Why Nigeria’s rising debt and falling revenues are a challenge for growth

In 2021, the World Bank rated Nigeria fifth on its list of ten nations with the biggest debt exposure. This was coming at a time when Nigeria was using 97% of its revenues to service outstanding debt, a cause for concern for the multilateral organization. Nigeria owes the International Development Association (IDA), one of the World Bank’s two lending arms, US$11.7 billion. IDA gives loans to nations at low to zero interest rates based on a country’s creditworthiness or per capita income. These loans are the World Bank’s contribution to helping low and lower-middle-income countries maintain some level of stability and growth at almost zero interest rates. Nigeria is eligible for these concessional loans from IDA based on its per capita income. If the World Bank is raising some concerns about Nigeria’s debt exposure, why then has Nigeria not been cautious about its borrowing? Why has the Nigerian government recently continued to borrow despite spending all its revenue on debt servicing? Why has the finance minister, Dr. Zainab Shamsuna Ahmed, responded that the country does not have a debt problem but a revenue problem? These and other questions will be addressed in detail in this article.