Nigeria Risks Higher Borrowing Costs Without Strategic Planning – Rewane

An economist and Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, has cautioned that Nigeria could face increasing borrowing costs unless the Tinubu administration adopts a more strategic and results-oriented approach to debt management.

Rewane made this known during an appearance on Channels Television, Thursday, where he urged the federal government to prioritise efficiency and impact in its borrowing decisions.

“We need to be very intentional, very strategic and focus on what we are borrowing for—to generate revenue and have an impact—so that people can begin to reap the dividends of reforms and democracy,” Rewane said, stressing that the current borrowing trajectory must be aligned with measurable economic returns.

According to data from the Debt Management Office (DMO), Nigeria’s external debt stood at $45bn as of December 31, 2024.

Of this amount, $6.45bn was borrowed from the World Bank alone within the first 16 months of President Bola Tinubu’s administration, raising concerns about sustainability and fiscal discipline.

Rewane explained that Nigeria’s access to affordable financing is becoming increasingly uncertain due to delayed global interest rate cuts.

“We were anticipating borrowing under the assumption that interest rates would fall, easing the debt service burden. But with the delay in rate cuts until late 2025 or beyond, Nigeria may now be forced to raise funds at higher rates than originally expected,” he said.

The implication, he noted, is that the government must become more prudent and selective with its borrowing, ensuring that all new loans are tied to revenue-generating or economically productive projects.

“What are we borrowing for? Are those budgets going to generate enough revenue to service those debts? Those are the key elements,” he warned.

Highlighting the urgency of the situation, Rewane noted that it has been approximately 740 days since the Tinubu administration took office, and time is running out to implement credible reforms that translate into tangible economic gains for Nigerians.

In addition to fiscal prudence, Rewane emphasized the critical role of monetary policy in supporting investment and economic productivity.

He urged the Central Bank of Nigeria (CBN) to reduce its benchmark interest rate—currently at 27.5 per cent—to encourage private sector investment.

“While the central bank’s mandate is primarily price stability, lowering interest rates could create room for growth and send the right signal to the fiscal authorities,” he said.

He also called on the government to address structural constraints hindering productivity. “The fiscal authority must do a lot to remove the bottlenecks to production—everything from infrastructure to policy clarity must be addressed to unlock Nigeria’s economic potential.”

Nigeria Risks Higher Borrowing Costs Without Strategic Planning – Rewane is first published on The Whistler Newspaper