Nigeria’s challenge is low revenue, not high debt – World Bank
World Bank Highlights Nigeria’s Revenue Mobilization Challenges
The World Bank has identified weak revenue mobilization as Nigeria’s most pressing fiscal challenge, rather than excessive borrowing. The organization is urging the Nigerian government to prioritize efforts aimed at enhancing revenue generation to foster sustainable economic growth.
In an interview on Channels Television on Friday, Mathew Verghis, the World Bank’s Country Director for Nigeria, emphasized that Nigeria’s debt profile is moderate by international standards, contrasting it with countries that are facing debt distress.
“From our assessment, Nigeria doesn’t have a high indebtedness problem; it has a low revenue problem,” Verghis stated. He noted that Nigeria’s debt-to-GDP ratio is lower than that of many comparable nations, suggesting that the focus should shift from limiting borrowing to improving government revenue.
“When we looked at the numbers, Nigeria is a moderately indebted country,” he said, adding that its debt levels are less burdensome relative to its economy than those of many of its neighbors.
He compared Nigeria’s situation to that of Ghana, which is undergoing debt restructuring, underlining the different fiscal landscapes of the two countries.
Verghis defended government borrowing as a vital mechanism for financing long-term investments that can drive economic growth and enhance living standards. “Countries borrow to achieve results. The annual funds available are often insufficient. By borrowing to deliver results, the ability to repay improves,” he explained.
He cited the expansion of electricity access as a key example, noting that providing power to approximately 32 million Nigerians requires significant upfront investment. “To connect and provide energy to 32 million Nigerians, Nigeria needs to borrow now. Increased access to energy will contribute to wealth generation and better positions the country to repay its loans,” he added.
While acknowledging Nigeria’s moderate debt levels, Verghis warned that low government revenue poses a greater risk to the country’s fiscal sustainability. “Nigeria’s debt is not particularly high; it is quite moderate internationally. However, its revenues are very low by the same standards. Without increased revenue, the country will struggle to service its debt,” he stated.
He advocated for strengthening revenue mobilization as a means to facilitate greater investment in infrastructure, healthcare, education, and other sectors critical for job creation, human capital development, and poverty reduction in the long term.
These remarks align with the World Bank’s recent launch of a six-year Country Partnership Framework for Nigeria, which emphasizes job creation through investments in infrastructure, healthcare, agriculture, and digital connectivity.
