… Says Country Moderately Indebted By Global Standards
…. Urges FG To Boost Revenue Or Risk Repayment Challenges
Daud Olatunji
The World Bank has said Nigeria’s biggest fiscal challenge is not the size of its debt but the country’s persistently weak revenue generation, warning that unless government earnings improve, servicing existing loans and funding critical development projects will remain difficult.
The World Bank Country Director for Nigeria, Mathew Verghis, stated this during an interview on Channels Television on Friday, stressing that concerns over Nigeria’s debt profile were often exaggerated.
According to him, Nigeria remains only moderately indebted when compared with many countries of similar economic size, adding that the country’s debt-to-GDP ratio is lower than that of several African peers.
“From our assessment, Nigeria doesn’t have a high indebtedness problem; it has a low revenue problem,” Verghis said.
He explained that while borrowing is a normal financing strategy adopted by governments worldwide, the real challenge lies in generating sufficient revenue to repay such loans and sustain development.
“When we looked at the numbers, Nigeria is a moderately indebted country, meaning it has less debt relative to its economy than most of its neighbours and many other countries,” he said.
Drawing a comparison with Ghana, Verghis noted that Nigeria’s fiscal situation differs significantly, pointing out that Ghana is currently undergoing debt restructuring due to severe debt distress.
He argued that governments often borrow to finance long-term investments whose benefits are realised over time, citing infrastructure and energy projects as examples capable of stimulating economic growth and improving living standards.
“Nigeria borrows for the same reasons that all countries borrow. If you want to deliver results to people, the money available annually is often insufficient, so countries borrow to finance development,” he said.
Verghis cited Nigeria’s electricity sector, saying expanding access to power for about 32 million Nigerians would require substantial upfront borrowing but would ultimately strengthen the country’s economy and enhance its capacity to repay the loans.
“To give energy access to 32 million Nigerians, Nigeria needs to borrow money now. But with increased access to energy, Nigeria will become a wealthier country, making it easier to repay,” he added.
The World Bank official, however, emphasised that increasing government revenue should be Nigeria’s immediate priority, warning that the country’s low revenue base poses a greater threat to fiscal sustainability than its debt stock.
“Nigeria’s debt is not particularly high and is quite moderate by international standards. Its revenues are very low by international standards, and unless those revenues are raised, it will not be able to pay back debt,” he said.
Verghis said stronger revenue mobilisation would enable the government to invest more in infrastructure, healthcare, education and other sectors capable of creating jobs, boosting productivity and reducing poverty.
His remarks come shortly after the World Bank unveiled a new six-year Country Partnership Framework for Nigeria, with job creation at the centre of its support strategy through investments in infrastructure, healthcare, agriculture and digital connectivity.
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