E-Financial
America Borrows Power, Nigeria Borrows Survival
By Blaise Udunze
Findings show that the United States owes more than $36 trillion while Nigeria owes over N159.28 trillion, with external debt now standing at approximately $51.8 billion. At a first glance, when comparing the debt profiles of the world’s largest economy and Africa’s largest economy, it may though seem misplaced. America can borrow almost indefinitely because it issues the world’s reserve currency. Nigeria cannot. Yet both countries are confronting a similar worry. This has led to asking, when does debt cease to be a tool for development and become a permanent feature of national survival?
The difference is that while America may be testing the limits of how much debt a superpower can carry, Nigeria is testing how much debt a fragile developing economy can sustain before it begins to mortgage its future.
The latest proposal by the Federal Government to secure another $1.25 billion World Bank facility under the Nigeria Actions for Investment and Jobs Acceleration Programme has once again reignited a debate that refuses to disappear. What appears to be far from the daily lived experience of Nigerians over the years, is having government officials insisting that the loan will support investment, expand access to finance, improve electricity, enhance digital services, and create jobs. According to the claims, these are worthy objectives. But Nigerians have heard similar promises before.
The more important question is no longer whether Nigeria should borrow. Virtually every modern economy borrows. The real question which calls for critical concern, is what exactly Nigeria is borrowing for, and why the benefits of decades of borrowing remain largely invisible in the everyday lives of millions of citizens. This is where the national conversation becomes uncomfortable.
Funny enough over the years, successive governments have justified borrowing as a necessary response to development deficits. Yet despite rising debt levels, many Nigerians struggle to identify corresponding improvements in their lived experiences. This justification has kept many wondering as the roads remain dilapidated, public hospitals are overwhelmed, electricity supply also remains unreliable. Talk of the public education system, this has continued to deteriorate badly and unemployment remains stubbornly high. Inflation has eroded incomes with the cost of cooking gas hitting N2,400 per kg, while businesses struggle under the weight of high operating costs.
If borrowing is supposed to finance development, where is the development? The concern becomes even more urgent when and highly alarming when viewed against the backdrop of Nigeria’s worsening fiscal position. According to the Debt Management Office, public debt has climbed to over N159 trillion. With this outrageous figure, more troubling is the fact that debt servicing now consumes an alarming share of government revenue, which has continued to cripple economic growth and compromising the future. This development caught the attention of the Nigerian Economic Summit Group as it recently noted that Nigeria’s debt-service-to-revenue ratio remains among the highest in the world. In simple and practical terms, this implies that government is spending an increasingly large portion of what it earns paying creditors rather than investing in infrastructure, healthcare, education, security, or economic expansion.
This is the hallmark of a debt trap. The danger is not necessarily that Nigeria will default tomorrow. The danger is that the nation becomes trapped in a vicious cycle where governments borrow to finance deficits, then borrow again to service existing obligations, and then borrow even more to cover the consequences of previous borrowing. That cycle is already becoming visible.
Come to think of it, President Bola Tinubu’s administration has boldly defended borrowing as necessary to support reforms, cushion economic shocks, and stimulate growth. Yet critics have continued to point to the fact that since May 2023, borrowing has accelerated significantly.
According to economic analyst Dele Oye, the current administration has added approximately N65.9 trillion to Nigeria’s debt stock within just two years, a figure that exceeds several multiples of what Nigeria accumulated during its first five decades after independence.
Whether one agrees with the politics surrounding that claim is secondary. The underlying concern remains valid since debt is growing far faster than the visible capacity of the economy to generate sustainable revenue. This is why comparisons with the United States are useful.
America’s debt is enormous, but debt sustainability is not determined by the size of debt alone. It is determined by economic productivity. The United States supports its debt burden through a diversified economy, deep capital markets, technological innovation, globally competitive corporations, advanced research institutions, and an unmatched ability to attract global investment.
