Market News

•FG, States, LGs share N5.899tn allocation in Q1 2026

Economic analysts and fiscal policy experts have again sounded the alarm over the Federal Government’s accelerated borrowing, warning that Nigeria’s debt-to-revenue metrics have deteriorated to unsustainable levels, severely threatening long-term fiscal stability and crowding out spending on infrastructure, education, health, and social services.

Despite rising revenues distributed through the Federation Account Allocation Committee (FAAC), the government continues to seek fresh loans. This includes President Bola Tinubu’s recent request for Senate approval of a $516.333 million external syndicated facility from Deutsche Bank to finance Sections 1, 1A, and 1B of the Sokoto-Badagry Superhighway project.

Recent borrowing approvals underscore the trend: the Senate approved $7.8 billion as part of the 2022–2024 plan, $2.2 billion in November 2024 for 2024 budget deficits, $21.54 billion (plus 15 billion yen and a $65 million grant) in July 2025 for the 2025–2026 plan, and now the latest $516 million request.

FAAC data reveal sustained growth in shared revenues. Over January to March 2026, the three tiers of government received a total of N5.899 trillion. This breaks down to N1.969 trillion from January revenue, N1.894 trillion from February, and N2.036 trillion from March — the highest in the period, aided by a N200 billion augmentation.

Gross statutory revenue for March stood at N1.699 trillion, up from N137.914 billion in February and N1.561 trillion.

The Federal Government retained a cumulative N2.118 trillion (N653.5 billion in January, N675.088 billion in February, and N789.159 billion in March). States collectively got N2.016 trillion, while local government councils received N1.43 trillion. Oil-producing states shared N327.79 billion in 13 per cent derivation (N96.083 billion in January, N110.94 billion in February, and N120.759 billion in March).

Yet this revenue uptick has coincided with expanded borrowing. The 2026 borrowing plan has been raised by N11.31 trillion to N29.20 trillion, amid a projected N31.46 trillion fiscal deficit. Public debt reached N159.28 trillion as of December 2025 — N14.61 trillion (10.1 per cent) higher year-on-year — with the Tinubu administration contributing significantly to the stock.

More troubling is that debt servicing consumed approximately N16 trillion in 2025, up from N13.02 trillion in 2024.

Seun Onigbinde, CEO of BudgIT, decried the situation saying: “In the 2025 figures, debt service was around N16 trillion. The federal government is not making more than N20 to N22 trillion Naira, and you have used around N16 trillion to service public debt. So personally, I do think the federal government does not have enough resources. The biggest problem is the debt servicing cost.”

He noted the government has avoided ways and means financing due to inflationary risks but faces revenue shortfalls, leading to continuous borrowing. Onigbinde highlighted exchange rate risks on external debt borrowed at stronger naira rates but repaid at weaker ones, and called for capital expenditure discipline and aggressive revenue generation.

In his position paper: “Where is the Money? Nigeria’s Borrowing Binge and the Vanishing Billions,” fiscal commentator Kio Amachree stated: “Nigeria is borrowing money at a speed that should alarm any serious nation. Billions from the World Bank, Eurobonds, and more queued up. Yet the roads remain broken, electricity unreliable, food prices crush families, and over 100 million Nigerians in poverty. Something does not add up.”

Amachree cited the Nigerian Economic Summit Group (NESG), which reported Nigeria’s debt-service-to-revenue ratio at 116.8 per cent in 2024 — far above the World Bank and IMF’s 30–40 per cent benchmark for developing economies.

“The government spent more servicing debts than it collected in revenue — and had to borrow again to cover the gap,” he noted. Without visible results and accountability, debt could exceed N200 trillion by 2027, with servicing absorbing over 90 per cent of revenue.

The Emir of Kano, Muhammadu Sanusi II, criticised weak fiscal discipline despite subsidy removal and exchange rate liberalisation: “You cannot remove wastages and continue borrowing. If you’re not paying the subsidy and you’ve got the money, why are we still borrowing?”

He welcomed domestic refining progress but questioned reform sequencing in a loose monetary environment, which exacerbated naira depreciation. Savings, he argued, should drive consolidation, not more debt.

Lending their voice, the African Democratic Congress (ADC) legislators’ Forum condemned the $516 million request as emblematic of “reckless borrowing,” urging the Senate to demand full disclosure, cost-benefit analysis, and a credible repayment plan. “Each new loan tightens the noose around the nation’s economic sovereignty,” their statement read, questioning motives ahead of elections.

Critics note persistent underperformance in capital releases (often below 30 per cent early in the year) and multi-year project delays, despite government claims of future completion under the Renewed Hope Agenda. Analysts call for tighter discipline, domestic resource mobilisation, leakage plugging, and public-private partnerships to ease debt dependency.

As FAAC allocations rise yet borrowing surges, the question persists: with revenues growing, why the continued binge? Experts warn that without transparent accounting and tangible results, Nigeria risks mortgaging its future while citizens bear the brunt.