The Alliance for Economic Research and Ethics (AERE) has urged the Federal Government to overhaul its fiscal strategy, saying Nigeria should shift from a debt-driven model to a revenue-led approach, while citing Anambra State’s zero-borrowing policy as evidence that economic development can be achieved without accumulating unsustainable debt.
In a policy paper released on August 3, 2026, titled A Tale of Two Ledgers: Anambra’s Zero-Borrowing Masterclass vs. Nigeria’s Debt Spiral, the Chairman of the Alliance, Dele Kelvin Oye, contrasted Anambra State’s fiscal management under Governor Chukwuma Charles Soludo with the Federal Government’s rising debt profile.
The report said Governor Soludo inherited Anambra with a debt burden of ₦109 billion and cash reserves of about ₦400 million when he assumed office in March 2022, but committed to a zero-borrowing policy despite difficult economic conditions marked by subsidy removal, exchange rate reforms and high inflation.
According to the Alliance, the state has maintained that commitment for more than three years.
The organisation attributed Anambra’s performance to its budgeting approach, noting that about 77 per cent of the state’s 2024 and 2025 budgets were allocated to capital projects, while only 23 per cent went to recurrent expenditure.
It said the strategy enabled the state to finance infrastructure projects, including more than 540 kilometres of road construction, without borrowing.
The Alliance also pointed to improvements in Internally Generated Revenue (IGR), stating that Anambra’s IGR grew by 62 per cent between 2019 and 2024 to ₦42 billion and has increased sevenfold over the past 16 years, driven by stronger tax administration and reduced revenue leakages.
According to the report, the performance contributed to Anambra ranking first among Nigeria’s 36 states in BudgIT’s 2025 State of States fiscal performance assessment with a score of 72.6 per cent.
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In contrast, the Alliance expressed concern over Nigeria’s growing public debt, citing Debt Management Office (DMO) figures showing that total public debt rose to ₦159.28 trillion as of December 2025, representing what it described as a nearly 380 per cent increase over four years.
The report said domestic debt stood at ₦84.85 trillion, while external debt reached ₦74.43 trillion, warning that rising domestic borrowing could crowd out private sector credit, while external borrowing increases the country’s exposure to exchange rate risks.
The Alliance also cited International Monetary Fund (IMF) projections showing that Nigeria is expected to spend 53.7 per cent of federal revenue on debt servicing in 2026.
It argued that the debt servicing burden would leave fewer resources for critical sectors, including healthcare, education and security, while describing the Federal Government’s plan to finance its 2026 fiscal deficit with ₦29.2 trillion in new borrowing as evidence of a broader revenue challenge.
“The Federal Government’s plan to finance its 2026 deficit through ₦29.2 trillion in new borrowing is not a strategy; it is a symptom of a systemic revenue crisis heavily reliant on volatile oil exports,” it stated.
According to the Alliance, the key difference between Anambra and the Federal Government lies in their approach to borrowing.
“The fundamental difference between Awka and Abuja lies in their borrowing philosophies. Soludo views borrowing as a last resort, permissible only if the loan is concessionary and tied to a revenue-generating project. The Federal Government, conversely, treats borrowing as a routine administrative function,” it said.
It also argued that although the removal of fuel subsidies was an important fiscal reform, the expected savings have not translated into lower government borrowing.
“Anambra’s experience proves that removing distortionary spending is insufficient; it must be coupled with strict borrowing constraints and aggressive revenue mobilisation,” the Alliance said.
The organisation called on the Federal Government to expand the non-oil tax base, reduce the cost of governance and introduce limits on the ratio of debt servicing to government revenue.
“Nigeria needs to transition from a debt-driven model to a revenue-driven one,” the Alliance said, adding that “Anambra State has proven that development without crippling debt is not just a theoretical concept; it is a practical reality.”
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X