The World Bank has said Nigeria’s biggest economic challenge is not the size of its public debt but the country’s weak ability to generate enough revenue to meet its growing development and fiscal obligations.
The clarification comes amid increasing public debate over Nigeria’s rising debt profile and concerns about the sustainability of government borrowing. According to the global financial institution, the more pressing issue is that government revenue remains too low to adequately finance critical infrastructure, healthcare, education and other public services.
The World Bank explained that while debt can be a useful tool for financing development when properly managed, countries with weak revenue bases often struggle to repay loans and fund essential government operations. It noted that improving domestic revenue generation is crucial for ensuring long-term economic stability and reducing dependence on borrowing.
According to the institution, Nigeria’s revenue-to-GDP ratio remains among the lowest globally, limiting the government’s capacity to invest in projects that stimulate economic growth and improve living standards. The bank stressed that increasing revenue through broader tax collection, improved fiscal management and stronger economic reforms would provide the government with more sustainable funding options.
The statement comes as the Federal Government continues implementing economic reforms aimed at boosting public finances, attracting investment and expanding non-oil revenue sources. Analysts have repeatedly argued that improving tax administration, widening the tax net and enhancing efficiency in revenue collection could significantly strengthen Nigeria’s fiscal position.
The World Bank maintained that debt should be assessed alongside a country’s repayment capacity, emphasizing that stronger revenue generation would make existing obligations easier to manage while creating room for greater investment in national development.
Economic experts have also noted that boosting government revenue could reduce pressure on public borrowing, improve investor confidence and create a more resilient economy capable of withstanding external shocks.
The latest assessment is expected to reignite discussions on fiscal reforms as policymakers seek ways to strengthen government finances while balancing economic growth, social spending and debt management in Africa’s largest economy.
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