The World Bank has said Nigeria’s greatest fiscal challenge is not its debt burden but its weak revenue base, urging the Federal Government to strengthen revenue mobilisation to support sustainable economic growth and long-term development.
The position was stated by the World Bank Country Director for Nigeria, Mathew Verghis, during an interview with Channels Television, recently, where he explained that Nigeria’s debt profile remains moderate by global standards and is far from the levels seen in countries facing debt crises.
“From our assessment, Nigeria doesn’t have a high indebtedness problem; it has a low revenue problem,” Verghis said.
He explained that Nigeria’s debt-to-GDP ratio is lower than that of many peer economies, stressing that the country’s fiscal challenge lies in generating sufficient revenue rather than restricting borrowing.
“When we looked at the numbers, Nigeria is a moderately indebted country, meaning that it has less debt relative to its economy than most of its neighbours and many other countries,” he noted.
Drawing a comparison with Ghana, Verghis said Nigeria’s situation is considerably different, noting that while Ghana is undergoing debt restructuring, Nigeria’s debt remains within a manageable range.
“Nigeria is in a very different situation than Ghana, for example, which is going through a debt restructuring,” he explained.
The World Bank official also defended government borrowing, describing it as a legitimate financing tool that enables countries to invest in infrastructure and other long-term projects capable of driving economic growth and improving living standards.
According to him, governments often borrow because annual revenues alone are insufficient to fund major development projects.
“Nigeria borrows for the same reasons that all countries borrow. If you want to deliver results to people, the money available on an annual basis is not enough. So you borrow, deliver results, and that improves your ability to repay,” Verghis stated.
He cited electricity expansion as an example, explaining that connecting about 32 million Nigerians to reliable power requires significant upfront investment that cannot be financed solely through current revenues.
“To be able to connect and provide energy to 32 million Nigerians, Nigeria needs to borrow money now. But with increased access to energy, the country will become wealthier and better positioned to repay the loans,” he added.
Despite defending prudent borrowing, Verghis warned that Nigeria’s weak revenue generation remains the country’s biggest fiscal risk, stressing that expanding the government’s revenue base is essential for maintaining fiscal sustainability and financing critical development priorities.
