FG, States, LGs share N5.899tn allocation in Q1 2026
Economic analysts and fiscal policy experts have renewed concerns over the Federal Government’s growing appetite for borrowing, warning that Nigeria’s debt-to-revenue position is fast weakening and may become unsustainable. They caution that the rising debt burden is already shrinking fiscal space, limiting investment in infrastructure, education, healthcare, and social welfare.
Despite increased revenues shared through the Federation Account Allocation Committee (FAAC), the Federal Government has continued to pursue fresh loans. This includes President Bola Tinubu’s recent request for Senate approval of a $516.333 million external syndicated facility from Deutsche Bank to finance Sections 1, 1A and 1B of the Sokoto-Badagry Superhighway.
Recent loan approvals reflect the pace of borrowing: the Senate endorsed $7.8 billion under the 2022–2024 borrowing plan, approved $2.2 billion in November 2024 to cover 2024 budget deficits, and in July 2025 approved $21.54 billion (alongside 15 billion yen and a $65 million grant) for the 2025–2026 plan. The latest $516 million request has further reinforced fears of deepening debt dependence.
FAAC records, however, show steady growth in distributed revenue. Between January and March 2026, the three tiers of government received a combined N5.899 trillion, comprising N1.969 trillion in January, N1.894 trillion in February, and N2.036 trillion in March—the highest figure in the quarter, boosted by a N200 billion augmentation.
Gross statutory revenue for March rose to N1.699 trillion, compared with N137.914 billion in February and N1.561 trillion in January.
From the total allocation in Q1, the Federal Government retained N2.118 trillion, receiving N653.5 billion in January, N675.088 billion in February, and N789.159 billion in March. State governments received N2.016 trillion, while local government councils got N1.43 trillion. Oil-producing states shared N327.79 billion as 13 per cent derivation, broken down into N96.083 billion in January, N110.94 billion in February, and N120.759 billion in March.
Yet analysts argue that the improved revenue profile has not translated into reduced borrowing. Nigeria’s 2026 borrowing plan has reportedly been increased by N11.31 trillion, bringing it to N29.20 trillion, amid a projected fiscal deficit of N31.46 trillion. Public debt climbed to N159.28 trillion as of December 2025, representing a year-on-year rise of N14.61 trillion (10.1 per cent), with the Tinubu administration contributing significantly to the expansion.
Debt servicing remains a major concern, as the country reportedly spent about N16 trillion on servicing obligations in 2025, up from N13.02 trillion in 2024.
Seun Onigbinde, CEO of BudgIT, described the situation as troubling, noting that debt servicing is consuming the bulk of government earnings.
“In the 2025 figures, debt service was around N16 trillion. The federal government is not making more than N20 to N22 trillion, and you have used around N16 trillion to service public debt. So personally, I do think the federal government does not have enough resources. The biggest problem is the debt servicing cost,” he said.
Onigbinde added that while the government has avoided ways-and-means financing due to inflation concerns, weak revenue growth continues to force it into repeated borrowing. He also warned of exchange rate risks, noting that external loans obtained when the naira was stronger are now being repaid at significantly weaker exchange rates. He called for tighter capital expenditure discipline and more aggressive domestic revenue generation.
Similarly, fiscal commentator Kio Amachree, in his paper titled “Where is the Money? Nigeria’s Borrowing Binge and the Vanishing Billions,” questioned the impact of Nigeria’s borrowing spree.
“Nigeria is borrowing money at a speed that should alarm any serious nation. Billions from the World Bank, Eurobonds, and more queued up. Yet the roads remain broken, electricity unreliable, food prices crush families, and over 100 million Nigerians in poverty. Something does not add up,” he stated.
Amachree referenced the Nigerian Economic Summit Group (NESG), which reported that Nigeria’s debt-service-to-revenue ratio stood at 116.8 per cent in 2024—well above the World Bank and IMF benchmark of 30 to 40 per cent for developing economies.
“The government spent more servicing debts than it collected in revenue—and had to borrow again to cover the gap,” he warned, adding that without accountability and measurable outcomes, public debt could exceed N200 trillion by 2027, with debt servicing consuming over 90 per cent of revenue.
The Emir of Kano, Muhammadu Sanusi II, also questioned the government’s borrowing strategy, especially after subsidy removal and exchange rate reforms.
“You cannot remove wastages and continue borrowing. If you’re not paying the subsidy and you’ve got the money, why are we still borrowing?” he asked.
While acknowledging progress in domestic refining, Sanusi criticised the sequencing of reforms, arguing that monetary looseness has worsened naira depreciation. He maintained that savings from reforms should support fiscal consolidation rather than fuel new borrowing.
Adding to the criticism, the African Democratic Congress (ADC) Legislators’ Forum described the $516 million loan request as another example of “reckless borrowing,” urging the Senate to demand full disclosure, a cost-benefit assessment, and a clear repayment strategy.
“Each new loan tightens the noose around the nation’s economic sovereignty,” the forum stated, raising concerns that borrowing may be driven by political motives as elections approach.
Analysts also point to recurring underperformance in capital releases—often below 30 per cent in the early part of the year—and persistent delays in multi-year projects, despite government assurances under the Renewed Hope Agenda. They argue that Nigeria must tighten spending discipline, plug revenue leakages, strengthen domestic resource mobilisation, and expand public-private partnerships to reduce its reliance on debt.
With FAAC allocations rising while borrowing continues to climb, experts insist the key question remains unanswered: if revenues are growing, why is borrowing still accelerating? Many warn that without transparent accounting and tangible development outcomes, Nigeria risks mortgaging its future while citizens continue to bear the cost.