Debt is not what sustains America. Productivity does. Unlike Nigeria and by contrast, it continues to rely heavily on crude oil revenues, a narrow tax base, volatile foreign exchange earnings, and a fragile manufacturing sector. The critical difference is that every dollar borrowed by Nigeria therefore carries greater risks than every dollar borrowed by the United States.
When America borrows, it borrows largely in its own currency. When Nigeria borrows externally, it exposes itself to exchange-rate risks that can dramatically increase repayment costs whenever the naira weakens as this call for utmost caution. Every currency depreciation effectively inflates the burden of external obligations. What appears manageable today can become overwhelming tomorrow. This reality makes Nigeria’s current debt trajectory particularly concerning which is but the truth.
The World Bank itself has raised concerns about governance risks and structural weaknesses within Nigeria’s fiscal architecture. Even more troubling are recent revelations indicating that more than N34.5 trillion was reportedly deducted through pre-distribution mechanisms before revenues reached the Federation Account between 2023 and 2025. According to the findings, approximately 41 percent of government revenues were removed as first-line charges before distribution.
Whichever way it is viewed, perhaps as fiscal leakages, weak oversight, or institutional inefficiency, the implications are profound and of critical concern. If we must begin to tell ourselves the factual truth, a nation cannot continue borrowing aggressively while simultaneously failing to maximise the value of revenues it already generates.
This brings us to the central question confronting Nigeria today. The point is, are these loans building future productive capacity, or are they merely financing continuity?
Borrowing can be justified when it funds projects that expand economic output. Investments in power generation, transport infrastructure, agriculture, industrialisation, technology, and education can create long-term growth that eventually pays for the debt itself. In such cases, debt becomes a bridge to prosperity.
But it must be known that borrowing to fund recurrent expenditure, sustain bloated government structures, finance consumption, cover inefficiencies, or service previous debts transforms borrowing into a treadmill. The irony here is that the country runs harder every year but remains trapped in the same place. Unfortunately, much of Nigeria’s fiscal reality increasingly resembles the latter.
The tragedy is that this debt burden is not abstract. It is already affecting ordinary Nigerians. The adverse implication and critical point are that every naira directed toward debt servicing is a naira unavailable for schools, hospitals, security, electricity, or social protection. Every external loan increases future repayment obligations. Every missed opportunity to invest borrowed funds productively transfers today’s policy failures to future generations.
The consequences are visible everywhere. Businesses face prohibitively high borrowing costs. Today in Nigeria, it is no longer news that manufacturers struggle with energy expenses, which rob off adversely on the citizens. The same applies to youth unemployment, which remains widespread. Also, infrastructure deficits persist. Another, critical issue is that states remain heavily dependent on monthly allocations from federal level. With the developments, economic growth remains too weak to significantly improve living standards.
The result is a contradictory in which debt rises while prosperity stagnates. This is perhaps the greatest lesson Nigeria must learn from America’s debt experience.
The debate should not focus exclusively on how much debt a nation carries. The more important progressive question is whether the economy is productive enough to sustain that debt.
What every Nigerians should know is that Nigeria as a country cannot borrow its way to prosperity because it must first strengthen the foundations that generate sustainable growth. With the lingering challenging surrounding the borrowing and the mountain of debts, one key fact is that it cannot rely indefinitely on external creditors while neglecting domestic productivity. Also, it cannot continue to depend on oil revenues while failing to broaden its tax base. Another loosed end that has been a critical matter is that it cannot expect debt-financed development without strong institutions, transparency, accountability and effective project execution.
The solutions are neither mysterious nor impossible. This entails that Nigeria must aggressively expand domestic revenue mobilisation without suffocating businesses and ensure it must digitise tax administration, eliminate leakages, enforce fiscal responsibility laws. Also, it must reduce the cost of governance, strengthen public procurement systems while it ensures that every borrowed naira and kobo is linked to measurable economic outcomes.
