World Bank Says Nigeria’s Biggest Economic Problem Is Low Revenue, Not Rising Debt

World Bank Says Nigeria’s Biggest Economic Problem Is Low Revenue, Not Rising Debt

The World Bank has stated that Nigeria's most pressing fiscal challenge is poor revenue generation rather than excessive borrowing, urging the Federal Government to focus on boosting public revenue to achieve sustainable economic growth and long-term development.

Speaking during an interview on Channels Television on Friday, the World Bank's Country Director for Nigeria, Mathew Verghis, said Nigeria's debt level remains moderate by global standards and is far from the crisis faced by countries currently struggling with debt distress.

Nigeria Has a Revenue Problem, Not a Debt Crisis

Verghis explained that the country's financial challenge lies in its inability to generate sufficient government revenue, not in the amount it has borrowed.

«"From our assessment, Nigeria doesn't have a high indebtedness problem; it has a low revenue problem," he said.»

According to him, Nigeria's debt-to-GDP ratio is lower than that of many developing economies and several neighbouring African countries, making the country's debt profile relatively manageable.

Nigeria Is Different From Ghana, Says World Bank

The World Bank official compared Nigeria's fiscal position with that of Ghana, which is currently undergoing debt restructuring due to severe financial pressure.

«"When we looked at the numbers, Nigeria is a moderately indebted country, meaning it has less debt relative to its economy than most of its neighbours and many other countries. Nigeria is in a very different situation than Ghana, for example, which is going through a debt restructuring," Verghis explained.»

His comments suggest that while Nigeria faces economic challenges, it is not yet experiencing the kind of debt crisis affecting some other African nations.

Why Borrowing Can Help Economic Growth

Verghis defended responsible government borrowing, describing it as an essential financing tool used by countries around the world to fund critical infrastructure and development projects.

According to him, annual government revenues alone are often insufficient to finance large-scale investments needed to improve citizens' quality of life.

«"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," he said.»

Electricity Investment Requires Major Funding

Using the electricity sector as an example, Verghis said expanding access to power for millions of Nigerians requires significant upfront investment.

He noted that providing electricity to approximately 32 million Nigerians will require borrowing today, but the long-term economic benefits would outweigh the costs.

«"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.»

Low Revenue Remains Nigeria's Greatest Fiscal Risk

Despite defending strategic borrowing, the World Bank warned that Nigeria's low government revenue remains a major obstacle to fiscal sustainability.

Verghis stressed that unless revenue generation improves significantly, servicing existing and future debt could become increasingly difficult.

«"Nigeria's debt is not particularly high, and in fact, it's quite moderate by international standards. Its revenues are very low by international standards, and unless those revenues are raised, it will not be able to pay back debt," he warned.»

World Bank Urges Stronger Revenue Mobilisation

The World Bank believes improving tax collection, expanding the revenue base, and strengthening public finance management will provide Nigeria with more resources to invest in key sectors.

According to Verghis, increased government revenue would enable greater investment in:

- Infrastructure development

- Healthcare services

- Quality education

- Agriculture

- Digital connectivity

- Job creation

- Poverty reduction

These investments, he said, are essential for building a stronger economy and improving living standards across the country.

New World Bank Partnership Focuses on Jobs

The remarks come shortly after the World Bank unveiled its new six-year Country Partnership Framework for Nigeria.

The programme places job creation at the heart of the Bank's support strategy, with planned investments targeting infrastructure, healthcare, agriculture, digital technology, and other sectors capable of driving inclusive economic growth.

As Nigeria continues implementing economic reforms, the World Bank insists that increasing government revenue—not simply reducing borrowing—will be the key to ensuring long-term fiscal stability and sustainable national development.