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

The warning followed President Bola Tinubu’s continued use of domestic and external loans to finance budgets and projects. Obasanjo argues that borrowing becomes dangerous when repayment burdens outlast the benefits created. His sharpest criticism was that debt can destroy generations, not just affect one borrower.

A major trigger was Tinubu’s request for approval to process external loans worth $20,517,755,901 and €1,045,083,643 under the 2026–2027 Supplementary External Borrowing Plan. Earlier, lawmakers approved a $516.3 million Deutsche Bank loan for the Sokoto–Badagry Superhighway and a $6 billion borrowing plan for budget support and port rehabilitation.

Tinubu says the key issue is what borrowing builds and what value it creates. He has defended borrowing for critical infrastructure, while Obasanjo questions whether Nigeria’s leaders can manage debt well enough to protect future citizens. The disagreement centers on whether loans produce lasting economic returns.

Nigeria’s latest external borrowing request is extremely large: $20,517,755,901 plus €1,045,083,643. President Tinubu asked the National Assembly to approve processing these loans under the 2026–2027 Supplementary External Borrowing Plan. The request adds to earlier borrowing approved for infrastructure and government financing.

The National Assembly previously approved a $516.3 million Deutsche Bank AG loan for the Sokoto–Badagry Superhighway. The nine-year facility includes up to three years’ grace and interest capped at SOFR plus 5.3 percent annually. In March, lawmakers approved another $6 billion plan. Five billion dollars was intended to support the national budget.

The remaining $1 billion from that plan was an export finance facility arranged by Citibank for rehabilitating Tin Can Island Port and the Lagos Port Complex. Tinubu says such borrowing finances critical projects. Obasanjo disputes whether continued loans will solve Nigeria’s economic problems or shift costs into the future.

Public debt is the total money a government owes from borrowing. Governments use it to cover budget gaps, build infrastructure, or respond to emergencies when current revenue is insufficient. Debt must later be repaid, usually with interest. This makes the source, cost, and purpose of each loan important.

Domestic debt is borrowed within Nigeria, often from local banks, investors, or financial markets, and is usually denominated in naira. External debt is borrowed from lenders outside Nigeria, such as foreign banks, governments, or international institutions, and may be denominated in dollars or euros. Exchange-rate changes can therefore increase the naira cost of repayment.

The article describes Nigeria’s reliance on both domestic and external loans for budgets and projects. It cites the Deutsche Bank highway facility and proposed loans in dollars and euros. These loans can support development, but repayment costs compete with future public spending and can expose Nigeria to currency and interest-rate risks.

When debt payments and interest absorb a large share of government revenue, less money remains for public services and development. Governments may delay projects, reduce maintenance, or limit spending on health, education, transport, and social support. The pressure can be especially severe when revenue grows slowly or borrowing costs rise.

The mechanism is straightforward. Revenue collected today is committed first to creditors under loan agreements. What remains must cover salaries, services, security, and new investment. If repayments are in foreign currency, a weaker naira can make the same dollar or euro payment cost more in local money, squeezing budgets further.

The article does not provide Nigeria’s debt-service share or quantify cuts to services. It does show growing reliance on loans for budget support and infrastructure. That makes project quality, loan terms, revenue growth, and repayment planning central to whether borrowing expands development or crowds it out.

Debt-to-GDP compares government debt with the size of the economy. It is useful, but it does not show whether the government collects enough revenue to repay debt. Two countries with similar ratios can face very different pressures if one has weaker revenue, higher interest costs, or shorter repayment deadlines.

Nigeria can also face currency risk when loans are in dollars or euros. If the naira loses value, foreign-currency repayments become more expensive in naira. Borrowing for projects that do not raise productivity or public revenue can add obligations without creating enough resources to meet them. These are general debt principles, not figures supplied by the article.

The article highlights Nigeria’s continued borrowing for budget support and infrastructure, including loans in dollars and euros. It does not state a debt-to-GDP ratio or debt-service figure. The forward question is therefore whether projects create durable value and whether revenue can cover repayment without weakening essential spending.

In general, the World Bank finances development programmes and offers technical advice, while the IMF supports countries facing financial and balance-of-payments pressures and advises on economic policy. Their loans and recommendations often come with conditions or reform expectations. These institutions can provide expertise and financing, but governments remain responsible for adapting policies locally.

Obasanjo’s objection is both institutional and political. He said the World Bank and IMF were built before Nigeria became independent and were not designed to solve Nigeria’s problems. He also cautioned against blindly adopting prescriptions from foreign-trained experts without considering Nigeria’s peculiar economic circumstances.

His criticism does not mean these institutions have no role. It means their advice should be tested against Nigeria’s conditions, priorities, and capacity to implement reforms. The article presents this debate alongside Nigeria’s borrowing plans, suggesting that external finance and advice should support national development rather than determine it without local judgment.

A sound borrowing decision begins with a clear purpose, realistic cost, and credible repayment plan. Officials should estimate how a project will raise productivity, revenue, jobs, or essential services. They should also test risks such as delays, cost overruns, exchange-rate losses, and higher interest rates. Borrowing should fit the country’s overall debt capacity.

The key mechanism is comparing the project’s expected economic value with the loan’s full cost. That includes interest, fees, insurance, and foreign-exchange effects. For example, the Sokoto–Badagry Superhighway loan has a nine-year tenure, up to three years’ grace, and interest capped at SOFR plus 5.3 percent. Those terms must be weighed against measurable benefits.

Tinubu says the real question is what Nigeria builds and what value it creates. Obasanjo warns that excessive borrowing can destroy generations. Nigeria therefore needs transparent project appraisals, public tracking of results, and repayment plans that protect future budgets and essential services.