Nigeria’s Growing Debt Crisis: A Nation at the Crossroads of Economic Survival -By Rukaiya Adamu Abdullahi

Nigeria is currently standing on a fragile economic edge, as the nation’s rising debt burden and widening fiscal deficit continue to dominate public discourse. The recent approval by the National Assembly of an additional ₦1.15 trillion in borrowing to cover the 2025 budget shortfall has reignited debate over the country’s financial sustainability. This move, though meant to bridge funding gaps, has drawn concerns from economists and civil society groups who warn that Nigeria may be drifting into a debt trap if urgent structural reforms are not implemented.

The country’s financial stress did not emerge overnight. For years, Nigeria’s economy has relied heavily on oil revenue, leaving it vulnerable to fluctuations in global crude prices. With oil output declining and global markets becoming increasingly unstable, the government’s revenue base has weakened sharply. As a result, Nigeria has had to depend on domestic and external borrowing to meet its recurrent and capital expenditure needs. The debt-to-GDP ratio, though still moderate compared to some peers, is rising at an alarming rate, and debt servicing costs are consuming a disproportionate share of national revenue.

This fiscal pressure is compounded by high inflation and a weak manufacturing sector. Inflation has eroded purchasing power, and industrial production has slowed due to poor infrastructure, erratic power supply, and high operating costs. Manufacturing’s contribution to GDP has been on a steady decline, signaling deeper structural inefficiencies. Businesses are shutting down or relocating, while those that remain face difficulties in accessing foreign exchange for imports, worsening unemployment and reducing tax revenues.

Unemployment, particularly among young people, remains one of Nigeria’s gravest challenges. Recent estimates suggest that nearly 80 million young Nigerians are either unemployed or underemployed. This figure represents not just an economic statistic but a human crisis with potential political and security implications. Idle youth are increasingly frustrated, and in many parts of the country, economic hardship has fueled migration, crime, and social unrest. The promise of Nigeria’s youthful population — once hailed as a demographic dividend — now risks becoming a demographic burden.

To confront these realities, the government has rolled out a series of reform initiatives, including tax reforms aimed at broadening the revenue base and reducing dependence on oil. The administration has also promised to promote investment in agriculture, digital technology, and renewable energy. However, these efforts face obstacles ranging from bureaucratic inefficiency to corruption and policy inconsistency. Investors remain cautious, and many argue that reforms must go beyond policy statements to deliver measurable impact.

The implications of the debt crisis extend far beyond macroeconomic indicators. With more than 25 percent of national revenue being spent on debt servicing, funding for vital sectors such as health, education, and security has been squeezed. Hospitals remain underfunded, public schools are deteriorating, and the security challenges across various regions persist. Citizens are increasingly questioning how the government’s borrowing translates into improved living conditions. The widening gap between policy promises and public experience is eroding confidence in leadership.

The cost of living crisis has further intensified public frustration. Inflation continues to rise, especially food inflation, which has made basic commodities unaffordable for many households. The minimum wage has lost real value, and middle-class families are being pushed into poverty. For millions, survival has become a daily struggle, with wages stagnant and essential goods priced out of reach. This economic squeeze is deepening social inequality and feeding public anger.

Nigeria’s mounting fiscal crisis is also affecting its international image. The nation’s ambition to reclaim its leadership position in Africa and strengthen its global standing has been undermined by persistent domestic instability. Analysts argue that economic vulnerability weakens Nigeria’s diplomatic influence and limits its capacity to project power or attract strategic investments. The credibility of the country’s economic management is now being scrutinized by international lenders, investors, and development partners.

Despite these challenges, there are faint signs of stabilization. Inflation has slightly eased in recent months, and the naira has shown some resilience due to interventions by the Central Bank of Nigeria. The government’s decision to suspend planned fuel import tariffs has also brought temporary relief to consumers and industries. Yet, such measures remain short-term fixes. Long-term stability depends on diversifying the economy, cutting wasteful spending, and investing in productive sectors that can create jobs and generate sustainable revenue.

In conclusion, Nigeria’s debt challenge is not merely a financial problem but a national test of leadership, accountability, and vision. The country stands at a defining moment — a crossroads between reform and regression. If leaders can summon the political will to implement credible reforms, strengthen institutions, and invest in the real economy, Nigeria can overcome its fiscal difficulties and set a path toward inclusive growth. But if current trends persist, the debt burden could deepen poverty, weaken governance, and threaten national stability. The choices made today will determine the economic destiny of Africa’s most populous nation for generations to come.

Rukaiya Adamu Abdullahi Student of mass communication Kashim Ibrahim University, Maiduguri.