January 7, 2026
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By Kalu Okoronkwo

When President Bola Ahmed Tinubu assumed office in May 2023, he inherited a daunting fiscal landscape shaped by years of budget deficits, dwindling oil revenues, and an economy desperate for sustainable reform. Nearly three years into his presidency, however, the cost of governance has become increasingly tied to massive borrowing, placing profound strain on Nigeria’s economic resilience and on the daily lives of its citizens.

Within this period, borrowing quickly emerged as a central pillar of the Tinubu administration’s fiscal strategy. While targeted borrowing can legitimately finance infrastructure and long-term development, Nigeria’s borrowing pattern under the current administration has drawn intense scrutiny, both for its scale and its persistence.

Despite early assurances to break the cycle of overreliance on debt, Nigeria’s public debt profile has expanded sharply under Tinubu’s watch. The administration has justified this borrowing as necessary to plug budget deficits, fund capital projects, and stabilise revenue inflows. Critics, however, argue that the loans have largely expanded the debt burden without generating commensurate productive output.

The immediate and long-term consequence of this borrowing pattern is clear: a growing share of government revenue is now devoted to servicing debt rather than funding development priorities. Resources that should have been channeled into healthcare, education, infrastructure, and security are increasingly absorbed by interest payments.

Former Vice President Atiku Abubakar captured this concern succinctly when he warned that Tinubu’s borrowing approach risks “mortgaging Nigeria’s future” and pushing the country into a debt spiral, where new loans are taken primarily to service existing ones.

Parallel to its borrowing strategy, the Tinubu administration has pursued expansive tax reforms, framed as essential to boosting revenue and reducing dependence on oil. These include new tax laws scheduled to take effect from January 1, 2026, despite widespread criticism.

The stated objectives are to broaden the tax base, improve compliance, and stabilise government revenue. Yet the timing and structure of these reforms have imposed heavier burdens on citizens and businesses already struggling with rising living costs. Critics argue that, rather than stimulating growth, the measures risk dampening consumption, weakening investment, and stifling private sector activity.

While increased tax revenue can strengthen fiscal sustainability, rapid tax expansion, especially in an economy still adjusting to subsidy removal and currency reforms can slow consumption, burden households and businesses, and intensify public discontent if not accompanied by visible improvements in public services and social safety nets.

The combined effect of rising debt service obligations and expanded taxation has placed Nigeria’s economy under significant strain.

A clearer picture of the debt dynamics under Tinubu’s administration underscores the scale of the challenge. Between 2023 and 2025, Nigeria’s total public debt rose sharply from ₦87.38 trillion in June 2023 to about ₦149.39 trillion by March 2025, an increase of roughly 71 per cent in less than two years.

This surge reflects both fresh borrowing and the securitization of Central Bank overdrafts, known as “Ways and Means” advances, which immediately inflated the official debt stock.

Between 2025 and 2026, the administration also sought and secured approval for new external loans totaling about $24.14 billion, including $21.54 billion, €2.19 billion, and ¥15 billion. These funds were earmarked for sectors such as power, agriculture, security, ICT, and infrastructure, with Senate approval granted for a $21.5 billion external borrowing plan covering the 2025–2026 period.

In addition, within the administration’s first 16 months, Nigeria reportedly borrowed about $6.45 billion from the World Bank for multiple projects, adding to long-term repayment obligations. Domestic borrowing also expanded, with approximately ₦1.15 trillion raised through naira-denominated instruments as the government continued to secure tranche-based loans.

Large external borrowings expose the economy to exchange-rate risks. When the local currency weakens, foreign-denominated debt balloons in naira terms, intensifying repayment pressures and deepening fiscal strain.

Modern Nigeria has, in effect, perfected governance by credit. Budget after budget, borrowing has shifted from being an occasional tool to a governing reflex. Loans now finance not only infrastructure and long-term investments but also routine governance; salaries, overheads, deficits, and even debt servicing itself.

