The Debt That Eats Tomorrow

Beneath the Surface By Dakuku Peterside

There are moments when statistics stop being numbers; they become warnings. Nigeria is in such a moment. Its debt profile is no longer a distant concern for experts. Debt has entered the marketplace, the classroom, the hospital ward, the transport fare, and the food basket. It has also entered the anxious calculations of families trying to survive another month.

This is why Emir Muhammadu Sanusi II’s recent warning deserves more than casual attention. Sanusi speaks with the authority of experience: a former Central Bank Governor who understands the mechanics of money, a public intellectual who has long warned against fiscal indiscipline, and a traditional ruler who now sees how macroeconomic choices descend into everyday hardship. At The Niche 2026 annual lecture in Lagos, he asked the question Nigeria can no longer avoid: if removing fuel subsidies was meant to free up public resources, why is the government still borrowing so heavily? His warning was sharp: “You cannot remove wastages and continue borrowing.”

The urgency of Sanusi’s warning has been sharpened by the latest borrowing approvals. In March 2026, the National Assembly approved President Bola Ahmed Tinubu’s request for a fresh $6 billion external financing package, made up of a $5 billion structured facility from First Abu Dhabi Bank and a roughly $1 billion UK export finance facility arranged by Citibank for the rehabilitation of the Lagos Port Complex and Tin Can Island Port. The stated objectives were budget support, priority infrastructure financing, and the refinancing of more expensive obligations. Barely weeks later, in April 2026, both chambers of the National Assembly approved another $516.3 million external loan for sections of the Sokoto–Badagry superhighway, following an earlier request tied to a syndicated Deutsche Bank facility.

These approvals may be defended as necessary instruments for infrastructure and fiscal stabilisation, but they also deepen the central anxiety: Nigeria is still expanding its external obligations at a time when total public debt had already climbed to about N159.28 trillion, or roughly $111 billion, by the end of 2025. The issue, therefore, is not whether roads, ports, and infrastructure matter; they do. The issue is whether a country already spending heavily on debt service can keep adding new obligations without a more convincing revenue strategy, stricter project discipline, and clearer proof that every borrowed dollar will generate the productivity required to repay it. That should haunt Abuja. The data is too stark to ignore.

Debt itself is not evil. Serious nations borrow to build railways, ports, power systems, schools, hospitals, and industries. Trouble begins when borrowing replaces discipline, when loans fund consumption rather than production, when debt rises faster than revenue, when the government removes one fiscal burden but creates another, and when citizens endure pain yet see no promised progress.

The 2026 budget deepens the concern. President Bola Tinubu signed a N68.32 trillion appropriation into law in April 2026, with N15.8 trillion set aside for debt service, N15.4 trillion for recurrent expenditure and N32.2 trillion for capital expenditure. On paper, the capital allocation appears ambitious. In reality, the size of the debt-service bill tells a harder story: before the government builds, hires, repairs, equips, or protects, creditors must be paid first. That is how debt quietly rearranges national priorities.

The main consequence of excessive debt is reduced public investment. Each naira used for debt servicing cannot fund classrooms, hospitals, rural roads, police posts, power projects, or water schemes. Payments to creditors go unnoticed, and monuments remain standing when coupons are settled. Yet the country’s potential is quietly curtailed.

A hospital without drugs is a fiscal story. A school without teachers or materials is a fiscal story. A road abandoned after political fanfare is a fiscal story. Security agencies with logistics problems are a fiscal story. Debt is not just an economic category. It is a decision about who waits, who suffers, and whose future is postponed.

This situation is particularly difficult given Nigeria’s entrenched poverty. According to the National Bureau of Statistics’ recent “Multidimensional Poverty Index,” 63 per cent of Nigerians—about 133 million people—are multidimensionally poor. In rural areas, poverty reaches 72 per cent, while child poverty is at 67.5 per cent. These statistics directly illustrate why fiscal policy decisions are crucial: with such widespread deprivation, the country cannot tolerate excessive borrowing, inefficient spending, or projects that fail to create real opportunities.

The second cost is a suffocated enterprise. When the government borrows heavily from domestic markets, it competes directly with businesses for access to credit. As a result, banks often prefer the safer option of government instruments over lending to manufacturers, farmers, exporters, and small firms. This competition for funds causes interest rates to rise, slows private investment, defers expansion, prevents job creation, and starves innovation.

