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The World Bank has said Nigeria’s major fiscal challenge is weak revenue generation rather than excessive debt, urging the country to focus on boosting government earnings to sustain development and meet its financial obligations.
Speaking in an interview on Channels Television on Friday, the World Bank’s Country Director for Nigeria, Mathew Verghis, said Nigeria remains moderately indebted by international standards, with debt levels lower than those of many comparable countries.
According to him, the country’s debt profile is not the primary concern, noting that Nigeria should not be compared with countries such as Ghana, which is currently undergoing debt restructuring.
“From our assessment, Nigeria doesn’t have a high indebtedness problem; it has a low revenue problem,” Verghis said.
“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.”
Verghis explained that governments borrow to finance long-term investments whose economic benefits are realised over time. He said such investments strengthen economies and improve governments’ capacity to repay loans.
“Nigeria borrows for the same reasons that all countries borrow. If you want to get results, if you want to deliver results to people, then the money that you have on an annual basis is not enough.
“So you borrow, you get results, and that will improve your ability to pay back,” he said.
He cited the expansion of electricity access as an example, noting that connecting millions of Nigerians to power requires significant upfront financing but would ultimately support economic growth.
“To be able to connect, to give energy to 32 million Nigerians, Nigeria needs to borrow money now,” the World Bank official said.
“But that money, with that increased access to energy, Nigeria will become a wealthier country, and it’ll be then possible to pay back.”
The World Bank official warned that Nigeria’s low revenue base poses a greater threat to public finances than its debt burden, stressing that increasing revenue collection is essential to meeting debt obligations and financing critical investments.
“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, then it will not be able to pay back debt,” the country director said.
He added that stronger government revenues would allow greater spending on infrastructure, healthcare, education and other sectors that promote job creation and reduce poverty.
The comments come shortly after the World Bank unveiled its new six-year Country Partnership Framework for Nigeria, which prioritises job creation through investments in infrastructure, agriculture, healthcare and digital connectivity.
