The Federal Government of Nigeria recently secured a $1.1 billion loan from the African Development Bank (AfDB) to power five million people by 2026. While this initiative aims to address Nigeria’s energy deficit, it reflects a concerning trend: the government’s over-reliance on external borrowing to fund development projects. This approach has deepened Nigeria’s debt burden, undermining economic stability and leaving citizens to bear the weight of poor fiscal decisions.
The Growing Debt Profile: A Symptom of Mismanagement
Nigeria’s debt profile has risen exponentially in recent years, with billions borrowed to fund projects that often fail to deliver long-term benefits. One of the major issues is the lack of alignment between visionary leadership and political appointees, many of whom prioritize personal gain over national progress. Funds secured for development projects are often misappropriated or mismanaged, creating a cycle of debt that stifles growth.
The alarming dependency on loans is not only unsustainable but also a betrayal of the nation’s potential. It is disheartening to see leaders celebrate the acquisition of foreign loans as achievements while ignoring their long-term consequences.
Lessons from U.S. Foreign Aid Cuts
The ongoing presidency of Donald Trump has reinforced the urgency for African nations, including Nigeria, to wean themselves off foreign aid and loans. President Trump’s recent decision to halt funding for AIDS programs in Nigeria and other African countries is a stark warning. Relying on external aid is a precarious strategy, as such funding can be withdrawn at any moment, leaving critical sectors vulnerable.
This development should compel Nigeria to rethink its approach to national development. The message is clear: we must build a self-reliant economy that is resilient to external shocks.
Rethinking Development: Projects That Attract Investment and Grants
Instead of accumulating loans, Nigeria should focus on sustainable development projects that attract foreign investors and international grants. Here are some key areas that can transform the economy:
1. Renewable Energy Revolution
With abundant sunlight, wind, and water resources, Nigeria has the potential to lead Africa’s renewable energy movement. Solar farms in the northern region, wind energy in coastal areas, and small-scale hydropower projects can attract global green investors and climate-focused funds. The African Union’s renewable energy initiatives and private sector players are potential partners.
2. Agricultural Modernization
Nigeria is blessed with vast arable land, yet agriculture remains underutilized. Mechanized farming, agro-industrial parks, and value chain development for exports can drive economic growth. International bodies such as the Food and Agriculture Organization (FAO) and development banks can support these initiatives.
3. Technology and Innovation Hubs
Nigeria’s youth population is a goldmine of creativity. Establishing technology parks and innovation hubs can position the country as a regional tech leader. Partnerships with global tech companies like Microsoft, Google, and venture capitalists can foster innovation, create jobs, and attract international grants.
4. Tourism Infrastructure Development
Nigeria’s rich cultural heritage and natural attractions remain largely untapped. Developing ecotourism, cultural festivals, and world-class hospitality infrastructure can attract international tourists and investors. This can be supported by grants from organizations promoting cultural preservation and sustainable tourism.
5. Industrialization Through Public-Private Partnerships (PPP)
Instead of relying on loans to fund industrial projects, the government should pursue joint ventures and PPPs. For example, in infrastructure projects like railways, foreign investors can provide funding and expertise in exchange for shared ownership and revenue. This approach mitigates debt risks while ensuring quality delivery.
A Presidential Think Tank for National Development
To ensure Nigeria takes the right path, the government must establish a Presidential Think Tank Group. This body should consist of experts unconnected to any past political positions to maintain impartiality. The group would provide innovative, unbiased solutions to Nigeria’s developmental challenges. Such a think tank could craft policies to:
Boost economic diversification.
Leverage Nigeria’s comparative advantage in agriculture, minerals, and human capital.
Create a framework for attracting grants and investment without incurring debt.
The Flaws of Loan-Funded Projects
One of the most glaring issues with foreign loans is that the lenders often dictate the terms. For example, Nigeria’s railway projects are funded by Chinese loans and executed by Chinese contractors. The result? Most of the funds return to the lender country, leaving Nigeria with little economic benefit and a significant debt burden.
Why can’t these projects be structured as joint ventures where foreign partners invest directly and share risks and rewards? This model encourages accountability, ensures project completion, and minimizes debt accumulation.
Reframing Progress: Foreign Loans Are Not Achievements
Nigeria must redefine its understanding of progress. Securing foreign loans should not be celebrated as an achievement; it is, in reality, a distraction. True progress lies in building a self-reliant, sustainable economy through innovation, investment, and effective governance.
The Way Forward for Nigeria and Africa
The time has come for Nigeria—and Africa as a whole—to reject the notion that development is impossible without foreign aid. The reliance on external funds undermines sovereignty and perpetuates dependency. African leaders must prioritize sustainable solutions, leveraging their countries’ unique strengths to build resilient economies.
The era of foreign loan dependency must end. By focusing on sustainable development, accountability, and innovation, Nigeria can pave the way for a brighter, self-reliant future.
Dr. Tofunmi Ogunronbi (A Former Gubernatorial Candidate and a Seasoned Advocate for Sustainable Development Projects)
