Two Economists have warned that Nigeria’s huge debt profile and poor spending culture are preventing citizens from feeling the expected benefits of fuel subsidy removal, despite the federal government’s repeated assurances on economic reforms.
Speaking during an interview with Newsmen in Ilorin, Kwara State Capital, Prof. Tunde Ijaiya Gafar of the Department of Economics, University of Ilorin, and former regional manager of First Bank of Nigeria, Babatunde Salami, said rising debt servicing costs, naira devaluation and weak budget implementation were worsening economic hardship across the country.
Ijaiya said the removal of fuel subsidy ought to have stabilised the economy by now, but argued that massive debt obligations had absorbed most of the expected gains.
According to him, Nigeria’s debt accumulation intensified after the 1986 Structural Adjustment Programme and the subsequent devaluation of the naira, adding that the country’s debt profile has continued to expand due to domestic and foreign borrowing.
He said the naira’s depreciation from about ₦3 to one dollar in the mid-1980s to over ₦1,400 currently had significantly increased the burden of servicing external loans obtained in foreign currencies.
The Economist also blamed what he described as ambiguous and non-transparent spending by successive administrations, arguing that high governance costs had weakened the impact of economic reforms.
He criticised the proliferation of political appointments and aides in government institutions, saying the growing cost of governance was placing additional pressure on public finances.
Prof. Ijaiya further accused state and federal legislatures of failing to effectively exercise oversight over public spending.
On rising fuel prices, the Professor said the federal government’s decision to sell crude oil to the Dangote Petroleum Refinery in naira had helped cushion the impact of global crude price volatility on Nigerians.
He warned that petrol prices could have risen further if domestic crude transactions were fully dollarised amid international market pressures.
The Economist also urged Nigeria to reduce dependence on the United States dollar for international transactions by exploring alternative currencies such as the Chinese Yuan and Saudi Riyal.
He cited China’s Cross-Border Interbank Payment System (CIPS) as a faster alternative to the dollar-dominated SWIFT payment system.
Salami, on his part, said borrowing itself was not Nigeria’s major problem, but the inability of governments to deploy loans productively.
The Former Banker faulted Nigeria’s budgeting system, saying poor implementation and the continuous rollover of uncompleted projects had weakened fiscal discipline.
He said the 2025 budget proposal, which relies heavily on borrowing, showed that government revenues were insufficient to finance planned expenditures.
Salami also raised concerns over weak institutional oversight, alleging that some public officials failed to properly scrutinise government spending.
The Economists also weighed in on the federal government’s plan to secure fresh loans for infrastructure projects, including the proposed Sokoto-Badagry highway.
They said borrowing for infrastructure and productive projects was economically justifiable if the projects were properly executed and capable of generating long-term returns.
According to them, several infrastructure projects initiated decades ago had suffered abandonment despite huge borrowings attached to them.
The Economists warned that unless borrowing was tied to transparency, productive investments and stricter accountability, Nigerians might continue to endure economic hardship despite major policy reforms.
