Former Labour Party presidential candidate, Peter Obi, has cautioned President Bola Tinubu against what he described as unsustainable borrowing practices, warning that loans not tied to production could cripple the nation’s future.
In a statement shared on Thursday, April 30, via his official X handle, Obi criticised the Federal Government’s borrowing strategy, arguing that it lacks economic value and long-term benefits.
“Mr. President, borrowing is not only a leprosy, but a killer cancer when it is borrowed for consumption and not production as it is in Nigeria today,” he stated.
He stressed that borrowing for consumption weakens a nation’s economic foundation, erodes its independence, and damages its global standing.
“Borrowing for consumption slowly eats away at the health, reputation, and autonomy of a nation. One of the major “leprosy” afflicting Nigeria today is not just debt, but debt without productivity.
“Debt that is not tied to measurable economic value. Debt that does not translate into jobs, growth, or improved living standards for the Nigerian people,” he said.
Obi further argued that responsible economies only take loans with clear objectives and repayment plans anchored on productive investments.
“No serious economy borrows recklessly. Nations borrow with discipline, with purpose, and with a clear plan for repayment through productive investment,” he added.
Citing the Fiscal Responsibility Act 2007, the former Anambra State governor noted that borrowing must be backed by clear purpose and measurable benefits.
“Fiscal Responsibility Act 2007 provides that “Any government in the Federation or its agencies and corporations desirous of borrowing shall, specify the purpose for which the borrowing is intended and present a cost-benefit analysis, detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied”
Cost-benefit analysis must show how the loan would be applied, how it will impact economic growth and improve the welfare of Nigerian citizens in measurable ways,” he said.
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Obi criticised what he described as a pattern of borrowing that fails to meet both legal and economic standards.
“Most of the borrowings by this government do not satisfy the requirements of law or the requirements of economic common sense.
“The humongous borrowing so far does not show how the projects for the loans enhance the productive capacity of the nation and the welfare of Nigerian citizens,” he stated.
He also warned about the long-term risks associated with rising debt servicing obligations, noting that it limits government spending on critical sectors.
“These loans are also dangerous because they burden the capacity of the Nigerian state to improve the economy in the future, as we have one of the world’s highest debt servicing ratios.
“What matters is not debt-GDP as much as debt-debt servicing ratio because the latter constrains our capacity to finance the sectors that drive human development and economic growth,” he said.
Obi added that mismanaged borrowing creates a cycle of financial strain, where current revenues are used to service loans that do not generate future returns.
“If the money is wrongly spent as we do in Nigeria currently, it becomes double jeopardy because you are using current revenue to service debts that did not add to revenue or improve capacity for more production in the future,” he stated.
He concluded by urging the government to adopt greater transparency and accountability in its borrowing practices.
“A responsible government does not merely defend borrowing; it explains it, justifies it, and most importantly, ensures it works for the people. A new Nigeria is POssible. -PO,” he stated.