Peter Obi
Olamilekan Abayomi
Peter Obi’s reaction to President Bola Tinubu’s announcement of a $11.6 billion debt servicing bill for 2026 centers on a simple comparison that he believes reveals Nigeria’s distorted fiscal priorities. The figure was disclosed by Tinubu on May 12 at the Africa Forward Summit in Nairobi, where he explained that nearly half of projected revenue for next year would go toward repaying debt. For Obi, the concern is not just the size of the bill but what it displaces. He argues that when a country commits that much money to servicing past loans, it leaves far less room for investment in the sectors that actually determine long-term productivity and living standards.
The scale becomes clearer when you line it up against the proposed budget allocations for human development. According to Obi’s breakdown, health is set to receive ₦2.46 trillion, education ₦2.56 trillion, and poverty alleviation ₦865 billion in 2026. Together that’s about ₦5.885 trillion. By contrast, the $11.6 billion earmarked for debt servicing translates to roughly ₦17 to ₦18 trillion depending on the exchange rate, meaning debt repayment would consume almost three times what the government plans to spend on health, education, and social protection combined. That gap is what Obi calls unsustainable, because it suggests borrowing is being used to fund consumption and recurrent costs rather than projects that can generate future revenue.
Obi is careful to say he is not opposed to borrowing as a concept. He points to countries like Japan, the United States, the United Kingdom, the UAE, Singapore, and Indonesia, all of which carry high debt burdens but channel most of that borrowing into education, healthcare, infrastructure, and innovation. In those cases, he argues, debt remains manageable because it is tied to measurable productivity and the capacity to repay. Nigeria’s situation, he says, is different because a huge proportion of past borrowing has been directed toward consumption with limited visible or sustainable developmental outcomes to justify the scale of indebtedness.
Part of his critique is historical. Obi notes that a significant portion of the debt now being serviced was accumulated under the current administration, even as the government continues to borrow at a considerable rate. He sees this as a compounding problem: more borrowing to cover shortfalls, more interest payments crowding out capital expenditure, and less fiscal space to respond to shocks or invest in growth. From that perspective, the $11.6 billion figure is not just a line in the budget but a symptom of a borrowing model that has not translated into broad-based economic expansion.
Tinubu’s own framing of the issue is more about the international system than domestic mismanagement. Speaking in Nairobi, he described the $11.6 billion as money leaving the treasury that could otherwise have gone into steel, textiles, agro-processing, and digital industries. He said African manufacturers cannot compete when the cost of borrowing is five to ten times higher than in Europe, Asia, or North America, and he blamed the international financial architecture for treating African sovereigns as permanently high-risk borrowers regardless of fiscal performance. In his view, the problem is structural and external, not just a matter of how Abuja manages its books.
The contrast between these two positions highlights the core debate over Nigeria’s debt strategy. Tinubu presents the payments as an unavoidable cost imposed by global credit markets and argues that Nigeria will continue to borrow responsibly to fund development. Obi counters that responsibility cannot be measured only by willingness to repay, but by whether borrowing actually creates the productive capacity to make repayment easier in the future. Without that link, he says, the country risks entering a cycle where debt service drains revenue, growth stagnates, and more borrowing becomes necessary just to stay afloat.
What makes the issue urgent is the trend line. Nigeria spent about $5.21 billion on external debt servicing in 2025, meaning the 2026 projection more than doubles that burden in a single year. That jump raises questions about refinancing costs, exchange rate exposure, and whether projected revenue growth can keep pace. If oil prices soften or non-oil revenue underperforms, the share of the budget consumed by interest and principal payments could rise further, squeezing discretionary spending even more.
For ordinary Nigerians, the practical effect is felt in underfunded hospitals, overstretched schools, and slow progress on poverty reduction programs. Obi’s warning is that if debt servicing continues to outstrip investment in people and infrastructure, the country’s productive base will weaken, making it harder to generate the growth needed to break the cycle. The debate now is whether the 2026 budget will shift enough toward productive investment to change that trajectory, or whether debt service will remain the dominant claim on national revenue for the foreseeable future.
