Nigeria stands today at a troubling intersection where its ballooning debt profile and the 27 percent Monetary Policy Rate (MPR) collide to choke growth and deepen hardship. The Central Bank of Nigeria (CBN), in its wisdom, recently eased the benchmark rate, but at levels that remain painfully high for households and businesses. The rationale is clear: tame inflation, stabilize the naira, and restore confidence. But in practice, the fallout of this policy, coupled with the government’s mounting debts, is suffocating the very engine of economic recovery.
Nigeria’s debt trajectory has reached alarming proportions. As of the first quarter of 2025, the nation’s public debt stood at N149.39 trillion, with external obligations of about $45.9 billion and domestic debt exceeding N78 trillion. Experts warn that the situation is unsustainable, with debt servicing consuming over 90 percent of revenues. This leaves little room for investment in critical infrastructure, schools, or hospitals.
The sharp increase in Nigeria’s debt under the current administration illustrates the gravity of the situation. When President Bola Tinubu took office in June 2023, total public debt (federal, state, and FCT) stood at N87.38 trillion. By September 2024, it had risen to N142.3 trillion, and by December 2024, the figure reached N144.67 trillion. As of March 31, 2025, total public debt had climbed further to N149.3 trillion. This represents an increase of over N55 trillion in just 19 months, with about N33 trillion of that rise coming from external borrowings and around N22 trillion from domestic sources.
Between June 2023 and May 2024 alone, domestic bond issuances amounted to approximately N20.1 trillion. The government has also continued to seek fresh loans: in 2025, it submitted proposals to the National Assembly to borrow about $21.5 billion, €2.19 billion, and ¥15 billion, alongside a €65 million grant, to fund the 2025-2026 budget and key programs. Taken together, the Tinubu administration is estimated to have borrowed nearly N56.6 trillion within its first 23 months in office.
Effectively, Nigeria has become a country borrowing not to invest, but to survive. Government dependence on loans, often used to fund recurrent expenditure, crowds out the private sector, raises borrowing costs, and limits opportunities for entrepreneurs. The result is a vicious cycle where new debts are incurred to service old ones, with scant evidence of tangible development.
On the monetary front, the CBN’s decision to hold the MPR at 27 percent was meant to signal discipline and curb inflationary pressures. Yet, the policy has turned into a double-edged sword. For small and medium-sized enterprises (SMEs), which form the backbone of Nigeria’s economy, lending rates remain punitive. These businesses, already battered by inflation, power shortages, and insecurity, are effectively locked out of affordable credit.
For households, the story is no better. Salaries remain stagnant while inflation eats into disposable income, forcing families to make painful choices between food, education, rent, and healthcare. The once-stable middle class is shrinking, and poverty levels are expanding. The irony is stark: the government itself borrows heavily at these same interest rates, competing with citizens for scarce credit, and in the process, worsening the debt spiral.
The losers in this equation are ordinary Nigerians. They pay the real cost in higher food prices, limited job opportunities, collapsing businesses, and deteriorating public services. The combination of debt dependency and high interest rates effectively punishes citizens for the government’s inability to rein in fiscal excesses. Monetary policy is being forced to fight a battle that fiscal discipline should have addressed long ago.
Beyond the statistics lies a harsh human reality. Inflation is at record highs, food inflation is crippling households, and the cost of transportation, rent, and electricity continues to soar. Families are cutting meals, withdrawing children from schools, or delaying healthcare until emergencies arise. For millions, the so-called “cost-of-living crisis” is not a phrase; it is a lived experience.
Meanwhile, reforms such as subsidy removals and exchange rate unification, while necessary on paper, have been rolled out without adequate safety nets. Palliatives are little more than a drop in the ocean. The gap between policy intentions and human consequences grows wider by the day, breeding frustration and eroding trust in leadership.
Nigeria cannot climb out of this hole through borrowing alone or by leaning solely on blunt monetary tools. What is required is a coherent strategy that blends fiscal prudence with growth-driven policies. This includes restructuring debt, expanding the tax base without suffocating citizens, curbing wasteful spending, and diversifying revenue beyond oil. Investment in infrastructure, power, and industrial capacity is critical to unleashing productivity and job creation.
Just as important is honest and compassionate communication from government. Citizens must see reforms not as abstract figures on charts but as meaningful improvements in their daily lives. Leadership must demonstrate empathy, integrity, and vision, recognizing that resilience is not a license for endless suffering.
Nigeria’s economy is at a dangerous crossroads. The combination of a suffocating MPR and an ever-mounting debt burden is more than an economic challenge; it is a social time bomb. The decisions made today will determine whether the nation steps onto a path of sustainable recovery or plunges deeper into stagnation. Policymakers must rethink the balance between stability and growth. For without growth, stability itself becomes a mirage, and the cost will be borne by the very citizens the government is meant to serve.
Blaise, a journalist and PR professional writes from Lagos, can be reached via: [email protected]