Borrowing, in itself, is not inherently problematic. Nations borrow to build, to bridge temporary gaps, and to accelerate growth beyond current revenue capacity. It becomes dangerous, however, when it outpaces productivity, when debt accumulates faster than the economy’s ability to repay. At that point, debt ceases to be a development tool and becomes a silent tax on future generations.

Nigeria now spends an alarming proportion of its revenue servicing old debts, leaving less for roads, hospitals, schools, and security. The result is a vicious cycle: borrow to govern, service the debt, then borrow again to survive.

To escape the debt trap, the state has turned aggressively to taxation. From a policy standpoint, the logic is sound: Nigeria’s tax-to-GDP ratio is low, and revenue mobilisation remains weak. But policy logic collides with lived reality when tax expansion meets a shrinking economy.

The new tax regime arrives in a country already battered by currency shocks, high inflation, subsidy removal, rising unemployment, and weak purchasing power. In such conditions, higher taxes do not merely “broaden the base”, they deepen the strain.

Small businesses are squeezed between rising costs and stricter compliance demands. Workers pay more in taxes while earning less in real terms. Informal operators, once outside the tax net, are pulled in without the protections or benefits of formality. This is the paradox of reform without cushioning: the state grows stronger while the people grow weaker.

Globally, countries that combine heavy borrowing with rapid fiscal tightening have faced painful trade-offs. In Latin America during the 1980s and 1990s, debt spikes combined with austerity triggered prolonged recessions. In Southern Europe, tax hikes and spending cuts deepened inequality and eroded trust in democratic institutions.

During the COVID-19 era, many emerging markets balanced stimulus and borrowing with mixed outcomes, largely determined by the efficiency of public spending and the resilience of economic structures. Across Africa and Asia, aggressive taxation without visible public value has often fueled evasion, protests, and policy reversals.

Although the Tinubu administration has embarked on bold reforms such as removing subsidies, unifying exchange rates, and overhauling tax systems, the lived experience for many Nigerians has been one of heavier burdens and more fiscal pressure. Borrowing remains central to financing government operations, while tax reforms are beginning to bite amid slow economic adjustment.

The lesson is unmistakable: when citizens feel overtaxed and under-served, compliance collapses and legitimacy erodes. Nigeria now flirts within this danger zone, not because reform is inherently wrong, but because the pain is immediate while the benefits remain distant and abstract.

Perhaps the most corrosive aspect of the current strain is perception. Nigerians are not just paying more; they are seeing little in return. Power supply remains unreliable, security challenges persist, infrastructure gaps endure, and public services continue to lag behind official promises.

In policy terms, this reflects a failure of value transmission, the inability of the state to convert fiscal sacrifices into visible social dividends. When taxes rise without improvements, and debt grows without development, the social contract begins to fray. And when that contract frays, the economy suffers, not only in numbers, but in morale.

What makes this moment combustible is that Nigeria is no longer under economic strain alone; it is under governance strain. The cost of running the state is rising faster than the capacity of revenue generated to sustain it.

Policy cannot survive on arithmetic alone. It must also pass the tests of fairness, timing, and empathy. Reforms imposed without buffers become punishments. Taxes levied without trust become extraction. Borrowing without restraint becomes generational theft.

For governance to be truly cost-effective, Nigeria must strengthen revenue collection without stifling growth, curb unsustainable borrowing while directing debt toward high-impact investments, and ensure that citizens experience tangible improvements in their daily lives.

A nation cannot tax its way out of inefficiency, nor borrow its way into prosperity. Nigeria now stands at a crossroads: continue down a path where governance is financed by borrowed billions and sustained by tax burdens, or recalibrate toward discipline, productivity, and shared sacrifice.

The strain is real, the warning signs are loud and history is unforgiving.

What Nigeria needs now is not just reform, but reform that remembers the people carrying its weight.

Kalu Okoronkwo is a communications strategist, a leadership and good governance advocate dedicated to impactful societal development and can be reached via kalu.okoronkwo@gmail.com.

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