World Bank: Nigeria’s Biggest Fiscal Problem Is Low Revenue, Not Debt

The World Bank says Nigeria’s biggest fiscal challenge is weak revenue mobilisation, not excessive borrowing, and urged the government to prioritize boosting revenue to support sustainable growth.

World Bank Country Director for Nigeria, Mathew Verghis, said this Friday during an interview on Channels Television. 

“Nigeria doesn’t have a high indebtedness problem; it has a low revenue problem,” Verghis said.

*Debt ‘moderate’ by global standards*

Verghis said Nigeria’s debt-to-GDP ratio is lower than that of many comparable countries and warned that the focus should be on improving revenue rather than limiting borrowing.

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

“Nigeria is in a very different situation than Ghana, for example, which is going through a debt restructuring.”

He defended government borrowing as a tool for financing long-term investments that drive growth and improve living standards.

“Nigeria borrows for the same reasons that all countries borrow. If you want to deliver results to people, the money available on an annual basis is not enough. So you borrow, deliver results, and that improves your ability to repay,” Verghis said.

He cited electricity access as an example, saying connecting 32 million Nigerians to power requires substantial upfront investment. 

“To be able to connect and provide energy to 32 million Nigerians, Nigeria needs to borrow money now. But with increased access to energy, the country will become wealthier and better positioned to repay the loans,” he said.

*Revenue risk*

Verghis, however, warned that low revenue poses a greater threat to fiscal sustainability than the current debt level.

“Nigeria’s debt is not particularly high, and in fact, it’s quite moderate by international standards. Its revenues are very low by international standards, and unless those revenues are raised, it will not be able to pay back debt,” he said.

He said stronger revenue mobilisation would enable the government to increase investment in infrastructure, healthcare, education and other sectors that create jobs, improve human capital and reduce poverty.

*New World Bank framework*

The remarks come as the World Bank recently unveiled a new six-year Country Partnership Framework for Nigeria. The framework places job creation at the center of World Bank support through investments in infrastructure, healthcare, agriculture and digital connectivity.