ONE Campaign Demands Urgent Fiscal Reforms To Tackle Nigeria’s Mounting Debt

A campaigning and advocacy organisation, ONE Campaign has called on President Bola Tinubu to urgently implement fiscal reforms to tackle Nigeria’s rising debt and unlock resources for important sectors that will benefit millions of poor and vulnerable Nigerians.

In a new report that was released by the anti-poverty organization, titled “Fiscal Reform in Nigeria: Navigating Nigeria’s Debt Burden Whilst Protecting Social Spending,” the organisation said excessive borrowing over the past decade has resulted in a threefold surge in the country’s public debt stock.

Nigeria is faced by a worrisome debt service-to-revenue ratio of 91 percent as of 2021, marking a significant increase from 29 percent in 2014. With projected external debt service reaching approximately $4 billion by 2025—up from $3 billion in 2023 and $2.5 billion in 2024—the country may encounter further challenges in debt repayment.

Nigeria’s economy also suffers from insufficient revenue generation due to its heavy dependence on oil exports and failure to diversify, exposing the country to fluctuations in global oil prices and disruptions in local oil production.

ONE Campaign maintains that the government’s inability to enhance revenue generation has adversely affected investments in crucial sectors that could drive economic growth and yield positive outcomes, impeding progress in reducing extreme poverty and multidimensional poverty among its population.

“Failure to act quickly could push 23 million additional Nigerians into poverty and leave 80 million working-age citizens without a full-time job by 2030,” the report added.

Nigeria country director at ONE campaign, Stanley Achonu, said: “As Nigeria grapples with rising debt and dwindling revenue, vulnerable citizens are disproportionately impacted due to a lack of government support in crucial areas that affect their well-being. Tackling these issues requires the government to take decisive actions that will ensure fiscal discipline and sustainable debt management and free up funds to invest in critical areas such as social protection, healthcare, agriculture, and education, among others. The challenges are not insurmountable, but only if the leaders are willing to act quickly before it is too late.”

The ONE Campaign recommends that President Tinubu-led administration deploy both domestic and international solutions to surmount the debt and revenue challenges:

It called for increase debt sustainability by committing to use concessional sources for all debt, refinancing where possible to reduce the amount of service paid; increased debt transparency, particularly for terms agreed on collateralized debt, domestic subnational debt, and state owned enterprise debt; and utilisation of innovations to refinance and reduce debt such as disaster clauses, debt swaps and other future opportunities to reduce debt and smooth payments; Free up resources for investment in social sectors by blocking leakages in public finance, including the haphazard use of tax incentives.

As a way out of the debt situation in Nigeria, ONE Campaign called on the authorities to prioritise spending to maximise better outcomes that deliver on developmental goals and divert funds to be saved from the fuel subsidy removal to better-targeted programmes like infrastructural development and direct cash transfers to the most vulnerable.

“Internationally, Nigeria must work with other African countries to reach common positions on the global financial architecture, including: pushing for fair pricing of African debt, by supporting the African Union’s African Peer Review Mechanism and UNECA’s network of regulators group to implement regulation for Credit Rating Agencies operating in Africa. Working with the African Union to identify a common position/tax framework that Africa can champion in light of the current global debate on international tax rules,” the organisation said.