Nigeria can still pull itself out of its growing debt crisis, but only if the government urgently increases revenue, stops borrowing for consumption and enforces strict fiscal discipline, the Alliance for Economic Research and Ethics LTD/GTE has said.
The group stated in a new policy brief titled “Debt Without Discipline: Nigeria’s Familiar Fiscal Trap — And the Road to Redemption,” dated May 21, 2026.
It stressed that Nigeria’s rising debt burden has become a major threat to economic stability, private sector growth and future generations.
The group argued that Nigeria’s problem is not simply the size of its debt, but the lack of discipline in how borrowed funds are used.
“A nation that borrows to eat will eventually borrow to breathe,” the group said. “The difference between a prosperous country and a pauper nation is not the size of its debt, but the discipline with which it deploys it.”
According to the policy brief, Nigeria’s total public debt rose to ₦159.28 trillion as of the fourth quarter of 2025, representing a 10 per cent increase from ₦144.67 trillion recorded a year earlier.
The group stated that the country’s debt has increased by approximately ₦109 trillion since the first quarter of 2023.
The report noted that more than half of the debt stock is domestic borrowing, which it said is crowding out private sector investment and making borrowing too expensive for businesses.
It pointed to the Central Bank of Nigeria’s (CBN) benchmark interest rate of 26.5 per cent as evidence of the tight credit environment facing businesses.
“The private sector, which should be the true engine of economic growth and job creation, is starved of capital,” it stated.
The group traced Nigeria’s debt journey from the debt relief secured under former President Olusegun Obasanjo in 2005 to what it described as years of rising fiscal indiscipline.
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It said Nigeria enjoyed a brief period of fiscal stability after the Paris Club debt relief deal, but successive administrations failed to sustain the discipline that created buffers such as the Excess Crude Account.
It noted that Nigeria’s debt grew sharply under former President Muhammadu Buhari, rising from ₦12.06 trillion in 2015 to ₦87.38 trillion by June 2023.
It also criticised the use of Ways and Means financing from the CBN, saying it fueled inflation and naira depreciation.
Under the incumbent President, Bola Tinubu, the group said Nigeria’s debt stock has continued to rise rapidly, with about ₦65.9 trillion added within two years.
It stressed that the country’s debt service burden has now become unsustainable.
It cited estimates showing that Nigeria’s debt service-to-revenue ratio stood above 100 per cent in 2024 and remained above 113 per cent in the first quarter of 2025.
It explained that this means the government is spending more on debt repayment than it earns in revenue.
The group said this situation leaves little room for investment in infrastructure, healthcare, education and security.
Despite Nigeria’s debt-to-GDP ratio remaining below the International Monetary Fund’s distress threshold, the group argued that the figure hides the country’s deeper revenue weakness.
According to the report, Nigeria’s tax-to-GDP ratio remains between eight and 10 per cent, far below countries such as South Africa, Kenya and Ghana, raising it to 15 per cent within three years would significantly ease fiscal pressure.
To achieve this, it called for the digitisation of tax administration, expansion of the value-added tax (VAT) base to include more digital services and the informal sector, and stricter enforcement of mining royalties.
The report also urged the government to stop borrowing for recurrent spending and ensure all new borrowing is tied to projects capable of generating economic returns.
It called for stronger enforcement of the Fiscal Responsibility Act and tougher oversight of public borrowing by the National Assembly.
The group pointed to countries such as Ethiopia, Ghana and Rwanda as examples of African nations taking difficult but necessary steps to manage debt pressures through fiscal reforms, restructuring and stronger revenue mobilisation.
It believes that Nigeria can still reverse its current fiscal challenges if leaders take urgent action.
“The time for action is now. The numbers do not lie. And history will not forgive inaction,” the group added.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X