$11.6b Debt Servicing: Obi reacts, faults Tinubu’s borrowing practices

Peter Obi, a leading presidential candidate and former Governor of Anambra State, has strongly criticized President Bola Tinubu following the announcement that Nigeria will spend $11.6 billion on debt servicing in 2026.

A statement by Presidential Spokesman, Bayo Onanuga, had quoted President Tinubu as saying that Nigeria would spend about $11.6 billion on debt servicing in 2026, representing nearly half of projected government revenue.

Tinubu spoke during the Africa Forward Summit held at the Kenyatta International Convention Centre, explaining that the global financial architecture is largely skewed against Africa, leaving the continent at the receiving end of development.

“Every single dollar that leaves our treasury to pay punitive interest rates is a dollar that did not go into our steel sector, our textile mills, our agro-processing plants, or our digital industries.

“We export raw minerals, crude oil, and agricultural commodities, and we import processed goods at a premium. This pattern is not an accident.

“It is the product of a global financial architecture that starves our industries of affordable capital, tolerates massive illicit financial flows, and imposes policy constraints that our competitors themselves never observed when they built their own industrial bases,” he said.

But, speaking through his Peter Obi Media Reach (POMR) on Monday, Obi warned that the administration’s aggressive loan accumulation is pushing the nation into “economic slavery” and creating an unsustainable long-term structural burden.

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The statement, e-signed by POMR Spokesman, Umar Ibrahim, said Obi, via a post on his X handle, emphasised that borrowing is not inherently negative if managed wisely and directed toward productive investments.

He cited examples of countries like Japan, the UK, the US, the UAE, Singapore, and Indonesia, which, despite being heavily indebted, allocate their borrowed funds toward education, healthcare, infrastructure, and innovation—areas that yield long-term economic benefits and enhance repayment capabilities.

“Consequently, these countries manage their debt levels more effectively, as the obligations are connected to tangible productivity.

“In contrast, Nigeria’s borrowing history has largely been geared toward consumption, with few sustainable developmental results that would validate the existing levels of debt.

“It is also crucial to note that a significant portion of the debt currently being serviced was accrued during the Tinubu administration itself, which continues to engage in substantial borrowing,” Obi stated.

He highlighted that the Tinubu-led administration’s recent external borrowing includes roughly $6 billion—$5 billion from First Abu Dhabi Bank in the UAE and $1 billion from UK Export Finance via Citibank London—along with an additional $1.25 billion being considered from the World Bank and $516 million arranged through Deutsche Bank.

“This raises the total known external loan commitments to about $7.8 billion. Additionally, domestic borrowing through monthly bond issuances continues to increase the overall debt,” he noted.

“In light of this, Nigeria’s 2026 budget allocates ₦2.46 trillion for health, ₦2.56 trillion for education, and ₦865 billion for poverty alleviation, totalling approximately ₦5.885 trillion for these essential sectors.

“In comparison, debt servicing—estimated at $11.6 billion (roughly ₦17–₦18 trillion based on exchange rate assumptions)—is nearly three times greater than the combined allocations for health, education, and social protection.

“This discrepancy underscores a concerning fiscal reality where debt obligations increasingly limit funding for human capital development and poverty alleviation.

“Furthermore, even within the limited funding for these sectors, full release of the funds is not guaranteed, and a substantial portion may be subject to misallocation.

“The primary concern, ultimately, lies not in the act of borrowing itself, but in whether the borrowed funds are being transformed into measurable productivity, inclusive growth, and enhanced living standards.

“Without such a conversion, debt servicing shifts from being a temporary fiscal obligation to a long-term structural burden that stifles development and exacerbates economic vulnerability,” Obi added.

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