Debt Dilemma: Nigeria’s 31% Revenue Shortfall Sparks Concern

The Federal Government of Nigeria has announced a revenue performance of N6.9 trillion for the first quarter of 2025, which signifies a 33% increase from the N5.2 trillion generated during the same period in 2024. Nevertheless, this revenue did not meet the projected target of N10 trillion on a pro-rata basis, indicating a 31% shortfall.

Revenue Performance and Debt

Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, stated that the increase in revenue reflects the initial benefits of ongoing economic and institutional reforms. Despite the revenue shortfall, the government may explore options to bridge the revenue gap, potentially through debt financing. As of December 31, 2024, Nigeria’s total public debt was recorded at N144.67 trillion, and President Bola Tinubu has sought approval for a new loan of $24.14 billion.

The government aims for a 7% growth rate in gross domestic product (GDP), capitalizing on enhanced revenue collection, fiscal discipline, and growth driven by the private sector. Recent indicators, such as increasing external reserves, improved revenue performance, and a reduction in inflation, suggest a favorable trend. The Minister highlighted that reforms like market-based pricing for foreign exchange and petroleum products have reinstated investor confidence and fostered a more transparent environment for economic activities.

The Minister disclosed that Shell intends to invest $5.5 billion in Nigeria this year, challenging the notion that significant players are withdrawing from the nation. The government is also striving to draw long-term capital into the economy via Public-Private Partnerships (PPPs). Furthermore, the Ministry of Finance Incorporated Real Estate Investment Fund (MREIF) has allocated mortgages totaling N6.9 billion to 159 recipients across six pilot areas.

Housing and Power Sector

The government seeks to tackle the housing shortfall estimated to be between 20 to 28 million units. The MREIF is structured to attract both public and private investment for housing development. In the power sector, the Minister indicated a 40% rise in electricity production, attributed to tariff reforms, targeted subsidies, and a significant metering initiative. 

Nigeria’s economic advancements have been acknowledged, with international credit rating agencies Fitch and Moody’s enhancing the country’s ratings. The government is dedicated to ensuring that even micro enterprises can secure financing to grow their operations, create more jobs, and help lower the cost of living through increased production.