Former Presidential Candidate, Peter Obi has raised alarms over Nigeria’s fiscal trajectory, warning that the nation’s projected $11.6 billion debt servicing bill for 2026 threatens to crowd out critical investments in human capital and poverty reduction.
Obi’s critique comes as the administration of President Bola Ahmed Tinubu continues to secure billions in
external loans to fund infrastructure and economic reforms, highlighting growing debate over the balance between borrowing for development and the long-term burden of debt.
During a recent foreign tour, President Tinubu disclosed that Nigeria would spend approximately $11.6 billion on debt servicing in 2026.
This figure, representing nearly half
of the country’s projected revenue, underscores the mounting fiscal pressures facing Africa’s largest economy.
Obi, in a recent statement, argued that while borrowing is not inherently wrong when directed toward the productive investments like education, healthcare,
and infrastructure, Nigeria’s historical borrowing largely funded consumption with limited sustainable developmental outcomes.
The scale of the debt servicing obligation is stark when compared to the proposed 2026 budget allocations for key social sectors. 
According to Obi’s statement, the budget allocates ₦2.46 trillion for health, ₦2.56 trillion for education, and ₦865 billion for poverty alleviation, totaling approximately ₦5.885 trillion.
In contrast, the $11.6 billion debt servicing bill— equivalent to roughly ₦17 to ₦18 trillion depending on exchange rates—is nearly three times the combined allocation for these three critical areas.
Obi warned that this imbalance shifts
debt servicing from a temporary obligation to a long-term structural burden that deepens economic vulnerability.
However, the Tinubu administration maintains that its borrowing strategy is essential for revitalizing the economy and addressing massive infrastructure deficits.
Recent external loan commitments under the current administration total roughly $7.8 billion. This includes a proposed $5 billion total return swap with First Abu Dhabi Bank in the UAE.
Which is aimed at lowering borrowing costs and supporting economic reforms, though this deal has reportedly faced delays due to geopolitical tensions in the Middle East. Additionally, the government secured a $1 billion loan backed by UK Export Finance via Citibank to refurbish the Lagos Port Complex and Tin Can Island Port, critical arteries for Nigeria’s trade.
The administration is also in advanced negotiations with the World Bank for a $1.25 billion loan to support ongoing economic reforms and expand access to finance.
Furthermore, the Senate recently approved a $516.3 million syndicated loan from Deutsche Bank AG specifically earmarked for the construction of the Sokoto-Badagry highway, a major
infrastructure project intended to boost regional connectivity and trade. Government officials argue that these loans, unlike past borrowing, are tied to specific, measurable projects in infrastructure, agriculture, and power that will generate long-term economic
returns and enhance the country’s repayment capacity.
Despite these assurances, critics like Peter Obi remain concerned about the transparency and execution of these projects.
He noted that even within the limited budget allocations for health and education, funds are often not fully released, and a significant portion of what is released can be misappropriated. The central issue, Obi emphasized, is whether borrowed funds are genuinely converted into measurable productivity, inclusive growth, and improved living standards for Nigerians.
As Nigeria navigates this fiscal tightrope, the debate over borrowing and spending priorities will likely intensify. The govt faces the dual challenge of managing a
massive debt burden, simultaneously investing in the human capital and infrastructure necessary to secure the country’s economic future.
Whether the current administration’s strategy of borrowing for targeted infrastructure projects will yield the
promised dividends or exacerbate the structural burdens warned of by its critics remains a critical question for the nation’s trajectory.