Equally important, government must rebuild public trust. The truth is that citizens are more willing to support reforms when they can see tangible results. Some of the developments in the past that have continued to erode public trust are when subsidy savings are announced, people expect better roads, improved healthcare, reliable electricity, and enhanced security. When new loans are obtained, they expect visible projects and measurable returns but the reverse have been the case. Those at the helms of affairs of this country must understand that transparency is not merely good governance; it is an economic necessity. History offers a warning.
In 2006, under the leadership of Olusegun Obasanjo, Nigeria celebrated its exit from the Paris Club debt burden after securing one of Africa’s most significant debt relief achievements. Not too long but for a brief period, the country stood relatively free from the crushing obligations that had constrained development for decades. Two decades later, that achievement appears increasingly distant.
The danger is not simply that Nigeria is borrowing. The danger is that borrowing is becoming normalised as a substitute for difficult reforms.
A nation can borrow to build industries or borrow to pay bills. It can borrow to create future wealth or borrow to postpone present challenges. One path expands prosperity; the other compounds dependency.
America’s debt mountain demonstrates that even wealthy nations are not immune from the consequences of structural borrowing. Nigeria’s debt burden demonstrates how much more dangerous that reality becomes when economic productivity fails to keep pace. Borrowing can buy time. It cannot buy prosperity.
Sooner or later, every nation must generate the economic value necessary to justify the debts it accumulates. Nigeria’s future will depend not on how much it can borrow, but on how effectively it can produce, innovate, industrialise, and grow.
That is the lesson hidden underneath America’s debt mountain. It is also the lesson Nigeria ignores at its own peril.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]
The Central Bank of Nigeria has directed banks, fintech firms, and other payment service providers to store payment transaction data generated within the country on local servers from January 1, 2027, as part of new measures to strengthen oversight of the fast-growing digital payments ecosystem.
The directive was contained in a circular issued by the Payments System Supervision Department of the CBN on Monday and addressed to deposit money banks, microfinance banks, mobile money operators, switching and processing companies, payment terminal service providers, payment solution service providers, super agents and other licensed operators in the payments industry.
The circular, signed by the Director of the Payments System Supervision Department, Rakiya Yusuf, also introduced new market structure rules, beneficial ownership disclosure requirements and systemic oversight measures for payment service operators.
According to the apex bank, the reforms became necessary following the rapid expansion of electronic payments and digital financial services across the country.
The CBN said it had observed “significant structural developments within the Nigerian Payments ecosystem, characterised by rapid growth in electronic payments, increasing adoption of digital financial services, and the emergence of operators with substantial market presence across key payment activities.”
It noted that while the growth had improved innovation, efficiency and financial inclusion, it had also created concerns around market concentration, operational dependence, ownership transparency and the storage of critical payments data.
To address these concerns, the regulator ordered all financial institutions facilitating payments in Nigeria to ensure that transaction data generated within the country are stored domestically.
The circular stated, “All Financial Institutions and participants facilitating payments within Nigeria shall ensure that payments transaction data generated within Nigeria are stored and managed in Nigeria in accordance with data protection laws and regulations applicable in Nigeria.”
It added that “all affected Financial Institutions shall fully comply with this requirement effective January 1, 2027.”
The move is expected to strengthen regulatory oversight, enhance data sovereignty and ensure that sensitive payment information remains within Nigeria’s jurisdiction.
It also aligns with broader efforts by regulators globally to localise critical financial data and reduce reliance on offshore infrastructure.
Beyond data localisation, the CBN ordered banks, payment service providers and other financial institutions with digital payment operations to disclose the ultimate beneficial ownership of significant shareholders.
According to the circular, institutions must maintain accurate and up-to-date records of their ultimate beneficial owners and make such information available to the apex bank upon request.
The regulator said the disclosure requirement must comply with existing anti-money laundering, counter-terrorism financing and counter-proliferation financing regulations.
The directive builds on previous CBN efforts to strengthen beneficial ownership transparency as part of wider measures to combat money laundering and illicit financial flows in the financial system.
