A new policy brief has warned that Nigeria's worsening debt profile and weak revenue generation have pushed the country into a dangerous fiscal position, with the current administration accumulating more debt in two years than Nigeria recorded during its first 55 years after independence.
The report, released by the Alliance for Economic Research and Ethics LTD/GTE, a Nigerian policy think tank, argued that the country's debt crisis has evolved into a governance and revenue emergency, as debt servicing obligations now exceed the federal government's retained earnings.
But the federal government had recently dismissed concerns raised by critics over the rising borrowing and debt accumulation, insisting that deficit spending was neither criminal nor abnormal.
It described debt as one of the oldest instruments of macroeconomic stabilisation known to economic theory and modern statecraft, characterising the position of critics as 'economic illiteracy' disguised as moral outrage
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According to the think tank, Nigeria's public debt rose sharply from N87.38 trillion in June 2023 to N159.28 trillion by the end of 2025, with President Bola Tinubu's administration accounting for about N65.9 trillion of the increase within its first two years in office.
The organisation in the brief titled: "Nigeria Is Borrowing to Breathe--and the Clock Is Ticking", noted that Nigeria accumulated only about N12.06 trillion in debt from independence in 1960 up to 2015, meaning the current administration added more than five times that amount in just 24 months.
The report stated that while previous governments also contributed significantly to the country's rising debt burden, the speed of accumulation under the current administration had intensified concerns over fiscal sustainability.
"President Bola Tinubu's administration has added a further N65.9 trillion in just two years. To put that in perspective: it took Nigeria's first 55 years of independence to accumulate N12 trillion in debt. The current administration has added more than five times that amount in 24 months," it argued.
It recalled that Nigeria briefly became almost debt-free externally after the administration of former President Olusegun Obasanjo secured an $18 billion Paris Club debt relief package in 2005 and paid $12 billion to extinguish about $30 billion in external obligations.
According to the report, that period represented a "golden window" for Nigeria, supported by the Excess Crude Account (ECA) and strong oil revenues, before subsequent administrations gradually returned the country to heavy borrowing.
The think tank explained that by 2015, under former President Goodluck Jonathan, public debt had risen to N12.06 trillion, although debt service obligations remained manageable at the time.
However, it stated that the debt profile expanded dramatically during the administration of former President Muhammadu Buhari, when total public debt climbed from N12.06 trillion to N87.38 trillion by June 2023, representing an increase of more than 620 per cent.
The report stressed that although Nigeria's debt-to-GDP ratio of about 35.5 per cent appeared relatively moderate compared to countries such as South Africa, Ghana and Kenya, the more important measure of fiscal health was how much of government revenue was consumed by debt repayment.
According to the policy brief, Nigeria's debt service-to-revenue ratio rose to 116.8 per cent in 2024 before easing slightly to 113 per cent in the first quarter of 2025.
Citing public data, the report revealed that in January 2025 alone, the federal government spent N696.27 billion on debt servicing, compared to retained revenue of N483.47 billion.
But beyond the rising debt stock itself, the organisation argued that the more troubling development was Nigeria's deteriorating debt service-to-revenue ratio.
"Governments love to quote the debt-to-GDP ratio. Nigeria's is 35.5 per cent, well below the IMF's 55 per cent distress threshold, and far more comfortable-looking than South Africa's 78.8 per cent or Kenya's 65.6 per cent . Politicians wave this number like a clean bill of health.
" Do not be deceived. The number that actually matters is the debt service-to-revenue ratio, how much of every naira earned goes straight to paying creditors. Nigeria's ratio stood at 116.8 per cent in 2024, easing only slightly to 113 per cent in Q1 2025, according to the Nigerian Economic Summit Group (NESG).
" In January 2025 alone, the CBN's own data showed the federal government paying out N696.27 billion in debt service against total retained revenue of just N483.47 billion. That is a 144 per cent coverage ratio in a single month," the report added.
The report described the development as evidence that the government was now spending more on servicing debt than it earned.
The organisation argued that Nigeria's central problem was not necessarily the size of its economy, but the government's inability to mobilise adequate revenue from it.
It pointed out that Nigeria's tax-to-GDP ratio remained critically low at about 8.2 per cent, far below the Sub-Saharan African average of 15 per cent and significantly lower than South Africa's 24 per cent, Kenya's 16 per cent and Ghana's 13 per cent.
According to the report, the weak revenue base has left the government heavily dependent on borrowing to finance recurrent expenditure, budget deficits and debt obligations. The think tank also highlighted concerns over the 2026 Appropriation Act, which allocated N15.8 trillion for debt servicing alone.
It noted that the figure exceeded the N15.4 trillion budgeted for recurrent non-debt expenditure and was larger than allocations to critical sectors such as education, healthcare and security combined.
In addition, the report stated that the projected fiscal deficit of about N25.3 trillion in the 2026 budget breached the 3 per cent threshold stipulated under the Fiscal Responsibility Act (FRA).
The organisation warned that continued deficit financing and aggressive borrowing could further weaken the naira, sustain inflationary pressures and crowd out private sector investment. According to the report, the current high-interest-rate environment has already made borrowing increasingly expensive for businesses, limiting expansion, job creation and economic growth.
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The think tank argued that much of Nigeria's borrowing had not translated into sufficient productive infrastructure capable of generating returns or stimulating broad economic growth. It stated that future generations risk inheriting massive liabilities without corresponding economic assets.
The report further noted that Nigeria's debt challenge was not unique and cited examples of countries that had successfully implemented reforms to restore fiscal stability.
It referenced Ethiopia's restructuring agreement with official creditors under the G20 Common Framework, Ghana's IMF-supported fiscal reforms and Rwanda's strict policy of borrowing only for projects with measurable economic returns.
According to the organisation, Nigeria still possesses the institutional capacity and economic potential to reverse its fiscal deterioration if political leaders demonstrate sufficient discipline and commitment to reform.
Among its recommendations, the report called on the federal government to declare a fiscal emergency focused on revenue generation, with a target of increasing the tax-to-GDP ratio.
It also urged full digitisation of tax collection systems, taxation of digital and informal sector activities, and greater transparency in public finance management.
The think tank further recommended stronger enforcement of the Fiscal Responsibility Act, including criminal sanctions for breaches of deficit limits and tighter restrictions on borrowing for recurrent expenditure.
