Borrowing, reform, and the burden of proof in Nigeria’s economy

Nigeria’s economic debate has become polarised between triumphalism and despair. On one side are voices insisting that recent reforms have set the economy on an irreversible path to recovery; on the other are critics who see little beyond rising hardship, mounting debt, and eroding trust. Neither position, on its own, is sufficient. What the moment demands is a more disciplined question: not whether Nigeria should borrow, but whether the scale and structure of current borrowing are justified by what it is delivering.

There is no dispute that Nigeria has been borrowing heavily. Since 2023, World Bank–approved and pipeline commitments to Nigeria are estimated at about $9.5–10 billion, making the country the largest International Development Association (IDA) borrower in Africa and among the top three globally. World Bank debt now accounts for over 40 percent of Nigeria’s external obligations. These are not speculative figures; they are publicly available and verifiable. What remains contested is what this borrowing signifies.

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Defenders of the current trajectory argue, with some justification, that Nigeria’s borrowing is not exceptional. Most emerging economies are financing structural adjustments through debt. They also note that multilateral loans are concessional, carrying lower interest rates and longer tenors than domestic borrowing. From this perspective, Nigeria is rationally leveraging relatively cheap capital to stabilise an economy undergoing painful but necessary reforms, including fuel subsidy removal and exchange rate liberalisation.

There is also evidence that macroeconomic conditions are improving at the margin. Inflation, while still uncomfortably high, has begun to decelerate. Foreign exchange reserves have strengthened, the naira has stabilised relative to its earlier volatility, and domestic refining capacity is coming onstream. From a low base, growth outcomes in 2026 and beyond may well look better than those of the past two years.

Optimism alone cannot substitute for accountability. The removal of petrol subsidies was explicitly justified as a fiscal reset, a decision that would free resources for development while reducing the need for borrowing. It is therefore reasonable to ask why large-scale external financing remains necessary and, more importantly, what concrete productivity gains it is financing.

“The challenge is not the existence of loans but the absence of clarity around outcomes. Borrowing on this scale should translate into visible infrastructure, improved public services, and measurable gains in productivity and household welfare.”

The challenge is not the existence of loans but the absence of clarity around outcomes. Borrowing on this scale should translate into visible infrastructure, improved public services, and measurable gains in productivity and household welfare. Instead, many Nigerians struggle to identify specific, transformative projects tied to these funds. Social protection programmes have expanded, but poverty levels remain elevated. Energy and transport investments are ongoing, but logistics costs continue to squeeze businesses. The burden of proof rests with the government to show that today’s debt is building tomorrow’s capacity.

This gap between macro indicators and lived experience has fuelled public scepticism. Conspiracy-laden narratives flourish not because Nigerians are irrational, but because trust erodes when reforms are not matched with transparent delivery. When citizens are told that “structural changes” will yield benefits tomorrow, they understandably want to know what milestones exist today.

A balanced view must also acknowledge that borrowing is not inherently harmful. Countries that successfully use debt do so by tying it to productivity-enhancing investments: power, transport, education, health, and institutional reform, and by rigorously tracking results. Nigeria’s problem has historically been less about access to finance and more about the efficiency with which finance is deployed.

The current administration, therefore, faces a narrow but critical test. It must move beyond defending borrowing in abstract terms and instead publish clear, project-level evidence of impact. Which roads, grids, schools, hospitals, or digital systems are being delivered? What are the timelines, costs, and expected returns? How will these investments reduce inflationary pressures, create jobs, or raise output?

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This is not an anti-government demand, nor a rejection of reform. It is a pro-governance insistence that credibility is earned through results, not reassurance. Economic reform, by its nature, imposes short-term pain. The social contract survives only when citizens can see a credible path from sacrifice to shared gain.

Nigeria’s economy may indeed perform better in the coming years, partly because of reforms and partly because recoveries often follow deep contractions. But growth alone is not the benchmark. The real measure is whether borrowing today is reducing vulnerability tomorrow. Until that connection is made explicit, the debate will remain stuck between hope and suspicion.

In the end, the question is not whether Nigeria can borrow or even whether it should. It is whether borrowed resources are being converted into durable economic capacity. On that question, optimism must give way to evidence.