World Bank: Nigeria’s crisis is about revenue, not debt

… The country is moderately indebted by global standards

…. Urges FG to increase revenue or risk reimbursement 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 public profits improve, servicing existing loans and financing crucial development projects will remain difficult..

World Bank Country Director for Nigeria, Mathew Verghis, said this during an interview on Channels Television on Friday, stressing that concerns about Nigeria’s debt profile are often exaggerated.

According to him, Nigeria remains only moderately indebted compared to many countries of similar economic size, adding that the country’s debt-to-GDP ratio is lower than that of several African countries.

“From our assessment, Nigeria does not have a high debt problem; it has a low revenue problem,” Verghis said.

He explained that while borrowing is a normal financing strategy adopted by governments around the world, the real challenge lies in generating enough revenue to repay such loans and support development.

“When we looked at the numbers, Nigeria is a moderately indebted country, which means it has less debt relative to its economy than most of its neighbors and many other countries,” he said.

Drawing a comparison with Ghana, Verghis noted that Nigeria’s fiscal situation differs significantly, noting 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 realized over time, citing infrastructure and energy projects as examples that can spur economic growth and improve living standards.

“Nigeria borrows for the same reasons all countries borrow. If you want to get results for people, the money available each year is often insufficient, so countries borrow to finance development,” he said.

Verghis cited Nigeria’s electricity sector, saying that expanding access to electricity for about 32 million Nigerians would require a substantial initial loan, but would ultimately strengthen the country’s economy and improve its ability to repay loans.

“To give 32 million Nigerians access to energy, Nigeria needs to borrow money now. But with greater access to energy, Nigeria will become a richer country, making repayment easier,” he added.

The World Bank official, however, stressed that raising government revenues should be Nigeria’s immediate priority, warning that the country’s low income base poses a greater threat to fiscal sustainability than its stock of debt.

“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 increased, it will not be able to repay the debt,” he said.

Verghis said greater revenue mobilization would allow the government to invest more in infrastructure, health, education and other sectors that can create jobs, increase productivity and reduce poverty.

His remarks come shortly after the World Bank unveiled a new six-year Country Partnership Framework for Nigeria, with job creation at the heart of its strategy to support through investments in infrastructure, health, agriculture and digital connectivity.

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