Nigeria Is Not Broke. Here's the Real Problem

Every time a person says “Nigeria has no money,” I pause. Because that's not exactly true. Nigeria is not a poor country. We have oil, we have gas, and we have over 200 million people; that's a market and a workforce on its own. We have some of the most talented, hardworking, resourceful people on this continent. Money comes into this country every year, in trillions of naira, from oil, from taxes, and from reforms the government itself has carried out.

The problem is not that the money doesn't exist. The problem is what happens to it after it arrives, who touches it, where it leaks, what it gets spent on, and whether it ever makes it to the things that actually move the needle for ordinary people. That's the real conversation we should be having, and honestly, it's a more useful one than “Nigeria is poor.” Because if the diagnosis is wrong, the prescription will be wrong too.

Where the money actually goes

Let's start with something that will vex you small. As of 2026, close to 54 kobo out of every ₦1 the federal government collects goes straight into paying interest on debt before a single naira touches roads, hospitals, or schools. The IMF projects that interest payments alone will swallow about 53.7% of government revenue this year, up from 53.2% in 2025 and 40.8% in 2024. Some independent analysts, using stricter measures that also count principal repayments, put the number even higher. 

There have been stretches where the government's entire revenue wasn't enough to cover debt alone, forcing more borrowing just to stay current on old borrowing. That's bleeding out through a hole we made ourselves, and now we're borrowing to buy plaster.

Meanwhile, the 2026 budget set aside ₦15.8 trillion for debt service alone, a figure that, when the budget was first presented, outstripped what was proposed for defense, infrastructure, education, and healthcare combined. So it's not that there's no money for hospitals and schools. It's that debt service eats from the plate before the rest of the family even sits down.

A real example: the subsidy money

If you want to see the whole story in miniature, look at what happened with subsidy removal. When the petrol subsidy was scrapped in 2023, the government said it would free up scarce resources for things that matter. And to be fair, it did generate real money, about ₦15.8 trillion in resources for the federation between June 2023 and December 2025, according to the Finance Minister. That's not small change.

But the part that would make you pause: of the incremental ₦30.64 trillion the government spent over that same period, the single largest line item, ₦9.39 trillion, went to wage adjustments and allowances for public servants. That's almost double the ₦5.4 trillion the federal government itself received from the subsidy savings. External debt service took another ₦9.37 trillion. Strategic infrastructure got ₦6.5 trillion, real, but clearly it's not the priority.

This is a story about what gets funded first when money shows up. And when wages and debt consistently outrank infrastructure, that tells you something about priorities, not about scarcity.

So why is Nigeria this deep in debt in the first place?

Not because the country lacks resources. It's because for years, the government has borrowed to fund recurrent spending, salaries, overheads, and subsidies instead of borrowing to build things that pay for themselves, like power infrastructure, rail, or export capacity. When you borrow to eat rather than borrow to plant, next year you're back at the table hungry, and now you owe someone too. Do that for a decade, and you get exactly where Nigeria is: a debt stock of above ₦150 trillion and a growing share of every new naira collected going to service debt taken out to cover yesterday's shortfall.

Add to that a revenue collection system with more holes than a sieve. Nigeria's tax-to-GDP ratio remains one of the lowest in the world for an economy this size, not because Nigerians refuse to pay taxes, but because the machinery for collecting, tracking, and accounting for revenue has never been built to match the size of the economy. Oil revenue also keeps underperforming budget targets, quarter after quarter, because production has sat below capacity for years: pipeline vandalism, crude theft, aging infrastructure, and years of underinvestment in the refineries. Money that should be coming in simply doesn't show up.

The naira problem makes it worse

Every time the naira depreciates, Nigeria's external debt, the part owed in dollars, instantly balloons in naira terms, even if not one more dollar was borrowed. A weak currency alone can push the country deeper into a hole without anyone signing a new loan agreement. This is part of why the debt figures look so dramatic in naira terms: the exchange rate does a lot of the damage on its own, quietly, in the background, every time it slides.

And it doesn't stop at the government's books. A weaker naira means the government needs more naira to repay the same dollar debt, while businesses also pay more for imported machinery, raw materials, and other inputs. Those higher costs eventually find their way into prices, making life more expensive for households. So the naira problem isn't just about the exchange rate; it affects debt, government spending, businesses, and ultimately the cost of living.

This is not really about scarcity

If you zoom out, the real story is not “Nigeria has no money.” It's that the money coming into the system is not being managed efficiently enough to create lasting economic value. The bigger problems are structural.

• Mismanagement: Money that should go into infrastructure, healthcare, education, and other productive areas can be delayed, diverted, or spent on less productive priorities. The problem does not merely concern how much money the government receives, but rather how much value Nigerians obtain from each naira that is spent.
• Weak revenue collection: Nigeria's economy is large, but the government still struggles to collect enough revenue from it. Tax leakages, the existence of an informal sector, inadequate enforcement, and an oil sector that consistently falls short of its potential all mean that money that could fund public services never fully reaches the government's treasury.
• Bad borrowing habits: Borrowing isn't automatically a bad thing. The issue arises when borrowing is used to finance expenses that do not produce enough future income to repay the debt. In such a situation, if the debt is used to fund infrastructure, power, or productive capacity, it can contribute to economic growth; but if it is mainly being used to pay current bills, then tomorrow will bring the same bills along with interest.
• A fragile naira: When the naira loses value, the naira cost of servicing Nigeria's dollar-denominated debt rises. It also makes imports more expensive, putting pressure on businesses and households. So exchange-rate weakness can magnify problems that already exist in the fiscal system.

None of these are simply “no money” problems. They are problems of incentives, institutions, priorities, and execution. The real solution is to fix the system that handles the money.

Why this distinction matters to you

If Nigeria's problem is being poor, the story ends there; there's nothing to do but wait for oil prices to rise or wait for aids to arrive. But if the problem is mismanagement, leakages, and how money is spent, that's a completely different conversation. It means the country has the raw material for a much better story; it just needs the discipline, the systems, and the political will to use what it already has well.

For the ordinary person, this matters too. It's the difference between a nation that's structurally poor forever and one that's currently mismanaging real wealth. One of those situations can change with better policy, stronger institutions, and more accountability. 

Nigeria is not broke. Nigeria is bleeding, and unlike being broke, bleeding is something you can actually stop.