the president’s request, which was communicated in a letter to Senate President Godswill Akpabio and Speaker of the House of Representatives, Tajudeen Abbas, and subsequently read during the plenary session on Tuesday.
The approval occurred during Thursday’s session, following the Senate Committee on Local and Foreign Debts, led by Senator Aliyu Wamakko (Sokoto North), presenting its report. The Senate President had tasked the committee with delivering the report within 24 hours for Senate consideration.
The external loan will be obtained through Eurobonds in the International Capital Market and other financial instruments. According to the committee’s findings, the funds are designated for the completion of ongoing capital projects as outlined in the 2024 Appropriation Act.
In defense of the borrowing, Wamakko, the committee chairman, stated that the loan would support the implementation of Nigeria’s Debt Management Strategy, which aims to extend the maturity profile of the nation’s debt, liberate the domestic market for other borrowers, and enhance external reserves.
The chairman underscored the importance of the loan to facilitate the effective implementation of critical national projects and programs while also addressing pending claims and obligations. Deputy Senate President, Barau Jibrin, who led the plenary session, remarked that the President’s request was clear and did not necessitate extensive discussion. The motion was approved unanimously.
In a similar vein, the House of Representatives also unanimously endorsed the President’s request yesterday. This approval came after the recommendations from the House Committee on Aids, Loans, and Debt Management, chaired by Abubakar Nalaraba, were accepted.
While the National Assembly has yet to commence discussions on the 2025 budget proposals, as well as the 2025–2027 Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP) submitted for review and approval, Atiku criticized President Tinubu’s administration for exacerbating Nigeria’s debt situation, accusing it of irresponsibility, corruption, and poor economic management.
In a statement issued yesterday, Atiku expressed concern over the proposed loan’s benchmark rate, stating, “What makes this particular loan proposal even more concerning is that it is benchmarked at the exchange rate of $1 to N800, whereas the current exchange rate from the Central Bank of Nigeria (CBN) stands at over N1,600 to $1.”
He charged the National Assembly with facilitating the borrowing spree, asserting, “Nigeria is sinking further into debt, and the National Assembly has become an accomplice once more.” He also questioned Tinubu’s assertions regarding revenue, stating, “In July this year, Tinubu boasted that the Federal Inland Revenue Services and the Nigerian Customs Service under his watch had collected all-time high revenues to finance the budget. Why are they still borrowing? There is something that they are not telling Nigerians.”
Atiku characterized the loans as harmful to the populace, warning, “These loans are bone-crushing to Nigerians and bringing insufferable pressure on the economy, especially when they are not properly negotiated.”
He claimed that corruption is driving the current borrowing trend, stating, “It is troubling that the insatiable demand for these enormous loans is fueled by corruption rather than genuine infrastructure and development needs.”
Reflecting on previous successes, Atiku expressed, “I experience a profound sense of distress witnessing that merely a few years after President Olusegun Obasanjo’s administration liberated our nation from foreign debt, we find ourselves once again at the forefront of this dilemma.”
Advocating for fiscal prudence, he concluded, “It is imperative to exercise greater caution and calculation regarding the loan surge.”
Additionally, the Lagos Chamber of Commerce and Industry (LCCI) indicated that the business sector is increasingly concerned about Nigeria’s fragile economic condition and the potential consequences of further borrowing on the nation’s financial stability.
In its statement, the LCCI underscored Nigeria’s already precarious fiscal situation, noting a debt-to-GDP ratio surpassing 50 percent and debt servicing costs threatening to overshadow capital expenditures in upcoming budgets. The country, now the third-largest debtor to the International Development Association (IDA) with an external debt of around $17 billion, faces considerable challenges in achieving debt sustainability.
The Chamber, in a statement signed by its Director General, Dr. Chinyere Almona, cautioned that depending on borrowing to cover budget deficits, without exploring alternative financing options, poses a serious threat to infrastructure development and economic stability.
It observed that increasing debt servicing obligations could exceed allocations for essential projects in the 2025 federal budget, worsening the nation’s infrastructure shortfall.
The LCCI also raised alarms regarding currency fluctuations, as the depreciating Naira amplifies the burden of servicing dollar-denominated debt. Efforts by the Central Bank of Nigeria (CBN) to stabilize the foreign exchange market have yet to produce significant results, further complicating debt repayment strategies.
To tackle these issues, the LCCI proposed a series of recommendations, emphasizing the necessity for the government to maintain transparency and accountability in the utilization of borrowed funds. The Chamber highlighted the critical importance of financing essential business-supporting infrastructure, such as electricity supply, food production security, logistics, and manufacturing enablers.
Furthermore, it stressed that in addition to borrowing, the federal government should enhance efforts to broaden the non-oil revenue base through tax reforms, improved compliance, and the encouragement of export-driven sectors, particularly agriculture and manufacturing.
In contrast, several Civil Society Organisations (CSOs) have expressed their support for the Federal Government’s $2.2 billion loan request, characterizing opposition to this initiative as misguided and lacking in understanding. These organizations, which include the Economic Rights Advocates, the Centre for Social Justice, Equity, and Transparency (CESJET), and the Good Governance Advocacy Network, asserted that the proposed loan is intended to bolster vital industries that benefit the Nigerian populace.
The CSOs commended the administration led by President Tinubu for its prudent financial management, noting its commitment to fulfilling obligations to foreign creditors, which has enhanced the country’s reputation for responsible borrowing and repayment practices. During a press conference in Abuja, the convener, Dr. Emeka Theodore, remarked that Nigeria’s borrowing strategy is in line with international best practices, with a manageable fiscal deficit of ₦8 trillion projected in the 2025 budget.
The CSOs called on opposing politicians to move away from populist rhetoric and recognize the realities of governance. Dr. Theodore refuted claims that the loan request would adversely impact ongoing programs and projects, asserting that it would not hinder infrastructure development, healthcare expansion, or educational reforms.
He indicated that the funds obtained through borrowing will facilitate revenue-generating initiatives and enhancements within the institution. Investments in digital technologies, infrastructure, and agricultural advancements are expected to enhance the efficiency of tax collection, diversify sources of revenue, and promote an increase in exports.
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