The Presidency has defended the decision of the Federal Government to borrow funds, saying the money is being used to invest in critical infrastructure needed to grow Nigeria’s economy.
This position was made known by Daniel Bwala, Special Adviser to President Bola Ahmed Tinubu on Policy Communication. Bwala spoke in response to recent comments by the Emir of Kano, Muhammadu Sanusi II, who raised concerns about the country’s continued reliance on borrowing.
The exchange highlights an ongoing debate about Nigeria’s economic direction, especially at a time when the government is implementing major reforms and facing pressure to improve infrastructure and reduce public debt.
In a post shared on social media platform X, Bwala explained that borrowing is necessary because Nigeria’s infrastructure needs are very large. He said the country requires between $30 billion and $100 billion every year to address gaps in roads, power supply, transportation, and other key sectors.
According to him, the current level of government spending is not enough to meet these needs, making borrowing unavoidable.
“Your Royal Highness, we are simply borrowing to invest in the most important areas of our economy, with infrastructure being the most crucial,” Bwala stated.
Nigeria, Africa’s most populous country, has long struggled with poor infrastructure. Many roads are in bad condition, electricity supply remains unstable, and rail and port systems need improvement. These challenges have slowed economic growth and made it harder for businesses to operate efficiently.
Despite this explanation, Sanusi expressed concern over the growing level of borrowing, especially after the removal of the fuel subsidy by the Tinubu administration.
The subsidy, which kept petrol prices artificially low, was removed in 2023 as part of efforts to reduce government spending and free up funds for development projects. The move led to higher fuel prices and increased cost of living, but the government said it was necessary for long-term economic stability.
Sanusi, a former governor of the Central Bank of Nigeria, questioned why the government is still borrowing heavily despite ending the subsidy.
He described the situation as financially inconsistent, noting that many Nigerians expected the savings from subsidy removal to reduce the need for loans.
“The benefits people were expecting from removing the subsidy have not translated into less borrowing,” he said.
Sanusi also pointed out that Nigeria, as an oil-producing country, should not continue to rely on foreign refineries. For years, the country has exported crude oil and imported refined petroleum products, a situation that has placed pressure on public finances.
He noted that recent progress in domestic refining, including efforts to increase local production of petroleum products, is a positive development for the economy.
However, he stressed that the government needs to manage its finances more carefully. According to him, the savings from subsidy removal should lead to clear improvements in the economy, including reduced debt levels.
The debate comes at a time when Nigeria’s public debt has been rising steadily. Government officials argue that borrowing is necessary to finance development, while critics warn that excessive debt could create long-term problems.
Economists often stress the importance of using borrowed funds wisely. If loans are invested in projects that boost economic growth, such as infrastructure, they can generate returns that help repay the debt. However, if funds are mismanaged or spent on non-productive activities, the burden of repayment can become difficult.
The Tinubu administration has repeatedly stated that it is focused on rebuilding the economy through reforms and investments. In addition to removing the fuel subsidy, the government has taken steps to unify exchange rates and attract foreign investment.
Officials say these measures are aimed at creating a more stable and transparent economic environment.
At the same time, many Nigerians are facing economic hardship due to rising prices of goods and services. This has increased public scrutiny of government policies, including borrowing and spending decisions.
For ordinary citizens, the key concern is whether these policies will lead to real improvements in their daily lives, such as better roads, reliable electricity, and more job opportunities.
As the conversation continues, both sides appear to agree on one point: Nigeria needs significant investment to fix its infrastructure challenges. The main issue remains how to achieve this in a way that is sustainable and beneficial to the economy.
For now, the government maintains that borrowing is a necessary step, while critics continue to call for more careful management of public funds and clearer results from ongoing reforms.