From Lender to Borrower

Between 1974 and 1976, Nigeria lent roughly US$680 million, about US$4 billion in today's money to the IMF, the World Bank, and the African Development Bank. That money funded drought relief across the Sahel, grants to Angola and Mozambique, and support for the liberation movements in Namibia and Zimbabwe. Nigeria was a creditor to the very institutions it now borrows from.

The reversal is stark. External debt averaged 1.9% of GDP between 1971 and 1977, with reserves nearly six times the debt and debt service claiming just 0.7% of export earnings. Today, external debt stands at US$51.86 billion. Debt service alone consumed 67% of federal retained revenue in the first three quarters of 2025, a far harder constraint than the headline debt-to-GDP figure of 39% lets on.

Our new report traces exactly how the position flipped: the 1978 loans that tripled external debt in a single year, the unpaid import bills that became sovereign debt without one deliberate borrowing decision, the shift from cheap official lending to expensive private credit, and the 2005 Paris Club deal that briefly reset the balance, before devaluation and off-budget financing, including the N30 trillion in Ways and Means advances securitised in 2023, quietly inflated it again.

Our argument: this is a revenue crisis before it is a debt crisis. Tax reform alone won't close the gap, the ratio only falls if revenue grows faster than debt service. What's missing isn't new law. It's enforcement of the law already on the books: the 3% deficit cap, consolidated borrowing limits, and a Fiscal Responsibility Commission that can sanction, not just report.

The report sets out four measurable tests for a genuine return to 1974: debt service below a fifth of retained revenue, borrowing long and cheap, a statutory savings rule no executive can raid, and every loan agreement published in full.

Download the Full Report