The central bank also introduced fresh competition rules aimed at limiting excessive market dominance in the payments industry.
Under the new framework, any financial institution that controls more than 25 per cent of the card-issuing market in a rolling 12-month period will not be allowed to hold more than 15 per cent of the merchant-acquiring market during the same period.
Similarly, operators with more than 25 per cent market share in merchant acquiring activities will be restricted to a maximum of 15 per cent market share in card issuing activities.
Merchant acquiring refers to processing card payments on behalf of merchants, while card issuing involves providing payment cards to customers.
The CBN said all regulated entities would be required to submit monthly market share returns based on prescribed templates and timelines.
It further directed affected institutions to take the necessary measures to achieve full compliance with the market structure requirements by December 31, 2026.
The apex bank said the new measures were designed to “improve transparency through beneficial ownership disclosure, address concentration risk, promote a fair, competitive, and resilient payments ecosystem.”
According to the regulator, the reforms are also intended to “safeguard the integrity of the Nigerian payments system and ensure the localisation of payments transaction data within Nigeria.”
The CBN warned that it would closely monitor compliance and impose sanctions where necessary.
“The CBN shall monitor compliance with the provisions of this Circular and may, where necessary, impose supervisory sanctions in accordance with applicable laws, regulations, and guidelines,” the circular stated.
The latest directive comes amid a rapid expansion of Nigeria’s digital payments industry, with electronic transactions reaching record levels and regulators increasing oversight of banks, fintech firms and other payment operators to address operational, cybersecurity and systemic risks.
Foreign exchange markets are entering a phase where how traders are positioned may matter as much as the economic fundamentals driving those positions, according to a new market analysis from JustMarkets.
JustMarkets
The brokerage’s latest commentary points to a build-up in trades tied to the US dollar and to carry strategies, bets that exploit interest rate differentials between currencies, as a growing source of risk heading into the coming weeks.
The dollar has been supported by elevated US interest rates and pushed-back expectations for rate cuts, conditions that have encouraged more traders to pile into similar carry positions. While the macro case behind these trades remains intact for now, JustMarkets cautions that when positioning becomes this lopsided, even sound trades can become vulnerable to sudden, sharp reversals.
A “crowded trade” isn’t inherently a red flag, the analysis notes, it can simply reflect a widely shared, fundamentally sound view. The danger emerges when too many participants are leaning the same way and conditions shift: traders rush to exit together, stop-loss orders cluster around similar price levels, and liquidity can evaporate just as prices move fastest. The combination, JustMarkets says, often produces a cascade effect that accelerates price moves in the opposite direction.
Notably, the analysis argues that reversals in crowded trades rarely require a major shock. Instead, minor developments, a softer-than-expected economic print, a subtle shift in central bank language, or fresh geopolitical headlines, can be enough to make traders question whether their positions still make sense. Once that doubt spreads, unwinding tends to happen in unison, amplifying both the speed and scale of the move.
Carry trades are singled out as particularly exposed in this environment. They tend to perform well during calmer periods but can unravel quickly once markets shift from “risk-on” to “risk-off,” triggering rapid liquidations and sharp corrections in carry positions.
JustMarkets argues that the current backdrop, marked by elevated geopolitical tension, persistent inflation, and lingering uncertainty over the path of monetary policy, leaves markets more exposed to positioning-driven swings than in previous cycles. Trader sentiment, the analysis suggests, is playing an outsized role alongside the usual response to economic data and headlines.
With crowded conditions raising the odds of fast, disorderly moves, the quality of trade execution becomes more consequential, the analysis notes, citing slippage, wider spreads, and order delays as factors that can compound losses during volatile swings.
On managing risk, JustMarkets’ analysts recommend that traders: Avoid overexposure to the dominant macro narrative of the moment, pay closer attention to positioning and sentiment indicators, maintain disciplined stop-loss orders ahead of potential downturn and pPrepare for higher volatility and faster price action than usual.
