Alliance Chairman Contrasts Anambra’s Zero-borrowing Model with FG’s Rising Debt Burden

• Says while Soludo-led state is strengthening fiscal position, FG continues to expand its debt stock at an unsustainable pace

• Calls for lower cost of governance, stronger revenue mobilisation, stricter borrowing limits, others  

• Recommends measures to lift Nigerians out of poverty

James Emejo in Abuja

Chairman, Alliance for Economic Research and Ethics (AERE), Hon. Dele Oye, yesterday urged the federal government to adopt a more disciplined fiscal management strategy modelled after Anambra State’s zero-borrowing policy.

Oye warned that the country’s mounting debt profile was  becoming a major threat to sustainable economic development.

In a policy statement titled, “A Tale of Two Ledgers: Anambra’s Zero-Borrowing Masterclass vs. Nigeria’s Debt Spiral,” Oye contrasted Anambra’s conservative fiscal approach under Governor Chukwuma Soludo with what he described as the federal government’s growing dependence on debt financing.

According to him, the contrast presents two sharply different models of public finance—one anchored on revenue generation and prudent expenditure, and the other driven by persistent borrowing to fund government operations.

Separately, Oye unveiled an eight-point policy framework aimed at transforming economic reforms into broad-based prosperity, adding that the country’s current growth trajectory will remain unsustainable unless it directly improves the lives of ordinary citizens.

He stated that rising government revenues and improving macroeconomic indicators would amount to little if households, farmers, and productive businesses continued to grapple with soaring prices, expensive credit, insecurity, and rising production costs.

The AERE boss stated that Soludo, while speaking at the 2026 Delta State Economic Summit, effectively showcased how fiscal discipline could deliver development without piling up debt.

He recalled that when Soludo assumed office in March 2022, he inherited a debt burden of about N109 billion, limited cash reserves, and an economy facing severe macroeconomic pressures arising from fuel subsidy removal, exchange rate unification, and rising inflation.

Despite the difficult economic environment, Oye said the governor committed himself to a zero-borrowing policy—a promise he said had remained intact more than three years into his administration.

Oye observed that Anambra’s budgeting strategy had consistently prioritised long-term investments over recurrent expenditure, with about 77 per cent of the state’s 2024 and 2025 budgets devoted to capital projects and only 23 per cent allocated to recurrent spending.

According to the policy paper, this spending pattern enabled the state to finance over 540 kilometres of road infrastructure, alongside investments in healthcare and education, without taking on new debt.

Oye attributed the achievement largely to improvements in Internally Generated Revenue (IGR), which he said rose by 62 per cent between 2019 and 2024 to approximately N42 billion, while recording a seven-fold increase over a 16-year period.

He said stronger tax administration and efforts to block revenue leakages helped drive the improvement, earning Anambra the highest fiscal performance rating among Nigeria’s 36 states in BudgIT’s 2025 State of States Report, with a score of 72.6 per cent.

AERE further pointed out that while Anambra was strengthening its fiscal position, the federal government continued to expand its debt stock at an unsustainable pace.

Citing figures from the Debt Management Office (DMO), the group said Nigeria’s total public debt rose to about N159.28 trillion by the end of 2025, representing one of the fastest increases in recent years.

It stated that domestic debt accounted for about N84.85 trillion, while external debt stood at approximately N74.43 trillion.

Oye warned that excessive domestic borrowing was reducing credit available to businesses while rising external obligations exposed the country to exchange rate risks.

Oye particularly expressed great concern over the country’s debt servicing obligations, stating that the International Monetary Fund (IMF) projects that the country will spend 53.7 per cent of its federal revenue on debt servicing in 2026.

According to AERE, the ratio is more than double the World Bank’s recommended threshold of 22.5 per cent, leaving significantly fewer resources for essential sectors, such as education, healthcare, infrastructure, and security.

The organisation also criticised plans by the federal government to finance its 2026 fiscal deficit with fresh borrowing, stating that continued debt accumulation reflects deeper structural weaknesses rather than a sustainable financing strategy.

It maintained that the key difference between both fiscal models lied in their philosophy towards borrowing.

Oye said while Soludo treated borrowing as an exceptional measure reserved for concessionary loans tied to productive, revenue-generating investments, the federal government appeared to have institutionalised borrowing as a routine budget financing mechanism.

The policy paper highlighted what it described as the “subsidy removal paradox”. It stated that although fuel subsidy removal was intended to create fiscal space and reduce pressure on public finances, the expected reduction in borrowing had not materialised.

