Obasanjo criticises Tinubu’s borrowings, says debt could destroy generations of Nigerians

Former President Olusegun Obasanjo has criticised the Bola Tinubu administration’s continued pursuit of domestic and external loans to finance the national budget and execute projects across various sectors, warning that excessive borrowing could destroy future generations.

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Mr Obasanjo, who democratically governed Nigeria between 1999 and 2007, argued that the country’s continued borrowing and reliance on foreign institutions, particularly the World Bank and the International Monetary Fund (IMF), might not address its economic challenges, insisting that the institutions were not established to solve Nigeria’s problems.

The former president spoke on Friday in Abeokuta, the Ogun State capital, at the Ajibosin Platform, a public forum themed “Leveraging Artificial Intelligence to Solve Grassroots Problems and Accelerate National Development.”

Tinubu’s borrowing plans

The Tinubu administration, like its predecessor, has continued to rely on domestic and external loans to finance government projects, with several borrowing requests submitted to and approved by the National Assembly.

On Tuesday, President Tinubu sought the National Assembly’s approval to proceed with the processing of external loans worth $20,517,755,901 and €1,045,083,643 under the 2026–2027 Supplementary External Borrowing Plan.

The request came about five months after the National Assembly approved a $516.3 million loan from Deutsche Bank AG to finance the construction of the Sokoto–Badagry Superhighway, a flagship infrastructure project under the administration’s Renewed Hope Agenda.

The loan has a tenure of nine years, including a grace period of up to three years, with an interest rate capped at the Chicago Mercantile Exchange’s Secured Overnight Financing Rate (SOFR) plus 5.3 per cent annually.

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The facility is backed by insurance from the Islamic Corporation for the Insurance of Investment and Export Credit, the insurance arm of the Islamic Development Bank.

In March, the National Assembly also approved a $6 billion external borrowing plan for the federal government.

Of the amount, $5 billion was to be sourced from First Abu Dhabi Bank to support the national budget, while a $1 billion export finance facility from the United Kingdom, arranged by Citibank, was earmarked for the rehabilitation of Tin Can Island Port and the Lagos Port Complex.

President Tinubu has repeatedly defended his administration’s borrowing decisions, stating that loans are necessary to finance critical infrastructure and other development projects.

On Thursday, the president defended his administration’s borrowing plans, saying, “The real question is not how much we borrow, but what we build, what value we create and what future we leave behind.”

In April, he said his administration would continue to borrow whenever necessary, insisting that borrowing should not be viewed negatively.

Mr Tinubu spoke at the State House during a meeting with Plateau State leaders led by Governor Caleb Mutfwang and the APC National Chairman, Nentawe Yilwatda.

“If we have to borrow, we borrow. Borrowing is not leprosy, we just have to work hard to be able to pay for it,” the president had said.

Debt destroys generations

Reacting to the president’s remarks, Mr Obasanjo described the comparison of debt with leprosy as “absolute nonsense”, stating that excessive borrowing could burden generations yet unborn.

“And for anybody to say debt is no leprosy, is absolute nonsense. Debt is worse than leprosy. Because leprosy destroys only one person. Debt destroys generations,” he said.

The former president also faulted Nigeria’s economic management, recalling that when he started his farm 47 years ago, the naira exchanged at N1 to $1.85.

“When I started my farm, 47 years ago, naira to the dollar was one naira to $1.85. Forty-seven years ago. What has Nigeria done in 47 years that we now have 1,500 naira to the dollar? What have we done?” he asked.

He also questioned the capacity of the country’s political leadership to make decisions capable of improving the living conditions of Nigerians.

“What do our leaders know? And what do they not know? And from what they know, what can they do for us?

“World Bank and IMF were not designed for us. They were not built by us. They were built before we became independent. And that’s the people who would determine what we do,” he added.

Mr Obasanjo further cautioned against blindly adopting economic prescriptions from foreign-trained experts without considering Nigeria’s peculiar economic circumstances.

Nigeria’s debt profile

Nigeria’s debt burden has increased in recent years as the federal government has relied on domestic and external borrowing to finance budget deficits and infrastructure projects.

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Although the country’s debt-to-GDP ratio has generally been considered moderate compared with that of some peer economies, analysts have raised concerns about the government’s limited revenue base and its capacity to meet debt obligations.

A substantial share of government revenue goes towards debt servicing, limiting the funds available for infrastructure, public services and other development priorities.

The International Monetary Fund and the World Bank have repeatedly urged Nigeria to strengthen revenue mobilisation, improve tax collection and ensure that borrowed funds support productive investments capable of generating economic returns.

The federal government has maintained that external borrowing is necessary to address the country’s infrastructure deficit, finance development projects and meet its budgetary obligations. Officials have also argued that borrowing on favourable terms can help manage financing costs and support economic growth.