In light of President Bola Tinubu's recent request for the National Assembly to approve a fresh external loan of $2.2 billion, experts are raising significant concerns regarding the implications of such borrowing on Nigeria's already precarious economic situation. This loan is intended to partially finance the projected budget deficit of approximately ₦9.7 trillion for the 2024 fiscal year, as outlined in the government's ambitious ₦28.7 trillion budget proposal.
The Senate is poised to approve this loan request today, following a recommendation from the Senate Committee on Local and Foreign Debts. However, financial analysts and economic experts caution that this move could exacerbate Nigeria's mounting debt crisis, which has already seen the country borrowing extensively from international lenders, including the World Bank.
Nigeria's total debt profile has been on a steep rise, with recent reports indicating that the government borrowed $6.45 billion from the World Bank in just 16 months. The cumulative debt obligations have raised alarms about the sustainability of such borrowing practices.
Analysts warn that increased reliance on external loans may lead to higher debt servicing costs, which are projected to reach ₦6.04 trillion in the first half of 2024—a staggering 68.8% increase from the previous year. This could divert funds away from essential services and development projects.
Citizens express skepticism regarding the effectiveness of past loans in driving tangible improvements in infrastructure and public welfare. Many fear that without a clear strategy for utilizing these funds effectively, Nigeria may find itself trapped in a cycle of debt without significant progress.
Experts advocate for greater transparency and accountability in how borrowed funds are utilized, emphasizing the need for robust mechanisms to ensure that investments lead to measurable benefits for the population.