According to the World Bank, Nigeria faces a significant fiscal obstacle primarily due to inadequate revenue generation rather than excessive debt.
The organization urges the government to enhance its revenue streams to facilitate sustainable economic development.
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In an appearance on Channels Television, Mathew Verghis, the World Bank Country Director for Nigeria, remarked that Nigeria’s debt is moderate when compared globally, distinguishing it from nations in debt distress. “Our analysis indicates that Nigeria’s core issue is not high debt levels; it’s low revenue,” Verghis stated.
He noted that Nigeria’s debt-to-GDP ratio is lower than that of several similar countries and emphasized the need to prioritize revenue enhancement over restrictions on borrowing. “Our findings classify Nigeria as moderately indebted,” he said, contrasting its situation with that of Ghana, which is undergoing a debt restructuring process.
Verghis advocated for borrowing as a vital means for making long-term investments that spur growth and uplift living standards. “Countries borrow to achieve results, and the annual funds available are often insufficient. By borrowing, we can deliver outcomes and enhance repayment abilities,” he explained.
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Citing the need for electricity access, he stated that Nigeria must secure funds to connect approximately 32 million individuals to power, asserting that greater access would bolster economic strength and repayment capacity.
He cautioned that low government revenue represents a larger threat than the current debt level. “Nigeria’s debt isn’t particularly high; its revenue is quite low by global standards. Without increasing revenue, debt repayment will be challenging,” he warned.
Furthermore, he mentioned that improved revenue mobilization could lead to more investments in infrastructure, healthcare, education, agriculture, and digital connectivity, thus creating jobs, enhancing human capital, and alleviating poverty.