Instead, the group stated that debt had continued to rise despite the savings generated from the reform.

AERE said Anambra’s experience demonstrated that subsidy reforms alone could not restore fiscal sustainability unless accompanied by firm borrowing limits, stronger domestic revenue mobilisation, and tighter expenditure controls.

It urged the federal government to shift from a debt-driven growth model to a revenue-driven fiscal framework by broadening the non-oil tax base, reducing the cost of governance, improving tax efficiency, and imposing stricter limits on debt accumulation.

It added, “Anambra has shown that development without crippling debt is not merely an economic theory but a practical reality.”

Oye said the country currently stood at a critical fiscal crossroads and must choose between deepening its dependence on debt or embracing reforms capable of delivering stronger public finances and more sustainable economic growth.

Oye, in his recommendations to government, maintained that genuine economic success should no longer be measured solely by fiscal balances or headline growth figures, but by whether Nigerians could secure decent jobs, operate profitable businesses, increase household incomes, and escape poverty.

According to him, the reality that the National Bureau of Statistics estimated that about 67 per cent of Nigerians—roughly 133 million people—were multidimensionally poor in 2022 should serve as a stark reminder that economic reforms must ultimately translate into improved living standards.

Oye said government must reposition itself as a credible referee, enabler, and protector of productive enterprise rather than attempting to substitute for private sector activity.

At the heart of the proposal is a call for closer coordination of fiscal, monetary, and exchange rate policies to restore price stability, reduce inflation, and bring down borrowing costs that have constrained businesses across sectors.

Oye also advocated greater discipline in public borrowing to prevent government from crowding out viable private enterprises from accessing affordable credit.

The policy framework recommended expanding financing for productive sectors through credit guarantees, risk-sharing mechanisms, leasing arrangements, invoice financing, and cash flow-based lending targeted at micro, small and medium-sized enterprises (MSMEs), farmers, manufacturers and exporters.

According to him, faster and more transparent access to finance would significantly improve productive capacity and stimulate employment across the economy.

To improve the business environment, the Alliance boss proposed the creation of a single, predictable regulatory framework by harmonising federal and state regulations and establishing a unified digital portal where businesses could access licensing requirements, fees, timelines, and dispute resolution processes.

The framework also urged government to replace obsolete regulations with modern, investment-friendly rules capable of reducing compliance costs and encouraging enterprise.

Rather than relying on opaque direct distribution programmes, Oye recommended a shift towards market-driven interventions through vouchers, tax credits, competitive procurement, open contracting systems and time-bound guarantees that allow private businesses to compete fairly.

He said, “The role of government should be to establish fair rules, unite the country, provide essential infrastructure and remain accountable for measurable outcomes, while productive Nigerians create businesses, invest, employ people and compete.”

The second phase of the proposal focused on strengthening the foundations of inclusive growth through improved security, infrastructure, and human capital development.

Oye described security as an essential economic asset, calling for intelligence-led protection of farms, highways, industrial clusters, markets, and ports to reduce production disruptions and improve investor confidence.

He also urged authorities to prioritise reliable electricity for productive clusters, rehabilitate freight corridors, reduce port delays, and preserve a transparent, rules-based foreign exchange market capable of supporting long-term business planning.

The framework equally recommended expanding targeted social protection for vulnerable households while increasing investments in nutrition, primary healthcare, quality education, apprenticeships, and demand-driven skills development.

According to Oye, no reform agenda can be considered inclusive if families lack the resilience to withstand the temporary hardships associated with economic transition.

To strengthen accountability, the Alliance proposed attaching measurable targets on employment, income growth, exports, local value addition, and poverty reduction to every government intervention, backed by quarterly public scorecards, independent evaluations, and sunset clauses for underperforming programmes.

Oye stressed that Nigeria needed a new standard for evaluating economic reforms.

He said, “The true test of reform is not simply whether government balances its books. It is whether more Nigerians can establish businesses, cultivate farms, operate factories, earn dignified incomes and lift their families above poverty.”

He urged government to regularly publish data on decent jobs created, real household incomes, multidimensional poverty, MSME survival rates, access to credit, food security, electricity reliability, export competitiveness, and the time and cost of doing business.

According to Oye, these indicators—not headline growth figures alone—would provide a more accurate measure of whether Nigeria’s economic reforms are delivering a genuine social contract between government and citizens.