Former President Olusegun Obasanjo has criticised the Bola Tinubu administration’s continued pursuit of home and exterior loans to finance the nationwide price range and execute initiatives throughout numerous sectors, warning that extreme borrowing could destroy future generations.
Mr Obasanjo, who democratically ruled Nigeria between 1999 and 2007, argued that the nation’s continued borrowing and reliance on international establishments, notably the World Bank and the International Monetary Fund (IMF), may not handle its financial challenges, insisting that the establishments weren’t established to resolve Nigeria’s issues.
The former president spoke on Friday in Abeokuta, the Ogun State capital, on the Ajibosin Platform, a public discussion board themed “Leveraging Artificial Intelligence to Solve Grassroots Problems and Accelerate National Development.”
Tinubu’s borrowing plans
The Tinubu administration, like its predecessor, has continued to depend on home and exterior loans to finance authorities initiatives, with a number of borrowing requests submitted to and authorized by the National Assembly.
On Tuesday, President Tinubu sought the National Assembly’s approval to proceed with the processing of exterior loans price $20,517,755,901 and €1,045,083,643 underneath the 2026–2027 Supplementary External Borrowing Plan.
The request took place 5 months after the National Assembly authorized a $516.3 million mortgage from Deutsche Bank AG to finance the development of the Sokoto–Badagry Superhighway, a flagship infrastructure mission underneath the administration’s Renewed Hope Agenda.
The mortgage has a tenure of 9 years, together with a grace interval of as much as three years, with an rate of interest capped on the Chicago Mercantile Exchange’s Secured Overnight Financing Rate (SOFR) plus 5.3 per cent yearly.
The facility is backed by insurance coverage from the Islamic Corporation for the Insurance of Investment and Export Credit, the insurance coverage arm of the Islamic Development Bank.
In March, the National Assembly additionally authorized a $6 billion exterior borrowing plan for the federal authorities.
Of the quantity, $5 billion was to be sourced from First Abu Dhabi Bank to assist the nationwide price range, whereas a $1 billion export finance facility from the United Kingdom, organized by Citibank, was earmarked for the rehabilitation of Tin Can Island Port and the Lagos Port Complex.
President Tinubu has repeatedly defended his administration’s borrowing decisions, stating that loans are essential to finance important infrastructure and different improvement initiatives.
On Thursday, the president defended his administration’s borrowing plans, saying, “The real question is not how much we borrow, but what we build, what value we create and what future we leave behind.”
In April, he stated his administration would proceed to borrow every time crucial, insisting that borrowing shouldn’t be seen negatively.
Mr Tinubu spoke on the State House throughout a gathering with Plateau State leaders led by Governor Caleb Mutfwang and the APC National Chairman, Nentawe Yilwatda.
“If we have to borrow, we borrow. Borrowing is not leprosy, we just have to work hard to be able to pay for it,” the president had stated.
Debt destroys generations
Reacting to the president’s remarks, Mr Obasanjo described the comparability of debt with leprosy as “absolute nonsense”, stating that extreme borrowing could burden generations but unborn.
“And for anybody to say debt is no leprosy, is absolute nonsense. Debt is worse than leprosy. Because leprosy destroys only one person. Debt destroys generations,” he stated.
The former president additionally faulted Nigeria’s financial administration, recalling that when he began his farm 47 years in the past, the naira exchanged at N1 to $1.85.
“When I started my farm, 47 years ago, naira to the dollar was one naira to $1.85. Forty-seven years ago. What has Nigeria done in 47 years that we now have 1,500 naira to the dollar? What have we done?” he requested.
He additionally questioned the capability of the nation’s political management to make selections succesful of enhancing the residing situations of Nigerians.
“What do our leaders know? And what do they not know? And from what they know, what can they do for us?
“World Bank and IMF were not designed for us. They were not built by us. They were built before we became independent. And that’s the people who would determine what we do,” he added.
Mr Obasanjo additional cautioned in opposition to blindly adopting financial prescriptions from foreign-trained specialists with out contemplating Nigeria’s peculiar financial circumstances.
Nigeria’s debt profile
Nigeria’s debt burden has elevated in recent times because the federal authorities has relied on home and exterior borrowing to finance price range deficits and infrastructure initiatives.
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Although the nation’s debt-to-GDP ratio has usually been thought of reasonable in contrast with that of some peer economies, analysts have raised considerations in regards to the authorities’s restricted income base and its capability to fulfill debt obligations.
A considerable share of authorities income goes in the direction of debt servicing, limiting the funds accessible for infrastructure, public providers and different improvement priorities.
The International Monetary Fund and the World Bank have repeatedly urged Nigeria to strengthen income mobilisation, enhance tax assortment and be sure that borrowed funds assist productive investments succesful of producing financial returns.
The federal authorities has maintained that exterior borrowing is important to deal with the nation’s infrastructure deficit, finance improvement initiatives and meet its budgetary obligations. Officials have additionally argued that borrowing on beneficial phrases will help handle financing prices and assist financial progress.
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