This is how a nation with strong entrepreneurial energy can remain trapped in low productivity. Nigeria’s economy grew 4.07 per cent in Q4 2025. The non-oil sector accounted for 97.13 per cent of real GDP. That should inspire confidence. Yet growth without broad-based jobs, affordable credit, and better household welfare stays politically fragile. People do not eat GDP. They experience growth through jobs, wages, prices, services, and security.

The labour market tells a cautionary story. Under the revised methodology, Nigeria’s Q4 2025 unemployment rate was about 5.3 per cent, masking deeper vulnerabilities. Informal employment and youth unemployment are very high. In a country where most survive on fragile, informal work, debt-driven inflation and weak public investment are not abstract—they translate to hunger, anxiety, and social volatility.

The third danger is the pressure external debt places on the currency. A dollar loan remains a dollar loan. Its naira cost rises when the naira weakens. This is not an abstract risk. It hits daily life: imported medicines become more expensive. Fuel costs rise. Food prices climb with transport and input costs. School fees are harder to pay. Savings lose value. Wages fall behind.

Inflation has already punished households. Nigeria’s headline inflation rose to 15.38 per cent in March 2026 from 15.06 per cent in February. Food inflation was 14.31 per cent year-on-year. Rural inflation was even higher at 17.22 per cent, showing that price pressure bites hardest outside urban areas. The poor suffer most because inflation is the cruellest tax. It does not wait for legislation or require enforcement. It simply erodes purchasing power.

The fourth danger is political legitimacy. Nigerians do not oppose reform; they recognise the subsidy as a problem and see that exchange-rate distortions cannot continue. However, they question why they must sacrifice if the government does not show discipline. If subsidy removal is followed by continued government borrowing, or citizens must tighten their belts while public institutions remain wasteful, reform appears as punishment without purpose.

That is dangerous. Economic reform succeeds only if citizens see pain-producing progress. People can endure hardship when they see seriousness, fairness, and results. Faith disappears if reform becomes a sermon to the poor by a state that refuses to change. Fiscal adjustment without moral adjustment is politically explosive.

This is why the debt question is really a governance question. It asks if Nigeria can match reform with restraint. It asks if the country can pair revenue with responsibility, borrowing with productivity, and sacrifice with trust.

The way forward is hard but clear.

Nigeria must first change its borrowing philosophy. Every major loan should pass a public-value test: What will it produce? How will it raise productivity? Will it generate revenue, reduce costs, expand exports, create jobs, or strengthen human capital? Borrowing for infrastructure that unlocks growth is defensible. Borrowing for waste, vanity, duplication, or recurrent indulgence is generational irresponsibility.

Second, debt transparency must be non-negotiable. Citizens deserve to know the terms, interest rates, timelines, contractors, project status, and expected returns of major borrowing. Public debt is not private paperwork. It is an obligation carried in the name of the people.

Third, the government must broaden revenue intelligently, not lazily. The answer is not to squeeze the poor or suffocate small businesses. Instead, expand the productive base, improve compliance, digitise collection, reduce leakages, and tax wealth more effectively. Citizens must see value for what they pay. Taxation without service delivery deepens resentment. Taxation tied to visible public value rebuilds the social contract.

Fourth, the government must curb its excesses. A country under debt pressure cannot maintain the theatre of abundance: bloated convoys, wasteful allowances, duplicated agencies, inflated contracts, ceremonial spending, and endless foreign trips. Fiscal discipline must start with the state. Leaders cannot demand sacrifice from citizens while the government acts as if austerity applies only to the governed.

Finally, Nigeria must put debt back in its proper place. Debt should be a tool, not a habit; a bridge, not a trap; an investment, not a survival mechanism. Debt should build the economy that will repay it, not become the economy itself. Debt remembers. It returns in future budgets, exchange rates, and inflation. It lingers in abandoned projects, underfunded schools, strained hospitals, and frustrated young people. Debt remembers long after speeches fade.

Nigeria still has choices. It has people, talent, markets, resources, geography, and entrepreneurial force. But potential does not pay debt. Discipline does. Productivity does. Trust does. Competent governance does.

The debt crisis is therefore not only about how much Nigeria owes. It is about what kind of country Nigeria wants to become. A nation may borrow to build tomorrow. But when it borrows to postpone hard choices, it merely invites tomorrow to arrive as a creditor.

The time to tame the debt is now—before it eats the future.

•Dakuku Peterside is the author of Leading in a Storm and Beneath the Surface.