Nigeria’s fiscal woes deepened in January 2025 as debt servicing obligations reached N696.27 billion overshooting total retained revenue of N483.47 billion by a staggering 144%. According to the Central Bank of Nigeria’s latest Monthly Economic Report, this alarming mismatch underscores the country’s growing vulnerability to a full-blown debt crisis.
Despite marginal year-on-year improvement in revenue (a mere 0.89% from N479.21 billion in January 2024), earnings remain grossly inadequate to support basic operations, let alone fund capital projects. The month-on-month decline is even more concerning government retained revenue plunged by 69.19% compared to December 2024’s N1.57 trillion, painting a grim picture of dwindling fiscal resilience.
Nigeria’s Federal Government Independent Revenue a crucial component that reflects the efficiency of Ministries, Departments, and Agencies fell sharply by 66.14%, landing at just N32.28 billion. Even revenue from the VAT Pool and Federation Account couldn’t bridge the gap, contributing N90.73 billion and N167.69 billion respectively. With revenues from Excess Crude and other expected sources yielding nothing, Nigeria is essentially financing debt with new borrowing, a textbook path to a debt trap.
Public-Private Partnerships and Remittances Offer Possible Relief but Need Urgent Reform
In the wake of these bleak figures, attention is turning to non-debt financing strategies, particularly Public-Private Partnerships (PPPs) and diaspora remittances. With over 60% of Nigeria’s infrastructure needs still unmet, PPPs could provide the capital and technical know-how the government currently lacks. Analysts recommend a 60:40 or 70:30 risk-sharing model, favouring private investors to attract long-term participation.
However, the PPP ecosystem in Nigeria faces critical challenges ranging from inconsistent policy enforcement to a lack of transparent project pipelines. To make PPPs truly viable, the government must offer regulatory clarity, uphold contracts, and incentivize participation with risk mitigation tools like guarantees and arbitration mechanisms.
Simultaneously, remittances remain a promising but underleveraged buffer. In 2023, Nigerians in the diaspora sent home over $20 billion, often through informal channels. If properly harnessed, these funds could serve as both consumption support and investment capital. Policymakers are being urged to create frameworks for diaspora bonds, cooperative investment schemes, and fintech-driven remittance platforms that make sending money home easier and cheaper.
The International Monetary Fund has echoed these sentiments. Managing Director Kristalina Georgieva recently warned that oil producers like Nigeria are under severe budgetary pressure due to declining global oil prices. She stressed the urgency of ramping up domestic revenue mobilization and leveraging technology to plug tax leaks and broaden the base.
With debt now outpacing earnings and oil no longer the dependable lifeline it once was, Nigeria faces a defining moment. The path forward lies in building a diversified, transparent, and resilient revenue system backed by private sector partnerships and diaspora capital to prevent further fiscal deterioration. Reforms are ongoing in Nigeria already. The next phase involving improved tax enforcement, and diversification of revenue sources has never been more urgent.
