FG driving inclusive growth, not just borrowing – Official
The Federal Government has reiterated that its 2026 borrowing plan is anchored on inclusive growth and long-term economic stability, dismissing suggestions that the strategy is designed merely to accumulate new debt.
Speaking at the 6th Economist Conference organised by Proshare, the Special Adviser to the President on Finance and Economy, Mrs Sanyade Okoli, said the administration’s fiscal direction must be assessed within the context of inherited macroeconomic distortions.
The virtual conference, themed “Can Nigeria Fund Itself Without Killing Private Investment?”, convened policymakers, economists and capital market operators to examine the sustainability of Nigeria’s fiscal framework and the implications for private sector liquidity.
Context of inherited distortions
Okoli argued that when the current administration assumed office under Bola Tinubu, the economy was grappling with foreign exchange illiquidity, fiscal imbalances and investor uncertainty.
According to her, the immediate priority was restoring macroeconomic stability before pivoting to growth acceleration. She maintained that borrowing under the 2026 framework is targeted at catalytic sectors capable of unlocking private capital, rather than financing recurrent expenditure.
“We are not borrowing for consumption,” she said, noting that the government’s objective is to drive inclusive growth that expands economic participation and reduces poverty.
Debt sustainability and revenue pressures
Addressing concerns about fiscal sustainability, Okoli disclosed that debt service-to-revenue ratios, which previously exceeded 100 per cent, have moderated significantly over the past two years.
She stressed that while the ratio remains elevated, ongoing reforms in revenue mobilisation and expenditure rationalisation are aimed at placing public finances on a more sustainable trajectory.
The government, she added, is also diversifying funding sources beyond the domestic capital market to mitigate crowding-out risks. She cited a recent Eurobond issuance as evidence of efforts to tap external markets rather than relying solely on local debt instruments.
Asset optimisation strategy
On the role of the Ministry of Finance Incorporated, Okoli said the agency has developed a structured asset register categorising government holdings based on financial viability and strategic value.
She explained that the asset optimisation framework involves multiple pathways, including holding strategic assets, inviting private sector participation through concessions, or selective divestment where appropriate.
“This is not about indiscriminate sales,” she said, emphasising transparency and value maximisation.
Market concerns over crowding out
Despite the assurances, several market operators expressed reservations about the scale of borrowing relative to projected revenues.
Johnson Chukwu, Group Managing Director of Cowry Asset Management Limited, warned that with budgeted revenue of N34tn and debt service estimated at N15.5tn, nearly half of government earnings could be absorbed by debt obligations.
He cautioned that although interest rate expectations point towards moderation, the volume of outstanding liabilities remains substantial.
Chukwu advocated for greater use of concession models in commercially viable infrastructure corridors rather than outright asset sales, arguing that structured private participation could generate recurring income while preserving long-term value.
Call for equity financing
From the academic and policy advisory community, Dr Ayo Teriba of Economic Associates commended the administration for discontinuing Ways and Means financing but urged a strategic pivot toward equity-based funding.
He suggested listing state-owned enterprises on the stock exchange to reduce sovereign borrowing pressures and deepen capital market participation.
According to Teriba, once such entities operate as publicly listed companies, they can independently raise funds and service obligations without adding to federal debt stock.
Transparency and oversight
Tilewa Adebajo, Chief Executive Officer of CFG Advisory, underscored the need for enhanced transparency in debt reporting and fiscal oversight.
He argued that clearer disclosure of contingent liabilities and up-to-date debt metrics would strengthen investor confidence and improve credit assessment frameworks.
Professor Frances Obafemi of the University of Calabar also noted that rational market behaviour explains why investors may prefer sovereign bonds to private lending when yields are elevated.
According to her, unless domestic liquidity expands or alternative financing structures emerge, aggressive deficit funding could limit credit availability to businesses.
A collaborative funding model
In reframing the conference theme, Okoli suggested shifting the debate from confrontation to collaboration between government and private stakeholders.
She argued that national development requires shared responsibility, adding that fiscal reforms, asset optimisation and prudent borrowing must operate alongside private investment flows.
The conference concluded with consensus that Nigeria’s fiscal debate has evolved from the question of whether funds can be raised to how they can be mobilised without undermining private sector dynamism.
While the Federal Government maintains that its borrowing strategy is calibrated toward inclusive growth, stakeholders insist that execution discipline, transparency and diversified financing will determine whether the approach strengthens or strains long-term sustainability.