Markets become crowded periodically, and when they do, the risk of a sharp, sudden reversal rises with them. For now, JustMarkets’ broader message to traders is one of caution: with positioning levels elevated across USD and carry trades, vigilance on execution and risk management will likely matter more than usual in the weeks ahead.
Association of Corporate Communication and Marketing Professionals in Banks (ACAMB) on the 11th of June kicked off activities, marking its 30th anniversary celebration with a tree-planting exercise on Providence Street, Lekki Phase 1, Lagos.
L-R: President, Association of Corporate Communication and Marketing Professionals in Banks (ACAMB), Jide Sipe; Representative of Wema Bank, Precious Akpan; Vice President 2, Morolake Onifade, Representative of Alpha Morgan, Tolu Onipede and General Secretary, ACAMB, Olugbenga Owotoomo during a tree planting initiative, put together to flag-off the 30th anniversary celebration of ACAMB, held at Providence Street, Lekki Phase 1, Lagos
Held in Lagos recently, the initiative, the initiative was part of the associations efforts aimed at promoting environmental sustainability while commemorating 3 decades of advancing corporate communications and marketing excellence within Nigeria’s banking industry.
The well attended exercise, led by President of ACAMB, Jide Sipe and the Registrar/Chief Executive Officer of the Chartered Institute of Bankers of Nigeria (CIBN), Akin Morakinyo, in the company of Vice President 1, Chinwe Bode Akinwande; Vice President 2, Morolake Onifade; Executive committee Members, both past and present, alongside, Group Heads of marketing and Corporate communications, and Heads of Departments across banks waded through the heavy downpour, planting trees in the rain in a display of commitment that set the tone for the milestone celebration.
A tree was planted, by representatives of banks in the country and named after each bank.
ACAMB President, Jide Sipe, who welcomed members and dignitaries to the exercise, reaffirmed the Association’s commitment to the reputation and growth of the banking industry.
“Thirty years ago, a handful of professionals chose to put the reputation of the banking industry above rivalry. We are standing today on the foundation they laid, and every tree we plant here is a promise to keep building and most importantly deepen credibility by proactively addressing issues which directly improve our collective brand image and customer loyalty,” he said.
“What ACAMB is doing also coincides with our 30th anniversary celebration. One of the best ways to celebrate this milestone is to contribute to the environment by the planting of trees that will on the long run be environmentally and economically impactful to the society at large.
“We are planting trees in honour of banks in the country and each of the trees will be named after them.
Outlining the anniversary programme, Sipe announced a series of activities running through September 2026, including a Golf and Networking Experience on June 27, 2026, at Ikoyi Club, Lagos, with the celebration culminating in a grand Gala Night on September 30, 2026.
“We are marking three decades the way they should be marked, with substance and with joy,” he said.
The Registrar and Chief Executive Officer of the Chartered Institute of Bankers of Nigeria (CIBN), Akin Morakinyo, HCIB, unveiled the Association’s 30th anniversary logo and commended ACAMB for its longstanding collaboration with the Institute.
“This anniversary is dedicated to the glory of God and the service of humanity,” he said. “I charge every member to hold firmly to professionalism and ethics in the discharge of their duties.”
A founding member of the association, Dr Nkechi Ali Balogun, offered a historical reflection on its formation. ACAMB was established in 1996 by representatives of five institutions: IBWA (later Afribank), Union Bank, NEXIM Bank, First Bank, and the Central Bank of Nigeria (CBN).
“The late Mr. Dangogo of the CBN gathered us at Kuramo Lodge with a simple idea, that banks could compete and still respect one another,” she said.
Member of the Association’s Board of Trustees, Ogie Eboigbe, traced the formation to concerns over banks de-marketing one another.
“Banks were winning customers by tearing down their rivals, and it was hurting public confidence in all of us,” he explained.
The tree-planting exercise reflects ACAMB’s commitment to environmental sustainability and stands as a fitting symbol of the Association’s growth and impact over the past three decades.
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